Understanding market efficiency is an important part of investment decision-making. It can help investors to identify the most appropriate investment strategies and develop realistic expectations for their returns. In this episode of the Rational Reminder Podcast, we sit down with Professor Burton Malkiel, the renowned economist, and author of the classic investing book A Random Walk Down Wall Street. Professor Malkiel is a distinguished figure in the world of economics and academia. He holds the prestigious title of Chemical Bank Chairman's Professor of Economics Emeritus and Senior Economist at Princeton, where he has made significant contributions to the field over the years. In our conversation, we discuss Professor Malkiel’s views on the stock market, the efficient market hypothesis, how behavioural finance relates to investing, and why index funds should be at the core of every portfolio. Throughout the episode, Professor Malkiel shares his insights on a wide range of topics related to personal finance and investing, including the benefits of index funds, the dangers of active stock picking, the impact of fees and taxes on investment returns, factor investing, and expensive asset classes. He also discusses research on socially responsible investing and how investors can incorporate ethical considerations into their portfolios without sacrificing performance. In this episode, listeners will gain a better understanding of the vital principles of investing and how to apply them to achieve their financial goals. Whether you're a novice investor or an experienced pro, this episode offers valuable insights and advice from one of the most respected economists in the field, Professor Malkiel.

Key Points From This Episode:

• Professor Malkiel explains the efficient market hypothesis and what the term “efficient market” means. (0:03:42)

• What the media tends to get wrong about the concept of market efficiency and the mathematical theory behind a random walk market. (0:07:04)

• We discuss investing in index funds rather than actively managed strategies. (0:09:44)

• How his book, Random Walk, was received by professionals and academics in the industry

  (0:13:08)

• Hear about the inspiration behind the concept covered in his book, and how his investment advice has changed over the last 50 years. (0:19:18)

• Why index funds have become widely accepted, and the difference between investing and speculating. (0:23:38)

• He unpacks why past market bubbles are vital for managers to understand and shares some wise words for those who want to participate in market speculation investing. (0:28:21)

• How the existence and persistence of bubbles throughout history relate to markets being efficient. (0:32:10)

• Find out how the multiple, non-diversifiable risks in today’s financial markets impact the advice in his book, and learn about factor investing. (0:35:42)

• He shares advice and insights for people looking to invest in cheaper funds and his perspective on trending investment strategies. (0:37:55)

• Learn how the general findings from behavioural finance influence his advice on investing in index funds. (0:41:33)

• We explore the value of risk parity strategies and the problem with backtests, and he shares his view on expensive asset classes. (0:44:09)

• What impact super-low bond yields had on the return of bonds, and whether you should focus on the value or yield. (0:54:16)

• The importance of saving as opposed to an optimal investment strategy to investor outcomes.

  (0:57:56)

• Insights into investing according to your desired outcomes and whether Professor Malkiel thinks it is better to rent or own a home. (1:03:55)

• We discuss inflation and possible future trends and the role of financial planners and investment advisors. (1:10:29)

• Hear his concerns regarding the growth of index fund assets. (1:14:52)

• Details about his book writing journey and his definition of success. (1:18:46)

Links From Today’s Episode:

Burt Malkiel — https://jrc.princeton.edu/people/burton-g-malkiel Wealthfront — https://www.wealthfront.com/ Theravance Biopharma — https://www.theravance.com/ Genmab A/S — https://www.genmab.com/

Rebalance IRA — https://www.rebalance360.com/

A Random Walk Down Wall Street: The Best Investment Guide That Money Can Buy — https://amzn.to/3BgepQz

Princeton University — https://www.princeton.edu/ The Yale School of Management — https://som.yale.edu/ Vanguard — https://investor.vanguard.com/corporate-portal/ Trillions — https://www.amazon.com/Trillions-Renegades-Invented-Changed-Finance/dp/ 0593087682 S&P Dow Jones Indices — https://www.spglobal.com/spdji/en/ S&P Dow Jones Indices SPIVA — https://www.spglobal.com/spdji/en/research-insights/spiva/ Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder- podcast/id1426530582. 
 Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected]
 Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on Twitter — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on Twitter — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

We all have different levels of risk tolerance. But how is that risk measured for complex investment strategies like covered calls? And how can you be sure it's an accurate reflection of reality? For the first portion of today’s episode, we provide a detailed breakdown of everything you need to know about covered calls and why there is no perfect model for assessing risk-adjusted returns. We examine how incorrect measures of risk can make covered calls seem more attractive, what investors need to know about covered calls, and the fees, costs, and taxes you should be considering with these types of strategies. Next, we are joined by lifelong friends and colleagues Jonathan Hollow and Robin Powell to discuss their new book How to Fund the Life You Want: What everyone needs to know about savings, pensions and investments. They describe how their shared passion for financial education motivated them to write their book, before explaining how readers can best use the accompanying workbook to identify and reach their financial goals. Robin and Jonathan then go on to share their advice on day-to-day money management, finding a trustworthy advisor, and why it’s never too early to teach your child about money. Tune in for a detailed breakdown of covered calls and how to make informed decisions about your investments and finances!

Key Points From This Episode:

• An introduction to the concept of covered calls. (0:02:41)
• The definition of covered calls, how risk can be measured incorrectly to make covered call strategies look more attractive, and why risk can never be destroyed. (0:04:22)
• A breakdown of the assets involved in covered calls and why their yields can be misleading. (0:07:00)
• Why there is no perfect model for assessing risk-adjusted returns and what can be learned from looking at investors through a behavioural lens. (0:16:19)
• An overview of why fees, costs, and taxes are major considerations for these types of strategies. (0:20:15)
• Introducing Robin Powell, Jonathan Hollow and their new book How to Fund the Life You Want. (0:25:08)
• Jonathan and Robin’s long friendship, their shared interest in financial education, why they saw a need for their book, and how readers can get the most out of their workbook. (0:30:45)
• Insight into the six rules that Robin and Jonathan outline in their book and the eight keywords that they set up for managing money day to day. (0:35:07)
• Advice on how to keep up with finance news, including what you should pay attention to and what you can ignore. (0:40:37) 
• The importance of a day-to-day savings habit and suggestions on what kids should be taught about money. (0:43:20)
• Advice on how to find a first-rate advisor based on your needs and what questions you need to be asking of them. (0:49:54)
• How your financial advisor should act as your financial bodyguard and complement your weaknesses. (0:56:02)
• Ben and Cameron share news about their next podcast appearances, Rational Reminder education courses for financial advisors, and upcoming meetups. (0:57:43)
• Learn about the webinars that Ben and Cameron have been hosting and how you can sign up. (01:03:00)

Links From Today’s Episode:

Robin Powell on LinkedIn — https://www.linkedin.com/in/robinpowell/

Jonathan Hollow on LinkedIn — https://www.linkedin.com/in/jonathanhollow/

How to Fund the Life You Want: What everyone needs to know about savings, pensions and investments — https://www.amazon.co.uk/dp/1399404601/

Covered Calls — https://www.investopedia.com/terms/c/coveredcall.asp

Episode 27: Robin Powell: Evidence Based Investing: Changing the Minds of Advisors and Investors — https://rationalreminder.ca/podcast/27

Patrick Boyle on YouTube — https://www.youtube.com/c/PatrickBoyleOnFinance

Sharpe Ratio — https://www.investopedia.com/terms/s/sharperatio.asp

Sortino Ratio — https://www.investopedia.com/terms/s/sortinoratio.asp

S&P 500 — https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview

Episode 167: Prof. Hersh Shefrin: Fear, Hope, and the Psychology of Investing — https://rationalreminder.ca/podcast/167

‘Behavioral Aspects of the Design and Marketing of Financial Products’ — https://www.jstor.org/stable/3665864

Episode 171: Prof. Campbell R. Harvey: The Past and Future of Finance — https://rationalreminder.ca/podcast/171

‘Portfolio Performance Manipulation and Manipulation-Proof Performance Measures’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=302815

Adviser 2.0 — https://www.advicereinvented.com/

Sensible Investing — https://sensibleinvesting.tv/

Financial Times — https://www.ft.com/

Rob Carrick — https://www.theglobeandmail.com/authors/rob-carrick/ The Globe and Mail — https://www.theglobeandmail.com/

The Money and Meaning Show — https://podcasts.apple.com/us/podcast/the-money-and-meaning-show/id1449894787

The Most Hated F Word — https://themosthatedfword.com/

New Self-Regulatory Organization of Canada — https://www.newselfregulatoryorganizationofcanada.ca/

FP Canada — https://www.fpcanada.ca/

Rational Reminder Continuing Education — learn.rationalreminder.ca

PWL Capital — https://www.pwlcapital.com/

PWL Capital on YouTube — https://www.youtube.com/c/Pwlcapital-Montreal/videos

IAFP Symposium — https://iafpsymposium.ca

Burt Malkiel — https://jrc.princeton.edu/people/burton-g-malkiel

David Blanchett — https://www.davidmblanchett.com/

Meir Statman — https://www.scu.edu/business/finance/faculty/statman/

Nick Maggiulli — https://www.linkedin.com/in/nicholasmaggiulli/

Jill Schlesinger — https://www.jillonmoney.com/

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ 

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — [email protected] Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on Twitter — https://twitter.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Navigating the world of finance and investing is undeniably complicated, sometimes unnecessarily so. And all too often the people who end up making the most costly financial mistakes are those who can least afford to do so. But what exactly needs to change in order for more people to make wise and well-informed financial decisions? And how do we go about implementing those changes? Joining us today to help us unpack this topic and the many decisions involved in the world of investing is John Y. Campbell, a British-American economist, professor of economics at Harvard, and founding partner at Arrowstreet Capital, a systematic asset management firm based in Boston. John has published over a hundred of articles on a range of topics including fixed income, equality valuation, portfolio choices, and household finance, all of which we explore in today’s expansive conversation. We kick things off by discussing utility theory, why it’s so important to the study of finance, and what it can teach us about risk aversion, before delving into portfolio structure, asset allocation, and hedging. John also expands on the study of household finance, the mistakes that households typically make, why household behaviour tends to differ from theoretical predictions, and how to bring theory and behaviour into alignment. We wrap things up by discussing how financial literacy, education, and regulation can improve outcomes for households before hearing John’s advice on selecting an optimal mortgage contract along with an overview of the type of risk that mortgage contracts expose you to. Today’s episode is jam-packed with information and insights from a profoundly knowledgeable figure in academia.

Key Points From This Episode:

•    An overview of asset pricing theory; unpacking the utility function in finance, what it teaches us about being risk averse, and how it is used to determine the value we place on any amount of money. (0:04:01)

•    The implications of using the Capital Asset Pricing Model (CAPM) for portfolio choice. (0:13:58)

•    The difference between arbitrage pricing theory and the Intertemporal Capital Asset Pricing Model (ICAPM). (0:18:15)

•    How predictability in stock returns affects portfolio advice for long-term investors and why John prefers the cyclically adjusted price-to-earnings (CAPE) ratio. (0:23:40)

•    Why a long-term inflation index bond is the ideal risk-free asset for a long-term investor, and how portfolio advice, concerning bonds, changes when inflation index bonds are not available. (0:28:32)

•    The impact that labour income should have on optimal portfolio choice and the relationship between human capital and financial assets as you age. (0:35:31)

•    Learn about John’s 2004 paper entitled ‘Bad Beta, Good Beta’ and how intertemporal asset pricing explains differences in returns between value and growth stocks. (0:38:33)

•    The benefits and drawbacks of value investing: why historically they do well on average, but extremely poorly over certain periods. (0:41:12)

•    A breakdown of stochastic volatility and how it affects portfolio choice for long-term investors. (0:47:16)

•    How long-term equity investors should approach foreign currency hedging in their portfolios, and how fixed-income investors should deal with foreign currency exposure. (0:50:07)

•    The study of household finance, what it aims to answer, and the major challenges in this area of study. (0:53:54)

•    An overview of the mistakes that households typically make, how costly they can be, and why household behaviour tends to differ from theoretical predictions. (0:59:57)

•    Suggestions on how household behaviour and theoretical predictions can be brought into alignment and the methods that have the most potential to improve outcomes for households. (01:04:47)

•    What households should take into account when selecting an optimal mortgage contract and the different types of risk that mortgage contracts expose people to.[01:10:18]

•    How John’s definition of success has shifted over the years, the joy of academia, and why he is especially grateful for the opportunity to connect with students on their educational journey. (01:16:04)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-250-prof-john-y-campbell-financial-decisions-for-long-term-investors-discussion-thread/23202

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

John Y. Campbell — https://scholar.harvard.edu/campbell/home

'Who Should Buy Long-Term Bonds' — https://www.nber.org/system/files/working_papers/w6801/w6801.pdf

'Inflation Bets or Deflation Hedges? The Changing Risks of Nominal Bonds' — https://scholar.harvard.edu/files/campbell/files/campbellsunderamviceira_20160523.pdf

'Growth or Glamour? Fundamentals and Systematic Risk in Stock Returns' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/gorg20090319_copyedited.pdf

'Bad Beta, Good Beta' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/bbgb_2004_nberw9509.pdf

'An Intertemporal CAPM with Stochastic Volatility' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/cgpt_volatilityrisk20170123final.pdf

'Global Currency Hedging' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/globalcurrencyhedging_20090128_manuscript.pdf

'Biases in long-horizon predictive regressions' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X21004013

'What Drives Booms and Busts in Value?' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/cgp_valueboomsbusts_20230311.pdf

'Household Finance' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/householdfinance_jof_2006.pdf

'The Cross-Section of Household Preferences' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/calvetcampbellgomessodini_20221027.pdf

'Restoring Rational Choice: The Challenge of Consumer Financial Regulation' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/elylecture_march2016.pdf

'Down or Out: Assessing the Welfare Costs of Household Investment Mistakes' — https://www.journals.uchicago.edu/doi/abs/10.1086/524204

'A Model of Mortgage Default' — https://scholar.harvard.edu/sites/scholar.harvard.edu/files/campbell/files/mortdefault13022014.pdf

'Household Risk Management and Optimal Mortgage Choice' — https://scholar.harvard.edu/campbell/publications/household-risk-management-and-optimal-mortgage-choice

'Predicting the Equity Premium Out of Sample: Can Anything Beat the Historical Average?' — https://www.nber.org/papers/w11468

'An Asset Allocation Puzzle' — https://www.nber.org/papers/w4857

Our focus for this episode is the real utility of financial advisors, and Ben shares a host of research and findings about the supposed and actual value that advisors can offer investors. This segment continues our exploration of investment basics, a fundamental theme for this show and our work at PWL Capital. One of the biggest and clearest lessons that becomes apparent through this discussion is the need for financial literacy independent of advice and so-called expertise from the outside. With that said, we do find time to share some of the positives investors can accrue from dealing with a trustworthy advisor and the conditions necessary for this. Later in the episode, our colleague Lukas Fleck joins us to share his review of The Obstacle Is the Way by Ryan Holiday and some of his own reading habits and tips. We finish the episode with lighter content about hot sauces, TV shows, and Ben's latest home improvement.

Key Points From This Episode:

•    Introducing today's question about the usefulness of financial advisors. (0:03:35)

•    Common financial mistakes made by households. (0:11:13)

•    Some of the research and findings grounding today's discussion. (0:18:13)

•    Investing and self-control; what we can learn from data about smokers. (0:22:49)

•    Looking at some of the potential benefits of hiring an advisor for investors. (0:28:40)

•    A quick review of Episode 43 with Dave Butler from 2019. (0:34:07)

•    Today's book review of The Obstacle Is the Way, with Lukas Fleck, and some of the biggest takeaways. (0:36:43)

•    A look at Lukas' reading habits, favourite recent books, and his increased focus on getting through books. (0:44:59)

•    Advice for starting a book club and Lukas' reading hacks. (0:50:49)

•    The after-show; Ben tells us about his basketball hoop, last week's episode of Succession, and the hot sauce debate. (0:54:44)

•    Upcoming events, audience reviews, and future guests on the podcast. (0:58:31)

Ad mentioned by Ben:

Video: https://www.reddit.com/user/AMF_Quebec/comments/11rzoc9/les_risques_de_fraude_avec_les_cryptos_sont_bien/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&utm_content=1&utm_term=15

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Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-249-what-are-financial-advisors-measurably-useful-for-discussion-thread/23120

Books From Today’s Episode:

The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph — https://amzn.to/3MXh1dl

The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money — https://amzn.to/3UM8KLb

Deep Work: Rules for Focused Success in a Distracted World — https://amzn.to/3AuSXqZ

Making Numbers Count: The Art and Science of Communicating Numbers — https://amzn.to/41HXnWK

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Lukas Fleck — https://www.pwlcapital.com/profile/lukas-fleck/

'Restoring Rational Choice: The Challenge of Consumer Financial Regulation' — https://www.aeaweb.org/articles?id=10.1257/aer.p20161127

'Financial literacy and financial resilience: Evidence from around the world' — https://onlinelibrary.wiley.com/doi/abs/10.1111/fima.12283

'Strategic price complexity in retail financial markets' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X08002092

'Shrouded Attributes, Consumer Myopia, and Information Suppression in Competitive Markets' — https://academic.oup.com/qje/article-abstract/121/2/505/1884013?redirectedFrom=fulltext

'The Role of Time Preferences and Exponential-Growth Bias in Retirement Savings' — https://www.nber.org/papers/w21482

'Contract Design and Self-Control: Theory and Evidence' — https://www.jstor.org/stable/25098689

'Restoring Rational Choice: The Challenge of Consumer Financial Regulation' — https://www.aeaweb.org/articles?id=10.1257/aer.p20161127

'Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds' — https://dash.harvard.edu/bitstream/handle/1/4686775/Laibson_OnePriceFail.pdf

'Failure to refinance' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X16301507

'Down or Out: Assessing the Welfare Costs of Household Investment Mistakes' — https://www.jstor.org/stable/10.1086/524204

'Financial literacy and stock market participation' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X11000717

'Attention Induced Trading and Returns: Evidence from Robinhood Users' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3715077

'Excessive Extrapolation and the Allocation of 401(k) Accounts to Company Stock' — https://www.jstor.org/stable/2697737

'$100 Bills on the Sidewalk: Suboptimal Investment in 401(k) Plans' — https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3158583/

'Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving' — https://www.journals.uchicago.edu/doi/10.1086/380085

'Annuitization Puzzles' — https://www.aeaweb.org/articles?id=10.1257/jep.25.4.143

'The Market for Financial Advice: An Audit Study' — https://www.nber.org/papers/w17929

'Understanding the Advice of Commissions-Motivated Agents: Evidence from the Indian Life Insurance Market' — https://www.hbs.edu/ris/Publication%20Files/12-055_13c23c02-e57f-4aea-9630-316aa4b772ce.pdf

'Fiduciary Duty and the Market for Financial Advice' — https://www.nber.org/papers/w25861

'Conflicting Interests and the Effect of Fiduciary Duty: Evidence from Variable Annuities' — https://academic.oup.com/rfs/article-abstract/35/12/5334/6674521

'How (not) to pay for advice: A framework for consumer financial protection' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X12000074

'Financial Advice and Bank Profits' — https://academic.oup.com/rfs/article-abstract/31/11/4447/4985213?redirectedFrom=fulltext

'The Misguided Beliefs of Financial Advisors' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12995

'Retail Financial Advice: Does One Size Fit All?' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12514

'The Ulysses option: Smoking and delegation in individual investor decisions' — https://www.sciencedirect.com/science/article/abs/pii/S1544612321003962

'Smoking hot portfolios? Trading behavior, investment biases, and self-control failure' — https://www.sciencedirect.com/science/article/abs/pii/S0927539821000463

'Exponential Growth Bias and Household Finance' — https://www.jstor.org/stable/27735191

'Money Doctors' — https://scholar.harvard.edu/files/shleifer/files/moneydoctors_journaloffinance.pdf

'The Costs and Benefits of Financial Advice' — https://www.hbs.edu/faculty/Shared%20Documents/conferences/2013-household-behavior-risky-asset-mkts/Costs-and-Benefits-of-Financial-Advice_Foerster-Linnainmaa-Melzer-Previtero.pdf

'Time is money: Rational life cycle inertia and the delegation of investment management' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X16300472

'Passing the buck: Delegating choices to others to avoid responsibility and blame' — https://www.sciencedirect.com/science/article/abs/pii/S0749597815300108#:~:text=One%20simple%20way%20to%20avoid,outcome%20on%20the%20other%20person.

'Expert financial advice neurobiologically "Offloads" financial decision-making under risk' — https://pubmed.ncbi.nlm.nih.gov/19308261/

'Impact of inflated perceptions of financial literacy on financial decision making' — https://www.sciencedirect.com/science/article/abs/pii/S0167487020300672

'Precautionary savings, retirement planning and misperceptions of financial literacy' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X17301551

'Behavioral and wealth considerations for seeking professional financial planning help' — https://fpcanadaresearchfoundation.ca/media/khyfoso3/financial-services-reveiw-publication.pdf

'Financial literacy and the demand for financial advice' — https://www.sciencedirect.com/science/article/abs/pii/S037842661400096X

'Does financial literacy affect the value of financial advice? A contingent valuation approach' — https://www.researchgate.net/publication/338669648_Does_financial_literacy_affect_the_value_of_financial_advice_A_contingent_valuation_approach

'How financial literacy shapes the demand for financial advice at older ages' — https://www.sciencedirect.com/science/article/pii/S2212828X21000220

'Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?' — https://academic.oup.com/qje/article-abstract/126/1/373/1901343?redirectedFrom=fulltext

'(Over)insuring Modest Risks’ — https://www.jstor.org/stable/25760237

'The Mismatch Between Life Insurance Holdings and Financial Vulnerabilities: Evidence from the Health and Retirement Study' — https://www.aeaweb.org/articles?id=10.1257/000282803321455340

'Saving and Life Insurance Holdings at Boston University - A Unique Case Study' — https://www.jstor.org/stable/23877728

'Who is internationally diversified? Evidence from the 401(k) plans of 296 firms' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X16302483?via%3Dihub

'Is conflicted investment advice better than no advice?' —  https://www.sciencedirect.com/science/article/abs/pii/S0304405X20301537

'How Does Household Portfolio Diversification Vary with Financial Literacy and Financial Advice?' — https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12231

'Financial Advice and Individual Investor Portfolio Performance' — https://www.jstor.org/stable/41493871

'Financial advisors: A case of babysitters?' — https://www.sciencedirect.com/science/article/abs/pii/S0378426611002548

'Professional financial advice, self-control and saving behavior' — https://onlinelibrary.wiley.com/doi/10.1111/ijcs.12480

'Do contracts influence comprehensive financial advice?' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1429807

'The Value of Financial Advice' — https://www.forbes.com/sites/wadepfau/2015/07/21/the-value-of-financial-advice/?sh=6b13feda1333

How the financial system works and how we interact with it has grown in complex ways and is a fascinating but nuanced topic. To guide us through the history of the economy is Professor William Goetzmann, who is an expert in finance, economics and art history, and whose research has been featured in top publications. As a highly respected scholar, he's authored numerous books on topics such as real estate and behavioural finance. It is fair to say Professor Goetzmann's work has left a significant impact on both academia and the world. In our conversation, we dive into financial market history and explore more than just broad market returns. We unpack the fascinating phenomenon of economic bubbles and booms, and how they have evolved and shaped the financial system. He also shares crucial insights from the past and advice for investors looking to leverage the market. And to wrap things up, Professor Goetzmann shares his views on money after digging deep into its historical roots. Tune in to unlock the secrets of the past and gain valuable insights for the future as we journey through the fascinating world of economic history. Tune in now!

Key Points From This Episode:

•    Why is it important to collect and examine long-term historical returns data, and how useful the findings can be for today’s market. (0:03:21)

•    The furthest back in time that Professor William Goetzmann has looked at equity returns and how much of an issue survivorship bias is in long-term historical data. (0:05:44)

•    Reasons for the United States market trends concerning equity risk premiums and his approach to forecasting long-term returns of both stocks and bonds. (0:11:02)

•    Whether current discount rates are better for estimating future returns than long-term historical returns. (0:17:08)

•    How the markets of today compare to the markets of the 1900s, and whether investor behaviour has changed. (0:18:42)

•    Learn how global finance changed after the First World War and how likely a global financial meltdown is. (0:23:35)

•    What to consider when investing internationally and whether Canadian investors should be biased towards their home country. (0:28:23)

•    Hear Professor Goetzmann’s definition of an asset price bubble and his approach to studying economic bubbles and booms. (0:32:44)

•    Overview of the economic bubble and boom trends and crucial advice he has for investors regarding a market run-up. (0:36:18)

•    An explanation for negative bubble behaviour and how well market crashes align with investor expectations. (0:41:46)

•    The role of media in influencing investor behaviour, and whether long-term investors should ignore news from the financial media. (0:47:35)

•    What Professor Goetzmann has learned from studying bubble dynamics, and his advice for investing in transformative technologies. (0:52:50)

•    Professor Goetzmann’s book Money Changes Everything, his definition of money, and if money pre-dates trusted authorities. (0:57:47)

•    The role of money in finance and a brief outline of how finance played a role in the development of modern civilization. (1:02:13)

•    Professor Goetzmann’s definition of success. (1:06:08)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-248-prof-william-goetzmann-learning-from-financial-market-history-discussion-thread/23010

Book From Today’s Episode:

Money Changes Everything: How Finance Made Civilization Possible — https://amzn.to/3KqOYzX

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Prof. William Goetzmann on Twitter — https://twitter.com/wgoetzmann

Prof. William Goetzmann — https://som.yale.edu/faculty-research/faculty-directory/william-n-goetzmann

'History and the Equity Risk Premium' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=702341

'The present value relation over six centuries: The case of the Bazacle company' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X18302836?via%3Dihub

'A Century of Global Stock Markets' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=225683

'Will History Rhyme?' — https://jpm.pm-research.com/content/30/5/34

'New evidence on the first financial bubble' — https://www.sciencedirect.com/science/article/abs/pii/S0304405X12002541

'Bubble Investing: Learning from History' — https://www.nber.org/papers/w21693#:~:text=History%20is%20important%20to%20the,sample%20size%20for%20inference%20small.

'Negative bubbles: What happens after a crash' — https://onlinelibrary.wiley.com/doi/abs/10.1111/eufm.12164

'Crash Beliefs From Investor Surveys — https://www.nber.org/papers/w22143

'Crash Narratives' — https://www.nber.org/papers/w30195

There’s been a lot of interest in the topic of bank runs lately, and in today’s episode, we take a look at the most relevant research to help us better understand why they happen and how they can be avoided. Our conversation unpacks the 2022 Nobel prize-winning work of Douglas Diamond and Philip Dybvig and examines the three primary risks that banks need to navigate to avoid a bank run related crisis. We discuss the immense value that banks provide and how they keep the economy moving, before reflecting on how their most valuable services are inexorably tied to the risk of bank runs. You’ll also learn about the role of the media in triggering a bank run, and how the problems that arise with bank runs can be addressed through a combination of deposit insurance, bank regulation, and a diverse customer base — all of which are designed to keep depositors from panicking simultaneously. We also revisit a past conversation with Jonathan Clements, before catching up with him in real time to discuss his new book My Money Journey: How 30 People Found Financial Freedom - and You Can Too. Tune in for an in-depth look at bank runs, the value of writing your money story, and a timely reminder that when you’re making a deposit, you’re actually lending money to the bank.

Key Points From This Episode:

•    An introduction to the topic of bank runs including an overview of the Nobel prize-winning work done on the subject in 2022. (0:02:12)

•    The three primary risks you need to manage as a bank in order to be a successful business. (0:07:28)

•    Why liquidity, illiquidity, and duration risk can pose a problem, even for healthy banks. (0:12:47)

•    How news stories can create unwarranted panic and cause a bank run, even if a bank isn’t experiencing problems. (0:16:02)

•    The multiple equilibria of banks as outlined in the Diamond and Dybvig paper. (0:16:31)

•    How deposit insurance can function as a solution, at least in part, to bank runs. (0:19:34)

•    What the Diamond and Dybvig paper teaches us about the Silicon Valley Bank (SVB) bank run. (0:21:35)

•    The difference between households and banks, and the lessons households can learn from the narrative around bank runs. (0:22:59)

•    A quick recap of our conversation with Jonathan Clements and a review of his new book My Money Journey: How 30 People Found Financial Freedom - and You Can Too. (0:27:16)

•    We welcome Jonathan Clements back onto the show to discuss his new book and why he wrote it. (0:32:00)

•    What readers can expect to learn from Jonathan’s book, like the impact parents have on your financial beliefs, and what inspires people to reassess their finances. (0:34:31)

•    The impact of early habits on our finances. (0:38:36)

•    Jonathan’s insights into the financial service industry, its complexity, and how our risk tolerance can shift over time. (0:40:19)

•    Why regret in financial decision-making is virtually unavoidable and the value of writing your money story. (0:44:22)

•    Past and upcoming meetups, feedback from our listeners, and a reminder of our 23 in 23 Reading Challenge. (0:47:42)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-247-bank-runs-plus-jonathan-clements-on-my-money-journey-episode-discussion/22878

Book From Today’s Episode:

My Money Journey: How 30 people found financial freedom - and you can too — https://amzn.to/439D5Hw

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Jonathan Clements on Twitter — https://twitter.com/clementsmoney

Jonathan Clements on LinkedIn —https://www.linkedin.com/in/jonathanclements

Jonathan Clements on Facebook — https://www.facebook.com/ClementsMoney

Jonathan Clements — http://HumbleDollar.com

Episode 55: Jonathan Clements — https://rationalreminder.ca/podcast/55

'Bank Runs, Deposit Insurance, and Liquidity' — https://www.journals.uchicago.edu/doi/10.1086/261155

'Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking' — https://www.jstor.org/stable/10.1086/319552

'Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or . . .)' — https://www.jstor.org/stable/43910017

'Long-Horizon Losses in Stocks, Bonds, and Bills: Evidence from a Broad Sample of Developed Markets' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3964908

Human beings are undeniably complex, and what motivates us can often be a mystery, even to ourselves. So, how do we go about gathering and analyzing the data that will help us answer the most fundamental questions about our lives and our purpose? The answers may lie in an unexpectedly rich source of knowledge, our regrets. While regret is likely to have a decidedly negative connotation for most of us, it is also extremely powerful and can teach us a great deal about ourselves and what we value. It is an emotion that is present in all of us, and social scientists (like anthropologists and sociologists) have been fascinated by the subject for decades. Today on the show, we are joined by one such expert, Daniel Pink, author of the book The Power of Regret: How Looking Backward Moves Us Forward. In our conversation, Daniel shares details about the research he conducted for his book, how he determined the four main categories of regret, and what we can learn from our regrets by confronting them head-on. We also discuss Daniel’s 2011 New York Times Bestselling title, Drive: The Surprising Truth About What Motivates Us, and what he thinks about working from home in light of the COVID-19 pandemic. Daniel is an exceptional storyteller and is highly knowledgeable on the subjects of regret, motivation, and the important role they play in our lives. To learn more about the many facets of regret and how it can help you thrive, be sure to tune in today!

Key Points From This Episode:

●      Understanding regret as an emotion, why it differs from disappointment, and how regret can help us make better decisions. (0:03:00)

●      The four main types of regret (foundation, boldness, moral, and connections) and the methodology Daniel used to determine them. (0:07:30)

●      The role that outcomes play when it comes to boldness regrets. (0:13:09)

●      Why Daniel believes connection regret is so common, and what regret reveals about our values. (0:14:13)

●      The World Regret Survey that Daniel conducted as a systematic survey of regret, and his findings that regrets of inaction tend to stay with us much longer. (0:17:14)

●      What people can learn from past financial decisions that they regret and the challenge of addressing foundation regrets. (0:20:42)

●      The surprising benefits of regrets and how to learn from them. (0:21:31)

●      How regret anticipation can be used to help people save for retirement. (0:22:46)

●      Daniel’s system for addressing feelings of regret, why it’s important to confront them rather than wallow in them, and the importance of being kind to yourself. (0:24:01)

●      The overwhelming amount of decisions we make in our lives, when to choose the best versus something that is good enough, and how to optimize future regret. (0:27:56)

●      An overview of the many complex factors that motivate people, intrinsic and external motivators, and how Daniel’s research on regret affected his perspective on motivation. (0:31:16)

●      Daniel’s thoughts on working from home when considering autonomy, mastery, purpose, and motivation. (0:37:17)

●      The motivational model that Daniel sets out in his book Drive and some of the common misconceptions he has observed in reporting on his book. (0:39:33)

●      Why people are purpose maximizers, not profit maximizers, and how this should impact the leadership of a company. (0:41:26)

●      Daniel’s response to the question “How do you define success in your life?” and why he doesn’t think about the word ‘success’ very much. (0:47:08)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-246-daniel-h-pink-how-to-use-regret-episode-discussion/22775

Books From Today’s Episode:

The Power of Regret — https://amzn.to/42HArID

Drive: The Surprising Truth About What Motivates Us — https://amzn.to/40jDpl7

To Sell Is Human — https://amzn.to/3K9M2ci

Free Agent Nation — https://amzn.to/40knovb

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Daniel H. Pink on Twitter — https://twitter.com/danielpink

Daniel H. Pink — https://www.danpink.com/

Goal-setting is essential for personal and professional growth, helping individuals clarify their priorities, stay focused, and achieve success. We are pleased to welcome guests Samantha Lamas and Danielle Labotka to help us unpack the topic of goal-setting and how it relates to finance. Samantha Lamas is a Senior Behavioural Researcher at Morningstar and a recipient of the Montgomery-Warschauer Award for her research in financial planning. Her work centres on investor engagement and the factors that influence an individual's decisions when it comes to investing and managing their finances. As a Behavioral Scientist at Morningstar, Danielle Labotka examines the impact of various cognitive and linguistic factors on investors’ financial decisions. Her research involves studying investors' behaviours, preferences, and attitudes in both everyday and financial planning situations. In our conversation with Samantha and Danielle, we gain insights into financial behaviour and decision-making, the biggest barriers to goal-setting, what deeper goals are, and how to focus on them. Then, we speak to Mark McGrath, who is licensed in insurance, holds several professional designations, including a Chartered Investment Manager and a Certified Financial Planner (CFP), and has more than a decade of experience in the industry. Mark tells us the emotional story about his dad, what motivated him to share his experience, and why you need to start thinking about retirement now. Finally, we review a past episode with Dennis Moseley Williams, a book from Will Storr, and go through feedback from the Rational Reminder community. Tune in now!

Content Warning: Some of the discussion in this episode is about suicide. If you or someone you know is struggling with thoughts about self-harm, help is available. In Canada: 1.833.456.4566 or at https://suicideprevention.ca/resources/

Key Points From This Episode:

•    How we became acquainted with the Morningstar team and background about our guests. (0:02:29)

•    An outline of the common obstacles faced in identifying the correct goals, and how it impacts financial advisors. (0:06:08)

•    Danielle explains the approach used to analyze qualitative data and how the results compared to the Rational Reminder findings. (0:09:07)

•    How the goals identified changed as respondents progressed through the survey, and insights gained from the process. (0:11:23)

•    The main takeaway from the analysis of how people should approach goal-setting and how financial advisors can leverage the research findings. (0:17:53)

•    Outline of current gaps and what is the next step for behavioural research. (0:20:59)

•    Find out what compelled Mark to share the tweet about his dad and he takes us through the story. (0:23:00)

•    How the experience regarding his dad has influenced his work as a financial advisor. (0:40:50)

•    Mark shares how the experience has impacted his approach to life. (0:42:25)

•    A final takeaway message that Mark has for listeners. (0:44:23)

•    Highlights and key takeaways from a past episode with Dennis Moseley Williams. (0:45:52)

•    This week's book review of The Status Game, and why it is a must-read. (0:48:44)

•    Research findings concerning macro socio-economic status and work ethic. (0:54:03)

•    We discuss interesting news and events, riskless assets, the advantages of Twitter, and the latest reviews for the show. (0:57:05)

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-245-deeper-goals-and-retiring-with-purpose-discussion-thread/22660

Book From Today’s Episode:

The Status Game: On Human Life and How to Play It — https://amzn.to/40vVLix

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Samantha Lamas on Twitter — https://twitter.com/SamanthaLamas4

Mark McGrath on Twitter — https://twitter.com/MarkMcGrathCFP

Samantha Lamas on LinkedIn — https://www.linkedin.com/in/slamas/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/

'Mining for Goals' — http://static.fmgsuite.com/media/documents/8b5abbe8-0bf5-4321-9a4a-e04a82a11597.pdf

When it comes to the world of investing, there are many options available to consumers. The range of financial products available can be overwhelming and confusing. Additionally, investing is not only about the rate of return but also about what you are investing for and why. To help us unpack this complicated subject is Charles Ellis, a highly respected investment consultant and founder of Greenwich Associates, a strategy firm focused on financial institutions. He is also a famous author and has written several books on the topic of finance and investment, such as Winning the Loser's Game which provides readers with insights into making the best financial decisions in an increasingly unpredictable market. In our conversation, we discuss why indexing is the better investment option, how the investment space has changed over time, tailoring your investment decisions to suit your needs and desires, and why looking at the bigger financial picture is essential. We also delve into why investors can be their own worst enemies, what advisors and investors should avoid, the theme of his book Inside Vanguard, various investment strategies, and much more. Tune in and hear insights on indexing, wise investing, and how to win the ultimate game from industry legend Charles Ellis!

Key Points From This Episode:

•    Charles explains what he means by ‘a loser's game’ and provides examples. (0:03:51)

•    How the perception of active management has changed since publishing Winning the Loser's Game. (0:08:00)

•    He unpacks how the market and market competition has changed since 1975. (0:10:33)

•    Whether the sentiment towards active management has become too negative. (0:17:24)

•    Discover why Charles thinks indexing is the best and preferred investment option. (0:19:22)

•    His opinion on low-cost systematic strategies that seek higher expected returns in the market by owning riskier stocks. (0:24:55)

•    Why investors and advisors should avoid trying to time or beat the market. (0:27:19)

•    The value and importance of a well-defined investment policy statement. (0:33:34)

•    Find out how investors can protect themselves from themselves. (0:34:58)

•    An underappreciated approach that investors can take to be more successful. (0:36:26)

•    Hear whether fee differentials between index and active strategies are understood well. (0:37:17)

•    Charles shares how his mindset has changed over the course of his career. (0:41:47)

•    Find out if institutions and endowments respect low-cost index investing. (0:42:42)

•    What he thinks about bringing exotic asset classes to retail investors. (0:44:45)

•    Reasons why investment management should be considered a full-time profession. (0:46:50)

•    The biggest opportunities he sees in future for investment management. (0:49:20)

•    Hear about the difference between price discovery and value discovery. (0:50:09)

•    Discover why Vanguard has been so successful as a company. (0:53:27)

•    The theme of his book, Inside Vanguard, and if it relates to other businesses. (0:58:17)

•    Lessons he has learned regarding personal motivation and productivity. (1:00:28)

•    Charles tells us his definition of success. (1:03:35)

•    An outtake from the episode: the role of luck. (1:05:21)

Participate in our 23 in 23 Reading Challenge:

23 in 23 Reading Challenge — https://rationalreminder.ca/23in23

23 in 23 Reading Challenge on Beanstalk — https://pwlcapital.beanstack.org/

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-244-the-losers-game-episode-discussion/22558

Books From Today’s Episode:

Winning the Loser's Game: Timeless Strategies for Successful Investing — https://amzn.to/3FrNKmt

Inside Vanguard — https://amzn.to/3TlwrcG

What It Takes: Seven Secrets of Success from the World's Greatest Professional Firms — https://amzn.to/3Thgm7z

Capital: The Story of Long-Term Investment Excellence — https://amzn.to/3FpiHb5

Figuring It Out: Sixty Years of Answering Investors' Most Important Questions — https://amzn.to/3LknZZ8

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.  Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Debt can play an essential role in financial planning in several ways, such as financing large purchases, building credit, managing cash flow, and leveraging investments. However, it's important to remember that taking on too much debt can also have negative consequences that could impact your financial future. Therefore, it's vital to carefully consider your options and ensure that any debt you take on is manageable and aligns with your overall financial goals. In this episode, we talk about the essential aspects of debt and the role of debt in financial planning, and we unpack the two major forms of debt. Learn about debt in financial planning, consumption smoothing, the mindset and psychology behind debt, the risk that comes with debt, how credit cards impact how people interact with their money, integrated financial planning, and important aspects of mortgages. We also review a past episode with guest Dan Solin and the book, The Five Most Important Questions, which provides readers with a tool for self-assessment and transformation concerning productivity in the workplace.

Key Points From This Episode:

•   The role of debt in financial planning and the distinction between good and bad debt. (0:08:16)

•   A brief overview of mortgages, credit cards, and their associated risks. (0:11:31)

•   Consequences of borrowing money at a high-interest rate, and how financial literacy impacts effective debt management. (0:13:20)

•   The psychological aspects related to debt and consumer spending. (0:16:10)

•   Outlining the psychological interactions of established debt on mental well-being. (0:18:15)

•   Credit cards, what they offer, and their psychological effect on paying. (0:22:10)

•   Costs associated with not using a credit card. (0:28:45)

•   Why mortgage debt is considered good debt for the borrower and the different facets of mortgages to consider. (0:32:48)

•   The difference between fixed and adjustable mortgage rates and which is better. (0:37:25)

•   Highlights and key takeaways from a past episode with Dan Solin. (0:46:06)

•   A review of the book, The Five Most Important Questions and why we recommend it. (0:47:47)

•   How the questions from the book relate to household decision-making. (0:51:18)

•   A testament to Dan Wheeler and his contribution to the field of finance. (0:52:55)

•   Recent interviews with Ben, upcoming guests, other interesting financial content, and our book recommendations. (0:56:33)

•   A 23 in 23 book challenge update, feedback on the show, and upcoming meetups. (01:01:35)

Participate in our 23 in 23 Reading Challenge:

23 in 23 Reading Challenge — https://rationalreminder.ca/23in23

23 in 23 Reading Challenge on Beanstalk — https://pwlcapital.beanstack.org/

Participate in our Community Discussion about this Episode:

https://community.rationalreminder.ca/t/episode-243-the-role-of-debt-in-financial-planning-discussion-thread/22433

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.

Rational Reminder Website — https://rationalreminder.ca/

Shop Merch — https://shop.rationalreminder.ca/

Join the Community — https://community.rationalreminder.ca/

Follow us on Twitter — https://twitter.com/RationalRemind

Follow us on Instagram — @rationalreminder

Benjamin on Twitter — https://twitter.com/benjaminwfelix

Cameron on Twitter — https://twitter.com/CameronPassmore

Extra References:

The role of debt

'Life Cycle, Individual Thrift, and the Wealth of Nations' — https://www.jstor.org/stable/1813352

'Diversification Across Time' — https://jpm.pm-research.com/content/39/2/73

'Debt literacy, financial experiences, and over indebtedness' — https://www.researchgate.net/publication/282436829_Debt_Literacy_Financial_Experiences_and_Over_Indebtedness

'Restoring Rational Choice: The Challenge of Consumer Financial Regulation' — https://scholar.harvard.edu/files/campbell/files/elylecturejan182016.pdf

'Attitudes towards Debt and Debt Behavior' — https://onlinelibrary.wiley.com/doi/abs/10.1111/sjoe.12419

'Expenditure Cascades' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1690612

'Consumer debt and satisfaction in life' — https://www.researchgate.net/publication/341564180_Consumer_debt_and_satisfaction_in_life

'Good credit, bad credit: The differential role of the sources of debt in life satisfaction' — https://onlinelibrary.wiley.com/doi/full/10.1111/joca.12388

'Debt and Overindebtedness: Psychological Evidence and its Policy Implications' — https://spssi.onlinelibrary.wiley.com/doi/full/10.1111/sipr.12074

'Winning the Battle but Losing the War: The Psychology of Debt Management' — https://www.researchgate.net/publication/249644425_Winning_the_Battle_But_Losing_the_War_The_Psychology_of_Debt_Management

'Reducing debt improves psychological functioning and changes decision-making in the poor' —https://www.researchgate.net/publication/332472709_Reducing_debt_improves_psychological_functioning_and_changes_decision-making_in_the_poor

Credit cards

'The Effect of Payment Transparency on Consumption: Quasi-Experiments from the Field' — https://www.jstor.org/stable/40216497

'Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay' — https://www.researchgate.net/publication/233496571_Always_Leave_Home_Without_It_A_Further_Investigation_of_the_Credit-Card_Effect_on_Willingness_to_Pay

'Present-Biased Preferences and Credit Card Borrowing' — https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/3531/AEJ_Meier_Sprenger.pdf

'How Credit Card Payments Increase Unhealthy Food Purchases: Visceral Regulation of Vices' — https://www.jstor.org/stable/10.1086/657331

'Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in the United States and Canada' — https://www.bankofcanada.ca/2021/02/staff-working-paper-2021-8/

'Popular Personal Financial Advice versus the Professors' — https://www.nber.org/papers/w30395

'Buy Now, Pay Later Credit: User Characteristics and Effects on Spending Patterns' — https://www.nber.org/papers/w30508

Mortgages

'Report of the Household Finance Committee' — https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/HFCRA28D0415E2144A009112DD314ECF5C07.PDF

'Household Risk Management and Optimal Mortgage Choice' —https://www.jstor.org/stable/25053944

'Failure to refinance' — https://www.nber.org/papers/w20401

'A Model of Mortgage Default' — https://scholar.harvard.edu/files/campbell/files/mortdefault13022014.pdf