Episode 299: The Most Important Lessons in Investing

In this episode, we unpack key tenants of investing and the quality of financial advice in Canada's banking industry. In our conversation, we present a list of lessons we have learned about investing, which has been consolidated from contributions by the Twitter community and the Rational Reminder Community. In our conversation, we discuss ways to beat the market, how narratives can impact the economy, and why timing the market is a bad investment approach. Discover why performance chasing is not a successful strategy, why incentives matter, and why economic growth is a poor predictor of investment success. Learn about the nuanced relationship between expected economic growth and stock returns, why wealth does not give you access to market-beating investments, and the effectiveness of investing in low-cost total market index funds. Finally, in our after-show segment, we delve into the quality of financial advice provided by Canada's six big banks, investment strategies, listener reviews, and much more. Gain valuable insights into navigating the complexities of investing and learn why simplicity, discipline, and skepticism towards overly complex or costly strategies are vital for financial success. Tune in now!   Key Points From This Episode:   (0:00:00) Introduction and outline of today’s topic: The Most Important Lessons in Investing. (0:04:55) Why you cannot outsmart the markets and what it takes to beat the market. (0:07:47) The notion that "this time is always different" during times of financial upheaval. (0:10:45) Explore the forward-looking nature of markets and their impact on decision-making. (0:12:08) Unpack the unreliability of market forecasts for making investment decisions. (0:14:48) Hear why time in the market beats timing the market. (0:16:11) Important aspects of funds and why investors should not chase portfolio performance. (0:19:20) Learn about the role of incentives in the distribution of financial information. (0:25:09) Common misconceptions about the link between economic growth and stock returns. (0:27:28) We discuss the importance of good financial planning over portfolio management. (0:30:51) Uncover the relationship between risk and expected returns in financial markets. (0:32:33) How the risk-return relationship changes over different time horizons. (0:34:59) Why fees and taxes matter and the nuances of permanent insurance.  (0:41:55) Find out why there is no such thing as a perfect investment strategy. (0:44:51) Tailoring your investment portfolio to meet your goals and sticking to it. (0:46:48) Investigate why there is no such thing as a passive investment. (0:50:59) Understanding why wealth does not provide access to market-beating strategies. (0:53:22) Why diversification is the only free lunch in investing. (0:58:58) Recommendations and pitfalls to avoid when assessing investments. (1:01:02) What the structure of a financial portfolio looks like for most people. (1:03:11) The aftershow: the state of Canadian banks, investment advice, and more.     Links From Today’s Episode:   Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/  Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://twitter.com/RationalRemind Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected] Felix — https://www.pwlcapital.com/author/benjamin-felix/  Benjamin on X — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/ Cameron on X — https://twitter.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://twitter.com/MarkMcGrathCFP The Economist — https://www.economist.com/  ARK Invest — https://ark-funds.com/ The Canadian Investor Podcast — https://thecanadianinvestorpodcast.com/ Episode 257: Giorgio Ugazio (Mr. RIP) — https://rationalreminder.ca/podcast/257 Mr. RIP on YouTube — https://www.youtube.com/@mr_rip The Money Scope Podcast: Episode 9 — https://moneyscope.ca/2024/03/15/episode-9-taxable-investing-in-canada/ Book a meeting with a PWL Financial Planner —    Books From Today’s Episode:   A Wealth of Well-Being — https://www.amazon.com/Wealth-Well-Being-Holistic-Approach-Behavioral/dp/1394249675 Wealthier — https://wealthierbook.com/   Papers From Today’s Episode:    ‘Where’s the Beef?’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4035890 ‘SPIVA® Canada Scorecard’ —  https://www.spglobal.com/spdji/en/documents/spiva/spiva-canada-year-end-2023.pdf ‘2018 Paper’ — https://doi.org/10.1093/rfs/hhy046 ‘CBC Article’ — https://www.cbc.ca/news/business/marketplace-hidden-camera-banks-1.7142427