For the first part of today’s discussion, we are joined by Don Coletti from The Central Bank of Canada. He is here to talk about their upcoming recommendation for a monetary policy framework for the next five years which is incorporating public feedback into its development through the survey, Lets Talk Inflation. From there, we touch on some favourite books, Starbucks’s stored value card liabilities, the benefits of keeping inheritance in a separate account, new standards for financial planners and advisors proposed by the FSRA, and why SoftBank did not pile into call options and cause the rally in tech as the previous headlines suggested. Heading into the meat of the episode next, Ben shares some findings from a model he built inspired by a program written by one of this show’s listeners that tests historical safe withdrawal rates for factor loaded portfolios. Ben gets into a series of papers that speak to the diversification benefit of adding factors in this section too. He wraps up the discussion with a spanner in the works though, which looks at this question through the lens of time-series momentum rather than cross-sectional momentum. Here, he considers trend following as another type of diversification that has shown favourable impacts on portfolio returns in the data that exists. As usual, we wrap up with our bad advice of the week, hearing Cameron relate the bizarre ‘findings’ of a Forbes article claiming that active management beats passive investing in the face of piles of data to the contrary! Books From Today’s Episode: Thinking in Bets — https://amzn.to/34bBhA7 How to Decide — https://amzn.to/2RXKW7n Who Is Michael Ovitz? — https://amzn.to/3ctKOpH The Master Switch — https://amzn.to/3h8CRXO 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/podcast/117 Don Coletti — https://www.bankofcanada.ca/profile/donald-coletti/ Ted Seides Interview with Annie Duke — https://podcasts.apple.com/us/podcast/annie-duke-how-to-decide/id1223764016 ‘The Economy, Plain and Simple’ — https://www.bankofcanada.ca/publications/the-economy-plain-and-simple/ ‘The BIG list of behavioural nudges’ — https://blog.brinkercapital.com/the-big-list-of-behavioral-nudges/ ‘Will Ontario’s new law protect financial planning in name only or in substance too?’ — https://www.theglobeandmail.com/investing/article-will-ontarios-new-law-protect-financial-planning-in-name-only-or-in/ Rational Reminder Ep 93 with Cliff Asness — https://rationalreminder.ca/podcast/93 Reducing Sequence Risk Using Trend Following and the CAPE Ratio - https://www.tandfonline.com/doi/pdf/10.2469/faj.v73.n4.5?needAccess=true Macro-Finance and Factor Timing: Time-Varying Factor Risk and Price of Risk Premiums - https://papers.ssrn.com/sol3/Papers.cfm?abstract_id=3296418 Contrarian Factor Timing is Deceptively Difficult - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2928945 A Wealth Management Perspective on Factor Premia and the Value of Downside Protection - https://jpm.pm-research.com/content/43/3/33 Can Sustainable Withdrawal Rates Be Enhanced by Trend Following? - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3019089 Fama-French Factors and Business Cycles - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3082577 ‘The Death of Diversification Has Been Greatly Exaggerated’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2998754 Michael Kitces — https://www.kitces.com/\ ‘Stock Market: Goodbye Passive Indexing, Hello Active Stock Picking’ — https://www.forbes.com/sites/johntobey/2020/08/02/stock-market-goodbye-passive-indexing-hello-active-stock-picking/#6f656b6824de The Let’s Talk Inflation Survey —https://www.bankofcanada.ca/toward-2021-renewing-the-monetary-policy-framework/toward-2021-outreach/lets-talk-inflation/