RR

Today’s episode doesn’t have an external guest, but Benjamin and Cameron provide fascinating information on a vast range of topics. First, the discussion centers around the book that Cameron is currently reading and what it is teaching him about social networks, the ego-driven world of social media, and the benefits of anonymity online. The hosts share some of the findings from a very insightful discussion which took place on their anonymous community board platform around people’s thoughts on the positive and negative impacts of work. Happiness and the factors that cause it are a big theme in today’s show, as is the practice of ‘buying the dip.’ If you aren’t familiar with this term, you should have a decent understanding of what it is and why you shouldn’t do it by the time you finish listening. The hosts also discuss the incident that has been called “the largest financial meltdown since 2008,” who the RR Model Portfolios are aimed at, and some of the ways people react to crises (in terms of their investments.) Tune in for a whirlwind education on some very important topics!
www.pwlcapital...
Books From Today’s Episode:
The Hidden Psychology of Social Networks by Joe Federer -amzn.to/39QVwGy
The Geometry of Wealth by Brian Portnoy - amzn.to/2AZpIkg
The Happiness Hypothesis by Jonathan Haidt - amzn.to/2PLng8X
Links From Today’s Episode:
Rational Reminder on iTunes - itunes.apple.c....
Rational Reminder Website - rationalremind...
RR Community Board - community.rati...
Inside Archego’s Epic Meltdown, The Wall Street Journal - www.wsj.com/ar...
Rational Reminder is a participant in the Amazon Services LLC Associates Program. We earn a small revenue from qualifying purchases.

[@pnkrckmom]

I wish your podcasts had timestamps.

[@johnmcclane2401]

Key Points From This Episode: Benjamin and Cameron share statistics which show how the podcast is growing. [0:02:53] How the hosts find the guests that they interview on the podcast. [0:03:10] Staggering one year stock performance numbers. [0:04:22] Why Cameron is reading The Hidden Psychology of Social Networks, and what he is learning from it. [0:06:56] Community boards and the arguments for and against anonymous online communities. [0:08:02] The “epic meltdown” which makes up the news story for today’s episode. [0:10:17] Where the value of the Rational Reminder Model Portfolios lies, who will benefit from them, and who probably won’t. [0:13:53] Tools which make implementation easy. [0:21:00] Data on individuals participating in 401(k) plans and a discussion around how humans deal with crises. [0:22:12] The conversation around connection, control, competence, context that was sparked by the question of whether the goal of retiring is a good one to have. [0:26:43] Jonathan Haidt’s Happiness Hypothesis; the importance of love and work. [0:29:34] People don’t tend to prioritize time over money to a point where it is detrimental. [0:32:53] What it means to ‘Buy the Dip,’ the reasons that people do it and the problems with engaging in this practice. [0:33:15] The paper that Benjamin has produced on ‘buying the dip’ which will be out by the time you listen to this episode. [0:40:34] Why the ‘buying the dip’ strategy has been particularly costly for Americans, and the contrast between the cases Benjamin looked at in the USA, Australia, Canada and Japan. [0:45:45] What people don’t realize about leverage and how this impacts their decision to ‘buy the dip.’ [0:52:00] The cards created by the University of Chicago Financial Education Initiative. [0:53:53] Cameron asks Benjamin a question from one of the cards; coincidentally it is about happiness. [0:55:00] The qualities that Cameron and Benjamin believe are most important in someone who is starting a business. [0:57:05] from the website

[@rossmacintosh5652]

I've been investing since the late 1980's. Over the years, every time there was some "dipping" actively occurring it seemed to me at least that the dip would continue. While dipping there was never a sense that the bottom was being reached. When the market prospects would start to improve there was always a sense that it's just a temporary reprieve and that the dip was likely to continue. In other words, seeing the bottom only became apparent with hindsight. Same for seeing the 'peaks'. From these experiences I've learned not to even try to time the market. I've also learned to not even bother to look to others for such signals. While there are always others claiming to have the insights necessary to time the market, I've learned it is better not to listen.

[@grahamschild8156]

Thank you for publishing your analysis and thoughts. I am 20 years old and have watched every episode since the pandemic started. Your shrewd analysis and thoughtfulness will compound utility for me and my family for years to come. I admire your work and aspire to approach my life with the level of sensibleness that both of you do. Cheers

[@stevenstewart3171]

Every time I try to listen to these guys, I keep waiting for them to start talking about the topic. I end up giving up most of the time. Timestamps would be a big help.

[@Joe-jc5ol]

I have a friend like that, he waited for the dip, he kept his powder dry. When covid crisis happened he was too scared to invest, he kept saying "it will go down more" and he missed out, and he is still missing out.

[@johnmcclane2401]

What it means to ‘Buy the Dip,’ the reasons that people do it and the problems with engaging in this practice. [0:33:15] The paper that Benjamin has produced on ‘buying the dip’ which will be out by the time you listen to this episode. [0:40:34] Why the ‘buying the dip’ strategy has been particularly costly for Americans, and the contrast between the cases Benjamin looked at in the USA, Australia, Canada and Japan. [0:45:45]

[@EvilGenius007]

I think the "Talking Cents" cards are pretty cool. I have a modest collection of playing cards and I believe they said they're 108 card decks? I wonder if it would be possible to do the playing card treatment (2-A+2J)x2 in addition to having the questions on them. Look up Airplane Spotter Playing Cards if you're not sure what I mean, really all they need is the Rank/Suit indicators on the corners. Adding that bit of utility makes them more viable in my mind, even if most people will never use them that way.

[@AAkCN1]

Loved this episode again. Had to listen to the podcast instead of watching the youtube video because of the delay of upload :D Passiv was a great mention. I'll look into alternatives for german investors

[@alexandremorin8635]

I use the rationnal reminder portfolio for my RRSP, and with passiv, its very easy to rebalance my portfolio, thank you. My TSFA is in VEQT only.

[@NAVIKMusic]

Does it rack up a lot of fees rebalancing? In some regard, would I make sense to not focus nearly as much on rebalancing in the earlier stages of investing?

[@alexandremorin8635]

@@NAVIKMusic it is not when you are in the accumulation phase, because I buy to rebalance my portfolio. With questrade, It is 0$ fee to buy ETF

[@jambojack]

I think many people adopt a 'buy the dip' approach because they want to do better than the worse possible outcomes of lump sum investing rather than the average outcomes. So it would be interesting to compare 'buy the dip' to the lower quartile of lump sum (not to suggest buy the dip makes sense, but it may indicate why otherwise rational people still adopt the approach)

[@whereistomm]

feedback: i think the "buy the dip" here is being given a different meaning from what it has today on the internet. The recent use of it has been more towards the "average down" the cost per share over time for companies you hold a long position. It is not intended as buy when there is a dip with the intent to time the market.

[@jambojack]

In either case it requires someone to have money that is not invested, but that they are willing to invest. This is what creates the problem, due to the opportunity cost.

[@rossmacintosh5652]

While that "averaging down" mantra is common it does seem to disregard some basic psychology. Say there has been a dip, why buy today when the dip may continue? And if prices are going up doesn't it make sense to buy today rather than wait? For a growth stock, the price at the next dip can be higher than the price today. I don't really think there are answers.

[@bruceaulabaugh]

Your thoughtful commentary and discussion is very valuable to me. Thank you.

[@seena1993]

Very good , Episode. for my self I use the model portfolio and I also do for my girlfriends, however for my mother I use the all in 1 ETF's

[@nikolavrbanic647]

You're talking about the implementation as if it's rocker science. I'm from Europe and my broker has a "pie" function where you literally put the percentages of stocks/etfs you want to buy and then you get 2 buttons: "buy" and "rebalance". Which made me think, how often should you rebalance the RR portfolio? Is rebalancing recommended even if it implies tax consequences (I think no, just "rebalance" with new buys)

[@nikolavrbanic647]

The moment I wrote this you started talking about the tools that help :'D

[@AAkCN1]

Which broker do you use?

[@nikolavrbanic647]

@@AAkCN1 trading212

[@bruceaulabaugh]

'Buy the Dip' vs 'Dollar Cost Average' vs 'Buy and Hold' types of analysis must factor in an individual's retirement timing. Grant Williams talks about being sure you avoid 'The Big Draw Down'. A big draw down at time of retirement could be of such a duration that there is no bounce in time for capital to recover before substantial capital is pulled out of the market to fund the retirement AT SUBSTANTIAL capital loss.

[@franklintyler4652]

Right. I believe that’s the correct conclusion to draw. More accurately, if you’re trying to “buy the dip” because you think it will increase your overall returns that’s not the case.

[@bjohns347347]

Great content. May convince me to change some habits. I still think there could possibly be a case for using leverage during large drops.

[@jaetube92]

What about combining both strategies, like DCA with 80% of your monthly max. Invest and continue saving the other 20% per month for an eventual drop in the market to buy the dip? This should dramatically decrease the opportunity cost of not being invested at all of a traditional „buying the dip“ strategy. I haven’t found anything online regarding this hybrid model. Otherwise great podcast, really enjoyed the 4C concept, thanks! :)

[@bruceaulabaugh]

Australia and Canada are very commodity driven. Commodities are cyclical by nature, depending on USD cycles and world growth cycles. In Australia a great deal of investor returns are via dividends/distributions and thus the ASX index price changes are muted in comparison to low yield indices such as the SPX. The above factors mean that the ASX (and perhaps TSX) will be more cyclical and have lower annual compound price increases per year (vs USA). These factors, in turn, suggest that Buying the Dip will work better in commodity driven economies.

[@Shadow1986]

only morons use the ASX index (XJO). You need to use XNT to get net total return to index the entire ASX

[@bruceaulabaugh]

@@Shadow1986 Yes, and which did they use in their analysis? That point and the point that commodity markets trade differently than tech driven markets are the thrust of my comment.

[@Click.on.photo.icon....]

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[@bruceaulabaugh]

@@Click.on.photo.icon.... 12 hours time difference Perth WA to Toronto Canada at present. I will need to call sometime like 8pm-9pm your time (Toronto?) or 7am-8am your time.

[@Shadow1986]

@@bruceaulabaugh I don't think that's actually been responding. I think somethings up why to his account

[@og7952]

For the TFSA I usually suggest VEQT and VVL, just not to have usd in it.

[@gmarks1559]

Great podcasts, you guys should definitely do live streams!

[@dfgsdfhgdhggdffgfhds]

Excellent episode as always! I may have missed this in the episode, but: Is it better to DCA as one sets aside new funds for investment (e.g. 20% of a paycheque), or is it better to hold the cash and do a lump-sum purchase periodically (i.e. annually/semi-annually)?

[@aidanwarren4980]

Not that you still need the answer, but I can’t imagine how investing a lump sum all once would be better unless you’re using it to specifically invest in assets that can’t be purchased fractionally, like treasury bonds or certificates of deposit. The point of dollar cost averaging is to trade away some expected return in exchange for lower variance. Saving to invest in lump sums would have the same effect on expected return (because you’re waiting to invest) without the benefit of reducing variance. Edit: that strategy also exposes you to the risk of attempting to time the market. It’s easier to part with $200 every month than $2400 all at once! I think a lump-sum saver is more likely to attempt to time the market.

[@neovi6424]

What do you think about only owning US equities? i.e. VUN vs VEQT. I'm sure you're aware of people like Jack Bogle who advocate for it. Why is international diversification better, is it supported by historical data? I know you can chalk it up to US equity bias but does the fascination with diversifying outside the US make sense over any historical period of time given you're not concerned about volatility and only care about long-term ROI (i.e. 30-50 years).

[@neovi6424]

Especially given the fact that 40% of US corporate profits come from international markets anyways, and many parts of the world indeed are a lot less stable and far from the kinds of environments in which businesses are likely to thrive. Seems like a case of overdiversification imo

[@MarcusW123]

Is there a good RR episode or CSI video around why rebalancing is important, with examples of what would happen if you didn't rebalance (e.g. created a 100% equity portfolio with a value tilt and just left it as is).

[@lilyzhang3198]

Is monthly DCA the best way for DCA result? Or would semi-monthly be even better?

[@sheldonpetrie3706]

I get paid once a month, so I make a lump sum contribution then and place my trades. If I got paid bi-weekly then I would do contributions on that frequency. In short get your money invested as soon as you can. There is no optimal way one or another as each person's situation is different. I found it really helpful to make a plan and stick to it. If the markets are up I buy, if they are down I also buy. Try to ignore the day to day and month to month activity as you are more likely to sell or make a drastic change to your plan.

[@azhp42069]

Haven't even watched it yet but always enjoy the content, keep it up!

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[@EvilGenius007]

Your research on the titular topic sounds similar to "Timing the market: The absolute worst vs absolute best vs slow and steady" Reddit post. You use different--more robust--methodology, but a related thesis.

[@JamyOats]

Great podcast. Is the paper released yet?

[@jillbiggar1787]

Have been so enjoying your videos etc, each and every one. Just wanted to add to the "bad advice" little segment that you sometimes do. We have a group RSP through my work, mutual funds managed by RBC, and in their FIRST line of the information session/webinar we were asked to attend, RBC stated that the decline in their ability to beat the market was most due to "investor behaviour", intimating heavily in the rest of their "info session" that the fees we are paying are there to cover OUR mistakes, not theirs. Rude. Lol

[@ANDRSNJHNSTN]

48:38 saving this for later. That's crazy...

[@GarrettOHara]

11:30 Erasmian pronunciation! :D

[@windowpane1000]

I would buy some of the cards from your store!

[@Click.on.photo.icon....]

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[@patrickebert5748]

If you want to see samples of unhealthy balances of active leisure: spend some time in the endurance sports community :-D

[@Click.on.photo.icon....]

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[@windowpane1000]

Passiv is great!

[@Click.on.photo.icon....]

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[@Bsketball77]

Diamond Value hands!

[@featherboards1565]

Second nine. 😉

[@BuyBBStonk]

just buy vgro

[@safetyfirst2417]

Ну, вот этот эпизод заебись:)

[@Andres-ft3vy]

My only 🔮🔮