Who Should Invest in (Cap Weighted) Index Funds? | Rational Reminder 227

Тәжірибелік нұсқаулар және стиль

In today’s episode, we pull relevant quotes from past guests (namely John Cochrane, Gene Fama, and Jonathan Berk) to extricate who should own market cap funds. We look at the variable risks of value stocks and factor investing and hear counter-views on owning the market. We also delve into the hot topic of tax loss selling, with an overview of a recent Financial Analyst Journal paper on loss harvesting outcomes, sorted by investor profiles. This episode will get you up to date on the biggest finance news of the week, from crypto collapses to Amazon’s catapulting gains and losses. Tune in to hear all of this and more, including a recap of our conversation with Dave Goetsch and our Financial Literacy Month book reviews.
Timestamps:
0:00 Intro
8:51 Main Topic: Who Should Invest in Market Cap Weighted Index Funds?
11:42 CAPM
14:21 ICAPM
18:48 Average Investor Theorem
26:56 Empirical Multifactor Asset Pricing Models
35:10 Practical Challenges
41:30 Who Should Invest in Total Market Index Funds?
45:07 News
53:00 Tax-Loss Harvesting: An Individual Investor’s Perspective
1:04:54 6 Book Reviews for FinLit Month
1:11:50 1 Episode. 60 seconds
1:13:34 Podcast feedback
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Books From Today’s Episode:
The Geometry of Wealth - amzn.to/3Od9J3N
Retirement Income for Life - amzn.to/3GpkHRN
We're Talking Millions! - amzn.to/3UI3uaE
Common Sense on Mutual Funds - amzn.to/3AjUsIM
The Investment Answer - amzn.to/3UWeSPM
Money Like You Mean It: Personal Finance Tactics for the Real World - amzn.to/3g9bT7Q
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'An Intertemporal Capital Asset Pricing Model' - www.jstor.org/stable/1913811
'Risk and Return of Value Stocks' - papers.ssrn.com/sol3/papers.c...
'The Value Premium' - papers.ssrn.com/sol3/papers.c...
'A Consumption-Based Explanation of Expected Stock Returns' - repository.upenn.edu/cgi/view...
'Who Are the Value and Growth Investors?' - papers.ssrn.com/sol3/papers.c...
'Is There a Replication Crisis in Finance?' - papers.ssrn.com/sol3/papers.c...
'Amazon Becomes World’s First Public Company to Lose $1 Trillion in Market Value' - www.bloomberg.com/news/articl...

Пікірлер: 27

  • @stevenbrady440
    @stevenbrady4406 ай бұрын

    Opportunity cost is a completely a legitimate line of inquiry regarding any consumer purchase. The higher the expense, the more interesting that becomes.

  • @jangsenj8069
    @jangsenj8069 Жыл бұрын

    The quizz idea would be great

  • @rzqletum
    @rzqletum Жыл бұрын

    Thank you for the great content!

  • @jonathankr
    @jonathankr Жыл бұрын

    What? So what is the answer to the question/survey

  • @tbarbuto2345

    @tbarbuto2345

    Жыл бұрын

    @41:30 The average investor

  • @prestonlui6451
    @prestonlui6451 Жыл бұрын

    As a side note, I got a bit feeling a bit confused who the guy on the left is. Am not used to see Ben with hair

  • @chrissoventa5055

    @chrissoventa5055

    Жыл бұрын

    It's Bens Cousin actually

  • @lmao4982
    @lmao4982 Жыл бұрын

    Are there non cap-weighted index funds? What would be the purpose of that?

  • @chrissoventa5055

    @chrissoventa5055

    Жыл бұрын

    for example: there are equal weighted index funds (e.g. S&P500 equal weighted), DFA and Avantis index funds are only partly cap weighted (they overweight certain stocks based on characteristics)....

  • @RebeccaEvans
    @RebeccaEvans Жыл бұрын

    I think they're just surprised you have the ability to grow hair. Your well-sourced data is plenty interesting regardless of follicles. No worries

  • @ranthony1998
    @ranthony1998 Жыл бұрын

    I’m looking at getting into low-cost index investing for the first time and thinking about purchasing some vanguard total market etfs on Wealthsimple? I know the specific etfs I would like but I’m wondering if there’s a lower cost broker you would recommend?

  • @cajungames
    @cajungames Жыл бұрын

    How would I invest in pwl capital.

  • @cajungames

    @cajungames

    Жыл бұрын

    With pwl capital or tickers under you guys. Something preferably on wealthsimple

  • @tbarbuto2345

    @tbarbuto2345

    Жыл бұрын

    Accrue at least a million in invest able assets and reach out to them on their website

  • @cajungames

    @cajungames

    Жыл бұрын

    @@tbarbuto2345 nice ok I'll get to work than !

  • @NATOnova

    @NATOnova

    Жыл бұрын

    check out the ben felix model portfolio

  • @pistopit7142
    @pistopit7142 Жыл бұрын

    My portfolio: 70% - Global all cap index fund 10% - Global high yeld dividend fund 10% - Emerging markets index fund 10% - Global small cap index fund I know I want to be 100% in stocks. I just cannot explain in great detail why I have choosen these specific funds.

  • @zzzzzzzzzzz6

    @zzzzzzzzzzz6

    Жыл бұрын

    Why dividends?

  • @Martin-qb2mw

    @Martin-qb2mw

    Жыл бұрын

    ACWI is 88.5% global stocks and 11.5% EM so your portfolio resembles that with an overweight to EM and some other things. Looks reasonable.

  • @pistopit7142

    @pistopit7142

    Жыл бұрын

    @@Martin-qb2mw thanks for saying that it looks reasonable, I needed someone to tell me this :) Please note I am also overweight in small caps. I like to think that this is my exposure to size factor. But what do I know.

  • @jeffsim4191
    @jeffsim4191 Жыл бұрын

    Why is tracking error a problem? If you have no reason to know if one fund would do better than another.... Then who cares?

  • @zzzzzzzzzzz6

    @zzzzzzzzzzz6

    Жыл бұрын

    Who says you have no reason to know? You can read through their investing philosophies and look at their holdings

  • @jeffsim4191

    @jeffsim4191

    Жыл бұрын

    @@zzzzzzzzzzz6 you're assuming you know more than the market then.

  • @zzzzzzzzzzz6

    @zzzzzzzzzzz6

    Жыл бұрын

    @@jeffsim4191 correct. In very limited ways.

  • @Martin-qb2mw

    @Martin-qb2mw

    Жыл бұрын

    tracking error introduces behavioural risks. many people are just gonna sell what isn't working and those people should not factor invest.

  • @alankoslowski9473

    @alankoslowski9473

    Жыл бұрын

    @@zzzzzzzzzzz6 Yes, to me the prevalence of poorly informed day traders and junky small growth stocks is a good argument for some degree of factor slants. Factor slants tend to hold me weight in less-sexy, but still highly profitable small companies and have less weight in flashy, potentially over-hyped tech stocks. To me that seems like a good thing. As I like to think about it, the market is only as rational and efficient as all investors, and some aren't.

  • @williguelpa6597
    @williguelpa6597 Жыл бұрын

    pքɾօʍօʂʍ 😎

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