Show Notes
In this episode, Ben Felix and Ben Wilson tackle a wide range of listener questions covering portfolio construction, home-country bias, currency exposure, ETF selection, retirement decumulation, leasing versus buying a car, discounted cash flow valuations, and the real work of portfolio management. Along the way, they revisit the Rational Reminder model portfolios, discuss how new products like CAGE have changed the DIY investing landscape, and explore whether Warren Buffett's long-term record still provides evidence that active management can outperform. The conversation also offers a behind-the-scenes look at PWL Capital's planning-centric approach to wealth management and why helping clients make better financial decisions often matters more than portfolio construction itself. Key Points From This Episode: (0:28) Why AMA episodes have become less frequent despite hundreds of listener questions waiting to be answered. (2:07) Ben shares observations from PWL's growing institutional investment business and why low-cost, planning-focused institutional advice remains surprisingly rare. (6:37) Revisiting the original Rational Reminder model portfolios and how newer products have simplified implementation. (10:09) Should U.S. investors underweight the U.S. market relative to global market-cap weights? (11:07) Research, home-country bias, and Ken French's arguments for overweighting domestic stocks. (18:11) Asset-allocation ETFs in retirement: Is there any benefit to separating stocks and bonds during withdrawals? (21:03) Leasing versus buying a vehicle, opportunity costs, depreciation, and convenience. (26:13) Currency exposure, RRSPs, withholding taxes, and common misconceptions about USD-denominated ETFs. (30:30) If Dimensional funds were unavailable, what would Ben choose instead? (31:26) Are there any popular ETFs investors should avoid? A look at Canada's largest ETF holdings. (38:28) Why discounted cash flow models often produce wildly different valuation estimates. (41:47) What portfolio managers at PWL actually do when they are not trying to beat the market. (45:57) Concentrated stock positions, client coaching, and helping investors make better long-term decisions. (50:02) Why financial planning questions are often portfolio management questions—and vice versa. (52:53) Helping clients navigate the transition from wealth accumulation to wealth preservation and spending. (58:06) Revisiting Berkshire Hathaway's long-term performance versus broad-market index funds. (1:02:35) The challenges of active management as assets under management grow larger. (1:04:22) Aftershow: Ben reflects on his experience appearing on Diary of a CEO with Steven Bartlett. Links From Today's Episode:
Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on YouTube — https://www.youtube.com/channel/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)
More from The Rational Reminder Podcast
In this episode, we are joined by Chris Murray, quantitative researcher and former equity quant and trader, and Marco Sammon, Assistant Professor of Finance at Harvard Business School, for an exceptionally nerdy deep dive into leveraged exchange-traded funds (ETFs). Drawing on their research, Chris and Marco challenge common assumptions about daily rebalancing, volatility drag, and the long-term performance of leveraged products, offering a more rigorous framework for understanding how these investments actually work.
In this episode, we welcome back Alex Edmans, Professor of Finance at London Business School and author of Grow the Pie, May Contain Lies, and The Madness of Markets. Drawing on academic research and real-world market examples, Alex explores how emotions, social influence, and psychological biases shape investor behavior—and why even apparently irrational markets can be difficult to beat.
In this episode, Ben Felix, Dan Bortolotti, and Kelly Thomas revisit some of the blind spots from their recent discussion about the finances of marriage before diving into a deeply nerdy discussion about leveraged ETFs. Kelly brings a different perspective to questions around spending roles, career sacrifices, financial autonomy, and the mental load of managing household finances.
In this episode, we're joined by Victor Haghani, founder of Elm Wealth and co-author of The Missing Billionaires, for a wide-ranging conversation about how different types of investors shape financial markets. Victor explains the framework behind his forthcoming paper, Who Killed the Random Walk?, and how fundamental investors, static investors, and extrapolators interact to produce momentum, excess volatility, and other market anomalies. We explore why return chasing is different from momentum investing, how investor flows and inelastic demand can move markets, and how the Merton share connects expected returns and risk to portfolio allocation. Victor also discusses long-short direct indexing and tax-loss harvesting, his experiment giving investors tomorrow's Wall Street Journal today, how AI performed in the same trading game, the role of leverage in financial markets, and when borrowing to invest might make sense. We finish with Victor's advice to his younger self: be intentional about financial planning, build financial literacy, and make a plan. Key Points From This Episode: (0:01:20) Lessons from The Missing Billionaires—practical insights on sizing and the Kelly criterion. (0:03:13) Who Killed the Random Walk?—persistent puzzles in stock returns: excess volatility, momentum, fat tails, booms, and busts. (0:05:06) Victor's three investor types: fundamental value investors, static investors, and extrapolators. (0:07:54) How static investors amplify market movements through inelastic demand. (0:11:11) How investor types interact to shape volatility, momentum, and equilibrium. (0:14:02) Wealth flows between investor types and how they create instability in simulations. (0:18:15) Distinguishing extrapolative return chasing from systematic momentum strategies. (0:20:34) How extrapolators create price trends that momentum investors exploit. (0:23:46) The Merton share—risk premiums, volatility, and risk aversion in determining equity exposure. (0:26:39) Combining value and momentum for higher Sharpe ratios. (0:32:34) Long‑short direct indexing and how leverage increases tax‑loss harvesting. (0:34:00) Why fees, complexity, and risk of direct indexing may not be worthwhile without alpha. (0:43:21) The "crystal ball" experiment—advance information, poor sizing, and excessive leverage. (0:49:28) The role of leverage in markets—ETFs, options, embedded leverage, and nonlinear instability. (0:52:50) Why leverage can create nonlinear interactions and amplify market instability. (0:52:55) When borrowing to invest can make sense, particularly for younger investors with substantial human capital and limited financial capital. (0:55:00) Why borrowing costs, expected equity returns, risk, and the possibility of losing a large portion of savings make leverage a difficult decision. (0:57:29) Why the risk-adjusted return from additional equity exposure matters more than the headline expected return. (0:58:42) The relationship between human capital and leverage—and why human capital is not necessarily bond-like. (1:00:01) Victor's advice to his younger self: be proactive, become financially literate, and make a lifetime financial plan. (1:02:18) Why dedicating time to financial education can meaningfully change how people approach financial decisions. Sources From Today's Episode — https://zbib.org/62e42e55fae14cb0a1aa62941d6996a2 Links From Today's Episode:
What happens when a small group of exceptionally wealthy people holds a growing share of a country's income and wealth? And what can economics tell us about the forces behind that concentration?