After months of research, number-crunching, and receiving listener requests on the subject, today’s episode is devoted to introducing our new model ETF portfolios — which promise to offer a smoother ride to getting reliable returns. We open our conversation with a financial news roundup and by touching on our book of the week. We then dive into the theory behind our model by first exploring how market assets are priced. We discuss historical views on asset pricing models before looking at what academia has done to overcome challenges to the idea of market efficiency. Host Benjamin Felix methodically shows how our model addresses the five systematic risk factors that are included in the Fama-French Five-Factor Model. From emerging markets to stock size, we share insights into what our model accounts for and how this should impact your portfolio distribution and premium expectations. After reflecting on how factor-loaded indexes get higher returns without extra risk, we talk about the ETFs that we use for factor exposure, as well as how you can apply our findings to your portfolio. We round-off today’s show by chatting about the latest bad financial advice. Tune in to hear more about our findings in this, our last episode of 2020.
Check out the new model portfolios: https://rationalreminder.ca/
Links From Today’s Episode:
Rational Reminder on iTunes — \itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
The Almanack of Naval Ravikant — https://www.navalmanack.com/
Episode with Dr. Brian Portnoy and Josh Brown — https://rationalreminder.ca/podcast/126
‘Crashing a 5.2 Trillion Dollar Party’ — https://www.bloombergquint.com/markets/crashing-a-5-2-trillion-party-etf-world-sees-record-new-firms
‘The Death of Diversification Has Been Greatly Exaggerated’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2998754
‘The Relationship Between Return and Market Value of Common Stocks’ — https://www.sciencedirect.com/science/article/abs/pii/0304405X81900180
Franco Modigliani — https://www.econlib.org/library/Enc/bios/Modigliani.html
Merton Miller — https://www.nobelprize.org/prizes/economic-sciences/1990/miller/biographical/
Episode with Marlene Lee — https://rationalreminder.ca/podcast/79
‘The Vanguard Total International Stock ETF: Right Idea, Wrong Implementation’ — https://seekingalpha.com/article/4387311-vanguard-total-international-stock-etf-right-idea-wrong-implementation