The Rational Reminder Podcast

In this special 400th episode, the Rational Reminder hosts reflect on 50 years of index investing and the profound impact it has had on financial markets, investor behavior, and the cost of investing. The episode features a panel moderated by Ben Felix at the New York Stock Exchange—hosted by Vanguard and S&P Dow Jones Indices—bringing together leading voices in the indexing world to explore how passive investing evolved and what it means for the future of capital markets. Ben is joined on the panel by Tim Edwards (S&P Dow Jones Indices), Jim Rowley (Vanguard), and Shelly Antoniewicz (Investment Company Institute) to discuss the mechanics of indexing, the myths surrounding passive investing, and the evidence on how index funds affect markets. They unpack questions about market concentration, price discovery, and whether indexing is changing the structure of capital markets.



Key Points From This Episode:
(0:00:04) Introduction to the Rational Reminder podcast and the hosts from PWL Capital.
(0:00:24) Celebrating the 400th episode and reflecting on nearly eight years of podcasting.
(0:01:09) Dan Bortolotti discusses the early days of podcasting and the transition from the Couch Potato podcast.
(0:02:11) The rise of podcasts and YouTube as major sources of financial education for investors.
(0:02:49) How Rational Reminder grew after Dan ended his previous podcast and the demand for Canadian investing content.
(0:03:47) The podcast reaches a record audience with over 384,000 views and downloads in January 2026.
(0:04:19) Institutional investors—foundations, endowments, and unions—show increasing interest in PWL's low-cost index approach.
(0:06:20) Why indexing can still be a difficult sell for institutional investment committees.
(0:08:25) Peer effects in institutional investing: committees often hesitate to adopt strategies that seem unconventional.
(0:09:11) 2026 marks 50 years since Vanguard launched the first retail index fund in 1976.
(0:10:08) Ben moderates a panel at the New York Stock Exchange on the future of index investing.
(0:11:55) Overview of the panel participants from Vanguard, S&P Dow Jones Indices, and the Investment Company Institute.
(0:13:07) Discussion of research papers presented at the event examining index investing's market impact.
(0:14:32) Historical context: the S&P 500 is currently as concentrated as it was in the mid-1960s.
(0:15:36) The largest companies in 1965—AT&T, Kodak, GM, IBM—eventually faded from dominance.
(0:17:43) A hidden advantage of cap-weighted indexing: investors automatically own future winners.
(0:20:59) Debate about whether today's tech-heavy market concentration differs from past cycles.
(0:23:30) The explosion of index funds and ETFs has created thousands of ways to implement passive strategies.
(0:26:42) Technical improvements in ETF implementation, including lower tracking error and better hedging.
(0:29:02) The "Vanguard Effect": index investing has driven massive reductions in investment fees.
(0:29:38) Index funds account for about 23% of total U.S. market capitalization, not the commonly cited 50%.
(0:32:48) Evidence suggesting index funds have not increased large-cap concentration in markets.
(0:34:25) Passive funds represent only about 1–2% of daily trading activity.
(0:36:16) Dispersion in stock returns remains high, meaning opportunities for active management still exist.
(0:38:12) Panel begins: defining passive investing and why the term is more complex than it seems.
(0:42:13) Who invests in index funds? Millions of households using them primarily for retirement savings.
(0:45:22) How advisors and institutions use ETFs to build diversified long-term portfolios.
(0:46:19) The surprising role of ETFs in trading and market liquidity.
(0:48:30) The proliferation of niche ETFs raises questions about whether indexing has strayed from Bogle's vision.
(0:49:49) Academic research offers conflicting views on indexing's effect on market efficiency.
(0:52:27) Evidence suggests index fund growth has not increased market volatility.
(0:54:25) Dispersion data shows indexing does not eliminate opportunities for stock picking.
(0:57:15) Index funds own only about 30% of the U.S. stock market, leaving the majority in active hands.
(0:59:42) Historical perspective: high market concentration has occurred before and eventually declined.
(1:02:14) Research remains inconclusive about whether indexing harms markets.
(1:05:25) Over 20 years, 94% of actively managed U.S. equity mutual funds underperformed the S&P 500.
(1:06:20) Post-panel reflections and discussion with the Rational Reminder hosts.




Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
 
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode, we welcome back James Choi, Professor of Finance at the Yale School of Management, to unpack one of the most important—and misunderstood—questions in personal finance: How much of your portfolio should be in stocks? Drawing on his new paper, Practical Finance: An Approximate Solution to Lifecycle Portfolio Choice, James walks us through the classic portfolio choice problem first solved by Robert C. Merton, later extended by Francisco Gomes and co-authors, and now made dramatically more usable through a spreadsheet-based approximation. We explore how risk aversion, wealth, labor income risk, and expected returns shape optimal asset allocation, why simple rules like "100 minus your age" aren't terrible but still costly, and how James and his co-authors managed to approximate a complex dynamic optimization model with an error of less than 0.1% in lifetime welfare.
 
Key Points From This Episode:

(0:04) Introduction and why this episode delivers on "mathy roots."
(1:10) James Choi's new paper: Making lifecycle portfolio choice solvable in a spreadsheet.
(5:15) The portfolio choice problem: How much should you allocate to stocks versus risk-free assets?
(6:09) The classic Merton (1969, 1971) solution and the "Merton share."
(8:00) The equity premium formula: Expected excess return ÷ (risk aversion × variance).
(11:20) Extending the model to risky labor income (Cocco, Gomes, and Maenhout).
(14:27) Why labor income behaves bond-like—even when it's risky.
(16:33) How wealth, risk aversion, and labor income characteristics affect optimal equity allocation.
(20:52) Transitory vs. permanent labor income risk—and why permanent risk matters more.
(23:04) Solving thousands of parameter sets to approximate optimal lifecycle allocations.
(27:09) How close is the approximation? ~3–4 percentage points on average, with (29:56) Comparing to rules of thumb: 100 minus age and 60/40.
(32:08) Why 0% equities is often far worse than 100% equities.
(33:33) What the optimal allocation typically looks like over the life cycle.
(38:55) Walking through the publicly available Google Sheet to calculate your allocation.
(44:39) Estimating your risk aversion using a coin-flip thought experiment.
(46:08) Forecasting future labor income and using wage imputation.
(48:05) Why housing is excluded—and why it's so hard to model.
(50:35) How often you should update your assumptions (hint: not often).
(53:06) Leverage, constant leverage ETFs, and why young investors might rationally use them.
(58:55) Discussing lifecycle advice from Scott Cederburg and co-authors.
(1:07:40) What practical finance problem James wants to tackle next (hint: the 4% rule and retirement spending).



Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore


Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode, we sit down with Tom Hardin, also known as "Tipper X," the former hedge fund analyst who became one of the most prolific informants in the largest insider trading crackdown in U.S. history. Tom walks us through his journey from rule-following soccer referee in Georgia to Ivy League graduate and rising Wall Street analyst—before crossing the line into insider trading at age 29. What makes this conversation so compelling is not just the crime, but how ordinary it felt at the time. Tom explains how small rationalizations, cultural pressures, ambition, and the normalization of questionable behavior gradually eroded his ethical boundaries. After being arrested and recruited by the FBI, he wore a wire 48 times and helped build over 20 cases in Operation Perfect Hedge, exposing widespread misconduct across the hedge fund industry. We explore the psychology of ethical failure, the "fraud triangle," moral licensing, and the difference between ethics in the classroom and ethics in the real world. Tom also reflects on redemption, forgiveness, mentorship, and how he now defines success after losing his finance career.
 
Key Points From This Episode:
(0:04) Introduction to Tom Hardin, former hedge fund analyst turned FBI informant.
(5:15) Tom's conviction: One count of securities fraud and one count of conspiracy after four illegal trades netting $46,000.
(6:11) Early life as a rule-following soccer referee and how ambition shaped his identity.
(8:07) The hedge fund world as a meritocracy—high pressure, high stakes, and performance-driven culture.
(9:13) How insider trading networks operated openly in certain hedge fund circles.
(12:21) The legal definition of insider trading: material non-public information and breach of fiduciary duty.
(15:25) How difficult it is to consistently generate returns without some form of edge.
(16:26) The first insider tip—and the rationalizations that followed.
(19:03) The "fraud triangle": pressure, opportunity, and rationalization.
(22:16) Placing the first illegal trade—and feeling almost nothing.
(24:39) Peer validation and the normalization of wrongdoing.
(28:38) The 6:30 a.m. arrest and being approached by the FBI.
(31:43) Deciding to cooperate—and becoming "Tipper X."
(36:24) Learning to wear a wire and extract incriminating statements over multiple meetings.
(38:26) Inside Operation Perfect Hedge: 81 individuals charged, 32 cooperators.
(39:28) The chilling effect on hedge funds and the possible decline of illicit "edge."
(42:12) Being publicly unmasked as Tipper X and the personal cost to his family.
(44:02) Why ethical failures are incremental—not sudden transformations.
(45:11) The gap between academic ethics and real-world psychological pressure.
(46:57) The role mentorship could have played—and how culture shapes behavior.
(50:29) Tom's view on hedge funds for retail investors: high fees, limited liquidity, and questionable value.
(52:04) Ethical drift, rationalization, and warning signs to watch for.
(52:35) Redemption: Owning mistakes fully and learning to forgive yourself.
(55:02) Redefining success—relationships, honesty, and meaningful contribution.
 
Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Dan Bortolotti — https://pwlcapital.com/our-team/
Dan Bortolotti on LinkedIn — dan-bortolotti-8a482310 



Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode, we welcome back return guest Hank Bessembinder for a deeply analytical conversation spanning leveraged ETFs, volatility, and the future of performance measurement. Hank walks us through his latest research on leveraged single-stock ETFs, clarifying the misunderstood concept of "volatility decay" and decomposing returns into rebalancing effects and frictions. The results are striking: meaningful underperformance relative to simple levered benchmarks, driven by both embedded costs and the mechanics of daily resets. In the second half, we shift gears to a more foundational question: What is a return, really? Hank challenges the dominance of arithmetic averages and even geometric means, arguing that neither truly captures the long-term investor experience. He introduces the concept of the sustainable return—a measure based on the cash flows an investment can support without depleting capital—and outlines how it could reshape academic finance and real-world financial planning.




Key Points From This Episode:
 
(0:01:03) Welcome back to Hank Bessembinder and overview of his recent research.
(0:06:16) What "volatility decay" really means—and why the term may be misleading.
(0:09:16) Why volatility does not necessarily reduce mean returns in constant leverage ETFs.
(0:10:11) Ex-ante decision-making and the wedge between mean and median outcomes.
(0:11:26) Single-stock vs. index leveraged ETFs: Similar mechanics, different magnitudes.
(0:12:52) Why past research has been so cautionary about long-term use of leveraged ETFs.
(0:15:53) How rebalancing costs differ for long and short leveraged products.
(0:16:57) The benchmark: Levered buy-and-hold versus constant daily rebalancing.
(0:19:46) Empirical results: Long funds underperform by ~0.8% per month; short funds by ~1% per month.
(0:21:10) Decomposing underperformance into rebalancing effects and frictions.
(0:24:15) The real (though rare) possibility of returns below –100% in leveraged products.
(0:27:04) Simulation results over 50 years: Skewness, negative medians, and rebalancing drag.
(0:28:38) Why volatility tends to coincide with reversals—and why reversals drive rebalancing costs.
(0:31:15) Practical guidance: Who, if anyone, should use leveraged single-stock ETFs.
(0:34:58) The limitations of arithmetic means and single-period models.
(0:36:55) Why aggregate investors are not buy-and-hold investors.
(0:39:17) The shortcomings of arithmetic averages, alphas, and Sharpe ratios for long-horizon measurement.
(0:42:38) Why log returns don't solve the core measurement problems.
(0:44:56) The case for dollar-weighted returns and the limitations of IRRs.
(0:48:18) Modified IRRs and their role in capturing aggregate investor outcomes.
(0:50:14) Introducing the sustainable return: Measuring what can be withdrawn without depleting capital.
(0:53:22) Expected sustainable return and its close relationship to the geometric mean.
(0:56:09) Proportional sustainable return and withdrawal-based performance measurement.
(1:00:00) Individual stock returns through the lens of sustainable returns.
(1:00:53) Nudging academic finance beyond the "econometric streetlight."



Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Cameron Passmore — https://pwlcapital.com/our-team/
Cameron on X — https://x.com/CameronPassmore
Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/



Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)

In this episode of the Rational Reminder Podcast, we are joined by Theresa Ebden, Vice President of the Investor Office at the Ontario Securities Commission, for a deep dive into how regulators are thinking about modern investor risks—from AI-powered scams to finfluencers and the gamification of investing apps. Theresa explains how the OSC works to protect investors through policy, education, behavioral research, and direct engagement with the public, and why investor education is one of the most powerful tools regulators have.



Key Points From This Episode:


(0:01:55) Overview of the OSC and why its investor research and education work matters.
(5:42) What the Ontario Securities Commission does and its mandate to protect investors and capital markets.
(6:25) Inside the OSC Investor Office: policy, education and outreach, and the investor contact centre.
(9:28) How the Investor Office identifies priority issues using inquiry data, behavioral insights, and global collaboration.
(12:11) The nature of investor inquiries: fraud, crypto confusion, complaints, and recovery room scams.
(14:01) How contact-centre data feeds into education, outreach, and policy responses.
(16:07) Overview of GetSmarterAboutMoney.ca and its role in investor education.
(20:43) Major retail investor risks today: AI-enhanced scams, finfluencers, dark patterns, and gamification.
(24:43) What to do if you're impersonated by AI in scam advertisements.
(29:28) What a "finfluencer" is and the different categories they fall into.
(31:01) Research findings on how strongly finfluencers influence investor decisions.
(32:55) Why non-investors are especially vulnerable to finfluencer advice and social-media scams.


(36:11) How investors can evaluate online financial advice and check credentials.
(38:02) Regulatory challenges in overseeing finfluencers and online financial content.
(41:04) How AI magnifies traditional scams and why AI-enhanced fraud is more effective.
(43:42) Mitigation strategies: education, just-in-time warnings, and system-level tools.
(47:25) Relationship investment scams and why they are especially damaging.
(52:53) Research on gamification in investing apps and its effects on investor behavior.
(55:25) The Get Smarter About Trading simulator and how it demonstrates gamification effects.
(57:19) How gamification can be used positively to improve diversification and outcomes.
(58:16) Theresa's perspective on success and her focus on improving the individual investor experience.



Links From Today's Episode:

Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582.
Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/
Rational Reminder on YouTube — https://www.youtube.com/channel/
Benjamin Felix — https://pwlcapital.com/our-team/
Benjamin on X — https://x.com/benjaminwfelix
Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/
Dan Bortolotti — https://pwlcapital.com/our-team/
Dan Bortolotti on LinkedIn — https://ca.linkedin.com/in/dan-bortolotti-8a482310



Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com)