The Rational Reminder Podcast

What if your biggest investment risk isn't the stock market—but your own income?
In this episode, we are joined by Patrick Adams, a PhD candidate at MIT, for a fascinating deep dive into how income risk, spending commitments, and liquidity constraints reshape what "optimal" investing actually looks like. Drawing on large-scale administrative tax data, Patrick challenges the conventional wisdom that young investors should be heavily—or even fully—invested in equities.
We explore why stocks appear safe over long horizons but become risky when real-world constraints force investors to sell at the worst possible times. Patrick explains how high-income households behave during market downturns, why their income risk is closely tied to stock market performance, and how consumption commitments like mortgages and childcare create hidden financial leverage. The conversation also introduces a new life-cycle model that incorporates these frictions—leading to surprisingly conservative optimal equity allocations for working-age investors. This episode reframes asset allocation as a problem of liquidity and risk management, not just return maximization.
 
 
Key Points From This Episode:
(0:00:00) Introduction to the podcast and overview of the episode's focus on asset allocation and new research.
(0:01:18) Patrick Adams' background, MIT PhD research, and how the paper was discovered.
(0:07:08) Why stocks are considered safe for long-term investors based on historical returns.
(0:08:37) When the "stocks for the long run" logic breaks down—forced selling during downturns.
(0:10:35) Evidence: High-income households sell stocks during crashes instead of buying.
(0:12:24) Data source: Administrative U.S. tax return data and its advantages/limitations.
(0:14:23) Investors shift into fixed income during crashes rather than staying invested.
(0:16:52) Financial reality: High wealth, but low liquid assets relative to income.
(0:18:00) Human capital: Income is risky and correlated with stock market downturns.
(0:20:15) Typical allocation: About 25% of liquid wealth in stocks for working-age households.
(0:22:36) Higher-income households have more volatile flows and greater exposure to stock risk.
(0:23:42) Income shocks drive stock selling—not just panic or behavioral mistakes.
(0:25:29) Why households draw down assets instead of cutting spending sharply.
(0:27:26) Consumption commitments (mortgages, childcare) act like hidden leverage.
(0:27:57) Key risk factors: Income volatility, low liquidity, and inflexible expenses.
(0:31:31) Traditional models vs reality: People don't cut spending—they use savings.
(0:35:25) New model incorporates income risk, market crashes, and spending frictions.
(0:38:33) Core finding: Optimal equity allocation for working-age investors is only 10–40%.
(0:40:55) Practical takeaway: Asset allocation is fundamentally about emergency funds.
(0:42:35) Higher fixed expenses require larger safe asset buffers.
(0:43:49) Counterintuitive result: Retirees may optimally hold more equities than workers.
(0:46:56) Scenario analysis: Selling during downturns destroys long-term returns.
(0:49:12) Key drivers of results: Income-stock correlation and spending rigidity.
(0:51:11) Why this model differs from others suggesting 100% equity portfolios.
(0:53:20) When 100% equity could make sense: low risk, high wealth, high risk tolerance.
(0:56:28) Personal impact: Patrick rethinks his own savings, risk, and spending commitments.
(0:57:34) Advice for listeners: Focus on liquidity, income risk, and fixed expenses.
(0:59:58) Defining success: Impactful research, teaching, and meaningful personal relationships.
 
 
Links:

Patrick Adams – MIT PhD Candidate: https://patrick-adams.com/ 
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 unpack the growing tension in private markets—private equity, private credit, and private real estate—and examine whether their long-standing appeal holds up under scrutiny. With increasing pressure to bring these investments to retail investors, the discussion explores how illiquidity, valuation opacity, and complex fee structures may be masking risks rather than reducing them. We break down how private assets are marketed, why their "smooth" returns may be misleading, and what recent events—like gated funds and forced asset sales—reveal about their true risk profile. 
 
Key Points From This Episode:
(0:00:00) Introduction to the episode and overview of private markets as the main topic.
(0:00:39) Clarifying PWL Capital's full-service wealth management approach beyond asset management.
(0:03:24) Why private markets are under scrutiny and recent negative developments across asset classes.
(0:06:36) The seductive sales pitch: higher returns, lower risk, and low correlation to public markets.
(0:08:32) Private assets explained: what they are and why they appear less volatile.
(0:10:06) "Volatility laundering" and the illusion of stability in private market valuations.
(0:13:51) Retail investors entering private markets and the risk of adverse selection.
(0:15:09) Liquidity challenges and the growing issue of gated funds.
(0:18:33) Why illiquidity is especially problematic for retail investors with uncertain cash needs.
(0:20:41) The debate over whether an illiquidity premium actually exists.
(0:23:56) Trade-offs between liquidity and volatility in portfolio construction.
(0:30:41) Evidence on private equity performance vs. public markets and the role of fees.
(0:31:39) High dispersion in private equity returns and challenges of manager selection.
(0:33:00) Continuation funds and evergreen structures raising valuation concerns.
(0:36:00) Secondary market sales, NAV manipulation concerns, and "NAV squeezing."
(0:40:00) Private credit risks, gating, and comparisons to publicly traded BDCs.
(0:44:00) Insurance companies allocating to private credit and potential systemic risks.
(0:45:02) Private real estate funds, liquidity issues, and IPO valuation shocks.
(0:47:43) Public listings revealing large gaps between NAV and market prices.
(0:49:34) Summary: private markets may be as risky as public ones, with added complexity.
(0:49:44) Larry Swedroe's critique and the debate over private market outperformance.
(0:52:00) Illiquidity premium vs. "smoothing as a service" debate.
(0:54:00) Manager skill, persistence, and the challenge of accessing top-tier funds.
(0:56:50) Final reflections on ongoing research and the importance of informed debate.
 
Links:

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)

What if factor investing in Canada became as simple—and affordable—as buying a single ETF?
In this episode, we are joined by Eduardo Repetto, CIO of Avantis Investors, and Caitlin Ebanks, Director of ETF Strategy at CIBC, to unpack the long-awaited launch of Avantis ETFs in Canada. This conversation explores how a partnership built on client-first principles and fee discipline is bringing sophisticated, evidence-based investing strategies to Canadian investors in a dramatically more accessible way.
We dive into the structure and philosophy behind the new ETF lineup, including how Avantis applies factor tilts, why implementation details like direct security ownership and low turnover matter, and how the new asset allocation ETF (CAGE) could simplify portfolio construction for DIY investors. Eduardo also shares insights into Avantis' research process, expected premiums, and the realities of tracking error, while Caitlin explains how CIBC is positioning these products within the Canadian ETF landscape.
This episode is a deep dive into the evolution of factor investing—covering product design, pricing, portfolio construction, and the broader shift toward low-cost, transparent investment solutions.
 
Key Points From This Episode:
(0:00:00) Introduction to the episode and the significance of Avantis launching ETFs in Canada.


(0:00:42) Why this launch marks a major step forward in accessibility for Canadian factor investors.


(0:02:52) Lower fees and simplified implementation remove key barriers to factor investing.


(0:04:55) Background on Eduardo Repetto and Caitlin Ebanks.


(0:08:12) Avantis surpasses $125B AUM and the drivers behind its rapid growth.


(0:10:20) How the Avantis–CIBC partnership came together and aligned on client-first pricing.


(0:13:04) CIBC's ETF strategy and rationale for partnering with Avantis.


(0:14:49) Overview of the Avantis ETF lineup launching in Canada.


(0:19:33) Fee structure, competitiveness, and expected MER approach.


(0:21:25) Eliminating operational cost uncertainty from investor fees.


(0:23:20) "Gas station sushi" and maintaining product quality.


(0:25:08) Why ETFs were chosen over mutual funds as the primary vehicle.


(0:28:29) Roles of Avantis and CIBC in managing and operating the ETFs.


(0:29:32) Direct security ownership vs. ETF-of-ETF structures and tax implications.


(0:31:23) Construction of the CAGE asset allocation ETF and its factor tilts.


(0:33:46) Expected outperformance (1.5–2%) and tracking error (3–4%) ranges.


(0:35:26) Transparency challenges and regulatory considerations in Canada.


(0:37:26) How CACE differs from the TSX through profitability and valuation tilts.


(0:40:13) Low turnover and tax efficiency considerations.


(0:42:05) Long-term commitment to the ETF lineup and viability concerns.


(0:43:44) Ongoing research and potential improvements to factor implementation.


(0:46:07) Current research focus: improving profitability forecasting.


(0:48:30) What excites Caitlin and Eduardo most about the launch.


(0:50:41) Why CAGE could transform how Canadians implement factor investing.
 
Links:

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 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)