Episode 46: Raw Truth of Investment: Why the Best Investment Advisors Cannot Beat a Dart

Welcome back to the podcast everybody! Today we are running through our weekly topics as usual, giving you the best, worst and everything in between on investing in Canada. We are talking a bit about the really interesting and important SOHN Investment Conference and what goes on there. We also go into why random stock picks, chosen by a thrown dart, beat Wall Street’s elite and what we can learn from the SPIVA Report. From there we go pretty deep into the topic of low volatility and how its different permutations and readings can impact our investments. In our planning section of the program we talk about returns and how Canadian investing fits into the global landscape. Lastly, we finish off with our segment on the worst advice of the week, where we evaluate a claim that new kinds of ETFs with a new kind of value are what is needed in the market currently. For all this and more, be sure to join us today!

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Key Points From This Episode:

• A little about the SOHN Investment Conference. [0:01:51.3]
• Why the ‘best’ investment advisors cannot beat a dart. [0:04:42.4]
• Active funds versus index funds and the SPIVA report. [0:06:59.7]
• Low volatility stocks, a definition and understanding them better. [0:13:18.2]
• The most important metrics in the low volatility equation. [0:19:01.1]
• Average returns on mutual funds over time. [0:24:42.6]
• The worst advice of the week! [0:31:56.3]
• And much more!

Tweetables:

“The stock picks of the dart throwing smoked the professional stock pickers.” — @benjaminwfelix [0:03:29]

“As we can see from the data in this year’s report you were no better off in active fund than you were just being in the index. So that argument falls apart.” — @benjaminwfelix [0:12:40]

“You would expect a riskier asset to have a higher return, that’s how the market is supposed to price assets in an efficient market.” — @benjaminwfelix [0:15:08]

Links From Today’s Episode:

Rational Reminder Website — https://rationalreminder.ca/

SOHN Investment Conference — https://www.sohnconference.org

CNBC — https://www.cnbc.com/world/?region=world

The SPIVA Report — https://www.spglobal.com/_assets/documents/corporate/us-spiva-report-11-march-2019.pdf

Fama and French Three Factor Model — https://www.investopedia.com/terms/f/famaandfrenchthreefactormodel.asp

Dr Richard Novy-Marx —http://rnm.simon.rochester.edu

Pim Van Vliet — https://www.robeco.com/en/insights/authors/pim-van-vliet.html

Jack Bogle — https://www.cnbc.com/2018/12/14/jack-bogle-founder-of-vanguard-group-and-creator-of-the-index-fund-dies-at-age-89.html

Larry Swedroe — https://buckinghamadvisor.com/people/larry-swedroe/

Buckingham Strategic Wealth — https://buckinghamadvisor.com

FP Canada — https://www.fpcanada.ca

3 Value ETFs for a New Kind of Value Stock — https://www.barrons.com/articles/value-etfs-for-a-new-kind-of-value-stock-51556912664

Download the transcript of this episode:  The Rational Reminder Podcast Ep.46 – Transcript