Feb 6, 2020
On today’s episode of The Rational Reminder, we once again cover
a host of topics. We begin with Cameron sharing his thoughts on a
book he recently finished, The Ride of a Lifetime, and
some of the lessons he took away from it. We then tackle three
listener questions, where we cover Mawer and index funds
hypothetically driving prices. Then, in the portfolio portion of
the show, we turn our attention to value premiums. Fama and French
recently released a paper on the topic, and Ben is naturally very
excited to share his assessment on it. We unpack how value has
performed in the US, unexpected big value findings, and other
takeaways from the paper. After that, we explore the total cost of
ownership in our planning section. These are expenses that you
incur when you begin investing. We shed light on some of them and
the effect they have on your investments. Finally, we end the show
with Tim Nash’s take on our assessment of sustainable investing in
episode 82. His insights offer an interesting perspective on the
topic. While we can’t say we’re fully on board with his active
position, it’s certainly a fascinating viewpoint. Don't miss out on
today’s jam-packed show!
Key Points From This Episode:
- Takeaways from the audience’s reception to episode 83 on
- Insights and lessons from The Ride of a Lifetime,
which Cameron recently finished. [0:04:13.0]
- More about Mawer: Data about and insights on how the company
has fared. [0:08:48.0]
- What would happen if index funds could hypothetically drive
- What’s interesting about the timing of Fama and French’s new
paper, The Value Premium.
- The thesis of Fama and French’s paper and what they found over
measured periods. [0:26:49.0]
- Why Fama and French used how value did relative to the market.
- How value performed between 1992-2019 and a surprising finding
about big value. [0:31:04.0]
- Ben’s takeaways from the Fama and French study.
- Conclusions from Fama and French’s 2019 paper, Volatility
- How other countries performed on market-wide value versus the
- Clarifying the confusion around the management expense ratio
and some empirical data. [0:40:00.0]
- The conflict of interest inherent in commission-based products.
- What the trading expense ratio is and how it works.
- Things similar to fees: Cash drags, large cap against
distribution, and withholding tax.
- ‘Bad advice of the week’: Globe and Mail
- An overview of Tim Nash’s services and his take on Ben’s ESG
- Tim’s critique of the assumption of lower returns when it comes
to equity. [0:57:07.0]
- Why externalities are so important with ESG even though they
are glossed over. [0:58:12.0]
- There is so much that we don’t know about ESG because it’s all
so new. [1:01:45.0]
- Why Tim believes we should invest in the green companies even
with the current market structure.
- Ben and Cameron’s take on Tim’s insights.