The Index Fund "Tipping Point" | Rational Reminder 225
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- Опубліковано 26 чер 2024
- Are index funds a menace to the market? Are pension funds still a wise way to secure your financial future? In this episode, we discuss index funds, the state-sponsored pension plan in Canada, and much more. First, we unpack the nuances of index funds and take a look at the impact that active and passive investors have on the market. We discuss current index fund trends, when to switch from a passive to an active investor, and the dreaded index fund tipping point. To help us understand pension funds, we also chat with Jordan Tarasoff, a financial planner at PWL Capital, about the recent controversy regarding state pension schemes in Canada, and he provides us with some valuable insights into the government’s upcoming plan. We switch up our usual book review to celebrate Financial Literacy Month and share five recommended books that will help you improve your understanding of finance. We also try something new by giving listeners a condensed overview of a previous episode with one of our favourite guests, Scott Rieckens. Finally, we go through some of the feedback and comments we’ve received from the growing Rational Reminder community about the show and our recent financial goals survey.
Timestamps:
0:00 Intro
9:14 Main Topic: The Index Fund Tipping Point
14:15 The Size of the Active Industry
18:14 The Market Portfolio and the Tangency Portfolio
23:28 Who Turns Passive?
33:22 The Paradox
35:18 Conclusion
38:42 Deferring CPP until Age 70 May Be Suboptimal
54:06 5 Book reviews for financial literacy month
1:02:49 1 Episode. 60 seconds
1:04:50 Talking Cents
1:09:18 Podcast / Community feedback
Participate in our Community Discussion about this Episode:
community.rationalreminder.ca...
Books From Today’s Episode:
Balance: How to Invest and Spend for Happiness, Health, and Wealth - amzn.to/35tiNPC
If You Can: How Millennials Can Get Rich Slowly - amzn.to/3UiPmnr
The Coffeehouse Investor's Ground Rules - amzn.to/3hqJsyQ
The Psychology of Money - amzn.to/3npH7G6
Think, Act, and Invest Like Warren Buffett - amzn.to/3WqgvXD
Links From Today’s Episode:
Rational Reminder on iTunes - itunes.apple.com/ca/podcast/t....
Rational Reminder Website - rationalreminder.ca/
Shop Merch - shop.rationalreminder.ca/
Join the Community - community.rationalreminder.ca/
Follow us on Twitter - / rationalremind
Follow us on Instagram - @rationalreminder
Benjamin on Twitter - / benjaminwfelix
Cameron on Twitter - / cameronpassmore
'On the Size of the Active Management Industry' - www.jstor.org/stable/10.1086/...
'Disagreement, tastes, and asset prices' - www.sciencedirect.com/science...
'Measuring skill in the mutual fund industry' - www.sciencedirect.com/science...
'Which Investors Matter for Equity Valuations and Expected Returns?' - papers.ssrn.com/sol3/papers.c...
'On index investing' - www.sciencedirect.com/science... - Навчання та стиль
I miss Ben’s perfectly shaved head, it was so clean and minimalist.
I know I was so shocked.
Ben may consider Ben’s Head to be in the vitriol category of commentary. 😂
As one of the three people listening to the end, I want to thank you for what you do and for putting out such great content!
If you haven't already, I would also appreciate a video, comment, or post on your thoughts about AVGE (Avantis All Equity Markets ETF). I'm sure other people would appreciate this too. If you have already done this, could you direct me to where you did it?
We discuss it with the CIO of Avantis in an upcoming episode.
-Ben
@@rationalreminder Awesome! Thank you!
Hadfield next?! That's awesome!
Great CPP information!
I'm surprised by how similar the CPP sounds to Social Security old age benefits in the US! There are so many shared traits.
We figured there was enough overlap to make it broadly interesting despite being Canada-specific.
Thank you.
Guys, it’s an interesting academic question. But to truly understand the active / passive debate, you need to layer in investor fees. Back when I was considering switching to a portfolio of passive ETFs, the decision might have been harder if the Fidelity’s (or any other fund advisor) of the world had been charging 10 bps rather the 100+ bps plus 12b 1 fees plus loads plus whatever costs could be loaded into the operating expenses of the funds.
Net alphas, meaning after fees, are 0 in equilibrium.
Ben went from looking like Ben Felix, MBA, CFA, CFP to Ben Felix, retired hockey player. Looking forward to seeing shaved head again!
I was not expecting pressure from our audience to shave my head.
-Ben
so betting on a flow from index funds back to smart money can be archived by betting on smallcap stocks?
You’re both incredible! ❤
Thank you, Ryan!
-Ben
great stuff
Holy smokes Ben has hair. Looking good!
Arbitrage opportunities always disappear as people become aware of them....
Markets are clearly not efficient.
46:50 Which people are most affected by this? Really? The old people who deferred...
Would it be even more beneficial to take the 0.6 hit to accelerate to 60 ??? For the people who are about the reach 60, that is... If they are past 60, it's already too late ;-)
1:14:00 People should know exactly what they have without having to check... or be confident in their strategy so they don't care...
1:19:00 A 2008-2010 comparison may actually be relevant in the current market... Can you please provide the citation?
Joining the "No net worth November" challenge. It's going to be especially difficult for me since I check my net worth almost every day.
I'd pay money to see Ben jumping on an indoor trampoline for 5 minutes
I would pay money not to be seen, so I suppose market forces will determine the outcome 😂.
-Ben
No one:
Absolutely NO ONE:
No one in the HISTORY OF TIME:
Ben Felix: "You know what would be cool? A 16 feet trampoline in the living room!"
Hey it’s cool isn’t it???
-Ben
@@rationalreminder Sounds rational enough... :)
@@rationalremindervery cool, just like I replaced my formal dinning table with a Radiating Sauna in my dinning room. Have a dinning table in my kitchen, Will certainly benefit more and utilize more from my Sauna than my dinning table. Same rational logic.
Ben, Your wife is a SAINT! LOL
Confirmed.
-Ben
Ben missed his morning head shave.
I have decided to stop cutting my hair for an undetermined amount of time.
-Ben
Isn’t it paradox where great active fund manager gives positive alpha so why would they go for index investing where you say if great active managers go to index investing, active management might start returning positive alpha.
Yes, it is called the "Grossman-Stiglitz Paradox".
-Ben
Ben, your hair is none of my business.
Within a month or two, your audience will get comfortable with it.
Your appearance is irrelevant to the valuable education you provide. Keep up the excellent work, Ben.
Cameron is great too. Awesome duo!
Gee thanks :)
Ben with hair is cursed.
I have always had hair it’s just a bit longer now.
-Ben
Hair?!?
Style drift.
-Ben