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- čas přidán 1. 07. 2024
- Today on Rational Reminder we take a deep dive into the evolution of modern portfolio theory. We kick the show off with some updates and reviews on some of the brilliant shows and books we are watching right now. A key item from this selection is Stolen Focus: Why You Can’t Pay Attention and the points it makes about the value of flow state for learning and creativity. After this week’s news stories, we get into the main topic, and Ben starts with a breakdown of portfolio theory as it was laid out by Harry Markowitz in 1952. From there we talk about research that shaped the current understanding of portfolio theory, exploring the distinction between the mean-variance efficient portfolio and the multi-factor efficient portfolio, and how they theoretically combine to make the market portfolio. One of the biggest takeaways here is that your financial asset portfolios can look the same in terms of asset allocation but the person with more macroeconomic risk in the remainder of their financial situation is taking on more risk. Additionally, even if somebody is the perfect candidate to be the mean-variance investor and they could theoretically tilt toward value, it doesn’t necessarily mean they have to. We wrap up our conversation by inviting our good friend Larry Swedroe onto the show to speak about his love of reading and share his methods for incorporating what he learns from books into his work and thinking.
Timestamps:
0:00 Intro
11:49 Cameron's Recommendations
20:10 News Stories of the Week
24:59 The Evolution of Modern Portfolio Theory
1:10:16 Discussion w/ Larry Swedroe
Books From Today’s Episode:
Stolen Focus: Why You Can't Pay Attention - and How to Think Deeply Again - amzn.to/3JCxJKw
Portfolio Selection: Efficient Diversification of Investments - amzn.to/3NoxzJd
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
Larry Swedroe - / larryswedroe
22 in 22 Reading Challenge - Join the Rational Reminder’s 22 in 22 reading challenge!
Ben’s Reading Code (22 in 22 Challenge): 7XWESMK
Cameron’s Reading Code (22 in 22 Challenge): N62IPTX - Jak na to + styl
Timestamps:
0:00 Intro
11:49 Cameron's Recommendations
20:10 News Stories of the Week
24:59 The Evolution of Modern Portfolio Theory
1:10:16 Discussion w/ Larry Swedroe
This may be the single greatest episode of the series (the other one coming close being episode 100 with Ken French). Thank you very much for the time and effort you put into it. More MPT FTW!
"In fact I'm reading right now on my second monitor during the pauses in our conversation." - Larry Swedroe
Hello from Romania! Thank you RR for a great episode, thank you Larry Swedroe for your contributions for retail investors!
Ben be looking like a young Harry Markowitz in this episode.
Mostly here for repetition but I certainly learned some things today. Thank you!
1:23:56 "The most important book is Atlas Shrugged..." - Amen!
You know it's going to be a good episode when Larry Swedroe is on
Wiggum
thanks for all the great content, helped me a lot with investment decisions. God bless both of you!
Awesome as always. Thanks alot!!!
This is as good as it gets! BR from Portugal!
Interesting video! It would be interesting to have someone talking about Risk Parity
I think the theory makes a lot of practical sense. If you talk to the average investor there's a ton of personal preference for a example hedging against a currency collapse (pretty irrational, but it's there. Especially if you ask Bitcoiners) avoiding brown, investing heavily into ESG and so on.
I eagerly await the Leasing vs Buying vidoe from Ben!
hi guys
I started reading Car Leasing Done Right.
Invaluable ressource !!
1:03:40 loool :D
Ben's reaction made me laugh
Atlas Shrugged by Ayn Rand is my favorite book!
Larry mentions that he recently recommended a "risk parity" book. Do you know what book he is referring to?
I think you missed the link to car leasing done right
imagine an suncream company and an umbrella company. both return 10 percent per year with opposite correlation to each other. they make up the whole stock market. you buy the whole market to reduce the risk or portfolio variation. the asset prices are based on the lower combined risk/variance of holding both companies so anybody buying individual stocks pays too much as the individual risk is higher.
Unless you have an information advantage which is what most people buying individual stocks think they have.
@@rationalreminder indeed! unless you have the weather forecast
You need to source Burt on this idea of sunscreen and umbrellas.
are the market portfolios, mean-variance and multi-factor efficient, mutually exclusive and conditional upon an investor's risk aversion? that is what I am understanding, if I am understanding it correctly.
Where can we find Larry's recommendations list?
twitter.com/larryswedroe/status/1472569662512771077?s=21&t=7HuLT8DShctXF33NCloQww
Modernism in literature is 1910 or something? Modern jazz is 1940. For situations like these, the word contemporary is useful to differentiate between the concept of modernism (might be old) and contemporary (present day).
I"m not from America. Is head shaving a Canadian ritual?
Hi Ben I know you’ve talked about the irrelevance of dividends before but does that change when it comes to dividend reinvestment plans? Does automatically growing your position beat capital appreciation?
Dividend reinvestment is a long-standing feature and it doesn't change the irrelevance of dividends. Dividends are just a decision by the company to distribute earnings to shareholders instead of reinvesting in the company, usually because the company is relatively mature.
The main way in which dividends are _not_ irrelevant for the investor is the increase in taxes.
I'd say this was a little too thick for a podcast. More like an evening with some graphs and equations.
But maybe there is someone who can understand you on the go.