Oct 3, 2019
Welcome back to Rational Reminder Podcast! We kick off today’s
episode with a discussion about the gap between investor
performance and fund performance, the potential reasons why asset
allocation funds produced a positive gap and the role that timing
and volatility play in a negative behaviour gap. IPOs have been in
the media a great deal lately – and not for particularly positive
reasons and we tackle the topic with reference to specific
companies. We also talk about Dimensional’s paper on the issues
with IPOs since the early nineties and then we introduce you to
The Fama Portfolio, a valuable resource that we will
likely quote quite a bit from in the future! As we have mentioned
before, the use of empirical findings is incredibly limited without
a theoretical framework and we talk about why the conversation
around the efficient market hypothesis needs to change and why
general statements about markets are not to be paid too much
attention to. We discuss the bad advice for the week and the
importance of goal setting in retirement.
Key Points From This Episode:
- The news item for the week: the gap between investor and fund
- Possible reasons why asset allocation funds produced a positive
- How timing and volatility play into the negative behaviour gap.
- All the private equity venture capital IPOs that’s been covered
in the media lately. [0:06:51.0]
- Companies who took large haircuts from their last private
valuations before IPO. [0:08:05.0]
- How 1.3% of stocks delivered all the excess return between 1990
and 2018. [0:11:52.0]
- Dimensional’s findings regarding IPO issues in the States since
- The pyramid that should be used in making investment decisions.
- The complex yet high-value insight to be gained from The
Fama Portfolio [0:18:05:0]
- Why it is vital for empirical findings to be back up by a
theoretical framework. [0:20:32.0]
- The paradox of the efficient market hypothesis and what markets
are really like. [0:21:58.0]
- Goal setting in retirement, keeping focused and realizing that
risk is always there. [0:25:51.0]
- Bad advice for the week about the deferred sales charge.
- And much more!