All Stocks, All the Time?

All Stocks, All the Time?

All Stocks, All the Time? In this episode, Kate and Veljko look at new research finding that the optimal retirement portfolio allocation is all stocks, no bonds. Is the advice we have been hearing all along, to put a larger and larger slice of our portfolios into bonds as we age, just wrong? Kate and Veljko try to make sense of it all, measuring returns, quantifying risks, and digging out the hard facts.   Timeline: 00:00 All Stocks, All the Time? 06:07 Welcome to Questions in Finance 06:45 The Team, the Data, the Machinery 11:28 Stocks and Bonds 17:05 Returns and Accumulations 22:18 Risks and Drawdowns 24:06 Behavioral Effects and Panics 26:20 Time Horizons 34:04 International Stocks Over Bonds 36:22 The Death of the Lifecycle 57:11 All Stocks, All the Time, for Everyone 01:12:20 The (Un)Safe Withdrawal Rate 01:18:42 On Balance   Bibliography: Anarkulova, Aizhan, Scott Cederburg, and Michael S. O’Doherty. “Stocks for the long run? Evidence from a broad sample of developed markets.” Journal of Financial Economics 143, no. 1 (2022): 409-433. Anarkulova, Aizhan, Scott Cederburg, and Michael S. O’Doherty. “Beyond the status quo: a critical assessment of lifecycle investment advice.” SSRN Working Paper (2023). Anarkulova, Aizhan, Scott Cederburg, and Michael S. O'Doherty. “Long-Horizon Losses in Stocks, Bonds, and Bills.” SSRN Working Paper (2023). Anarkulova, Aizhan, Scott Cederburg, Michael S. O’Doherty, and Richard Sias. “The safe withdrawal rate: evidence from a broad sample of developed markets.” Journal of Pension Economics & Finance 24, no. 3 (2025): 464-500. Munson, Lee. Rigged Money: Beating Wall Street at Its Own Game. John Wiley & Sons, 2011. Bali, Turan G., K. Ozgur Demirtas, Haim Levy, and Avner Wolf. “Bonds versus stocks: Investors’ age and risk taking.” Journal of Monetary Economics 56, no. 6 (2009): 817-830. Payet, Stéphanie. “Does investing in equity markets bring better retirement income.” OECD Pensions Outlook 2024 (2024): 75.   Soundtrack: The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

How Do Stock Markets React to Wars?

How Do Stock Markets React to Wars? In this episode, hosts Kate Holland and Veljko Fotak discuss how wars affect stock markets. Drawing on both existing academic research and historical records, Kate and Veljko discuss how markets tend to initially react negatively, with sharp declines, just as most of us would expect. But those initial sharp declines tend to be followed by “war rallies” and, overall, markets during wars display surprising low levels of volatility—what researchers call the “war volatility puzzle.” The episode includes discussions on winners and losers across sectors, flight to safety, currency markets, oil shocks, and a lot more fun and interesting stuff.     Timeline: 00:00 How Do Stock Markets React to Wars? 04:49 Welcome to Questions in Finance 08:18 The Real World 13:55 From Main Street to Wall Street 16:49 Rare Disaster Models 28:33 War Risk Is a Priced Factor 32:44 Market Timing 35:11 The Volatility Puzzle 39:40 Winners and Losers 50:11 Flight to Safety 56:32 Goodbye      Bibliography: Cortes, Gustavo S., Angela Vossmeyer, and Marc D. Weidenmier. “Stock volatility and the war puzzle: The military demand channel.” No. w29837. National Bureau of Economic Research, 2022. Barro, Robert J. “Rare disasters and asset markets in the twentieth century.” The Quarterly Journal of Economics 121, no. 3 (2006): 823-866. Barro, Robert J. “Rare disasters, asset prices, and welfare costs.” American Economic Review 99, no. 1 (2009): 243-264. Berkman, Henk, Ben Jacobsen, and John B. Lee. “Time-varying rare disaster risk and stock returns.” Journal of Financial Economics 101, no. 2 (2011): 313-332. Federle, Jonathan, André Meier, Gernot J. Müller, Willi Mutschler, and Moritz Schularick. “The price of war.” American Economic Review 116, no. 3 (2026): 791-827. Guidolin, Massimo, and Eliana La Ferrara. “Diamonds are forever, wars are not: Is conflict bad for private firms?.” American Economic Review 97, no. 5 (2007): 1978-1993. Hart, Oliver, David Thesmar, and Luigi Zingales. “Private sanctions.” Economic Policy 39, no. 117 (2024): 203-268. Hirshleifer, David, Dat Mai, and Kuntara Pukthuanthong. “War discourse and the cross section of expected stock returns.” The Journal of Finance 80, no. 6 (2025): 3589-3637. Hirshleifer, David, Dat Mai, and Kuntara Pukthuanthong. “War discourse and disaster premium: 160 years of evidence from the stock market.” The Review of Financial Studies 38, no. 2 (2025): 457-506. Schwert, G. William. “Why does stock market volatility change over time?.” The Journal of Finance 44, no. 5 (1989): 1115-1153. Taleb, Nassim N., “Fooled by randomness: The hidden role of chance in the markets and in life,” New York: Texere, 2001. Tajaddini, Reza, and Hassan F. Gholipour. “Trade dependence and stock market reaction to the Russia‐Ukraine war.” International Review of Finance 23, no. 3 (2023): 680-691. Wolfers, Justin, and Eric Zitzewitz. “Using markets to inform policy: The case of the Iraq war.” Economica 76, no. 302 (2009): 225-250.     Soundtrack: The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Should You Hire a Financial Advisor?

Should You Hire a Financial Advisor? In this episode, hosts Kate Holland and Veljko Fotak weight the costs and benefits of hiring a financial advisor. How much do advisors really cost? Do advisors lead to higher returns? How common is fraud? What are the mistakes people make in selecting advisors—and what mistakes do advisors make themselves? The conversation touches upon those questions and much more and, as always, the discussion is rooted in the latest academic research!   Timeline: 00:00 Should You Hire a Financial Advisor? 04:02 Welcome to Questions in Finance 04:39 Retirement Got Complicated 14:28 RIAs, CFPs, CFAs, and More Alphabet Soups 21:37 No, They Underperform 32:54 Yes, Advisors Get Investors from Cash to Stocks 42:34 No, there is Too Much Fraud 44:52 Yes, They Reduce Anxiety 51:10 Yes, They Provide a Variety of Services 55:58 No, Advice is not Customized 01:07:21 So, Who Should Get an Advisor?    Bibliography: Bergstresser, Daniel, John MR Chalmers, and Peter Tufano. "Assessing the costs and benefits of brokers in the mutual fund industry." The Review of Financial Studies 22, no. 10 (2008): 4129-4156. Bhattacharya, Utpal, Andreas Hackethal, Simon Kaesler, Benjamin Loos, and Steffen Meyer. "Is unbiased financial advice to retail investors sufficient? Answers from a large field study." The Review of Financial Studies 25, no. 4 (2012): 975-1032. Cici, Gjergji, Alexander Kempf, and Christoph Sorhage. "Do financial advisors provide tangible benefits for investors? Evidence from tax-motivated mutual fund flows." Review of Finance 21, no. 2 (2017): 637-665. Egan, Mark, Shan Ge, and Johnny Tang. "Conflicting interests and the effect of fiduciary duty: Evidence from variable annuities." The Review of Financial Studies 35, no. 12 (2022): 5334-5386. Egan, Mark, Gregor Matvos, and Amit Seru. "The market for financial adviser misconduct." Journal of Political Economy 127, no. 1 (2019): 233-295. Foerster, Stephen, Juhani T. Linnainmaa, Brian T. Melzer, and Alessandro Previtero. "Retail financial advice: does one size fit all?." The Journal of Finance 72, no. 4 (2017): 1441-1482. Gaudecker, Hans‐Martin Von. "How does household portfolio diversification vary with financial literacy and financial advice?." The Journal of Finance 70, no. 2 (2015): 489-507. Gennaioli, Nicola, Andrei Shleifer, and Robert Vishny. "Money doctors." The Journal of Finance 70, no. 1 (2015): 91-114. Guercio, Diane Del, and Jonathan Reuter. "Mutual fund performance and the incentive to generate alpha." The Journal of Finance 69, no. 4 (2014): 1673-1704. Linnainmaa, Juhani T., Brian T. Melzer, and Alessandro Previtero. "The misguided beliefs of financial advisors." The Journal of Finance 76, no. 2 (2021): 587-621. Stoughton, Neal M., Youchang Wu, and Josef Zechner. "Intermediated investment management." The Journal of Finance 66, no. 3 (2011): 947-980.    Soundtrack: The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

What Ten Geopolitical Trends Are Shaping Tomorrow’s Markets? With William Megginson

What Ten Geopolitical Trends Are Shaping Tomorrow’s Markets? With William Megginson What do financial economists make of the current geopolitical landscape? Hosts Kate Holland and Veljko Fotak, along with today's guest Bill Megginson, talk about the current state of geopolitics. They discuss tariffs, climate change politics, the internal political dynamics of China, Canada, and Russia, as well as newly emerging peace in the Middle East. And more, spanning the rearmament of the West, the increasing role of state ownership, the burgeoning space economy, and the projected impact of AI on global finance. Concluding with demographic trends and their potential to reshape the global economic landscape, this episode provides an overview of the most pressing geopolitical trends investors should be aware of.   Timeline: 00:00 Welcome to Questions in Finance 00:37 Introductions 10:17 Trend One. A New Tariff Regime 15:48 Trend Two. Climate Politics 21:02 Trend Three. Political Change in Canada, Russia, China, Israel 42:00 Trend Four. Peace in the Middle East! 50:06 Trend Five. Re-armament of the West 58:35 Trend Six. Europe's Ghosts 01:00:57 Trend Seven. The Re-emergence of State Capitalism 01:05:41 Trend Eight. The Space Economy 01:11:57 Trend Nine. AI is Taking Over the World 01:23:54 Trend Ten. Demographics Destiny? 01:31:34 Kate's Fear, Airborne Viruses and Pandemics 01:35:17 The Short Version...      Soundtrack: The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

How Does Policy Uncertainty Affect Investments?

How Does Policy Uncertainty Affect Investments? In this episode, university professors Kate Holland and Veljko Fotak explore academic research on the impact of policy uncertainty on investment decisions, markets, and firms. The episode underscores that high levels of policy uncertainty tend to depress corporate investment, hiring, and economic growth, as firms delay major expenditures. The conversation spans equity markets and higher risk premia, as well as 'flight to safety' effects in bond markets and the crucial question: Why are markets seemingly not reacting to the high levels of uncertainty in the summer of 2025?   Timeline: 00:00 How Does Policy Uncertainty Affect Investments? 06:01 Welcome to Questions in Finance 06:39 Defining and Measuring Policy Uncertainty 07:45 Economic Policy Uncertainty Index (EPU) 11:53 Historical Context and Validation of the EPU 16:47 Corporate Reactions to Policy Uncertainty 24:08 Impact on Mergers and Acquisitions 26:14 Research and Development During Uncertainty 30:14 Policy Uncertainty and Equity Markets 38:00 What is NOT Happening in 2025 47:42 Uncertainty and Bond Markets 49:39 Flight to Safety Mechanism 58:10 Political Uncertainty and Option Markets 59:06 Summary and Final Thoughts   Bibliography: Atanassov, Julian, Brandon Julio, and Tiecheng Leng. "The bright side of political uncertainty: The case of R&D." The Review of Financial Studies 37, no. 10 (2024): 2937-2970. Azzimonti, Marina. "Partisan conflict and private investment." Journal of Monetary Economics 93 (2018): 114-131. Baker, Scott R., Nicholas Bloom, and Steven J. Davis. "Measuring economic policy uncertainty." The Quarterly Journal of Economics 131, no. 4 (2016): 1593-1636. Bianconi, Marcelo, Federico Esposito, and Marco Sammon. "Trade policy uncertainty and stock returns." Journal of International Money and Finance 119 (2021): 102492. Bonaime, Alice, Huseyin Gulen, and Mihai Ion. "Does policy uncertainty affect mergers and acquisitions?." Journal of Financial Economics 129, no. 3 (2018): 531-558. Boutchkova, Maria, Hitesh Doshi, Art Durnev, and Alexander Molchanov. "Precarious politics and return volatility." The Review of Financial Studies 25, no. 4 (2012): 1111-1154. Brogaard, Jonathan, and Andrew Detzel. "The asset-pricing implications of government economic policy uncertainty." Management science 61, no. 1 (2015): 3-18. Gulen, Huseyin, and Mihai Ion. "Policy uncertainty and corporate investment." The Review of Financial Studies 29, no. 3 (2016): 523-564. Hassan, Tarek A., Stephan Hollander, Laurence Van Lent, and Ahmed Tahoun. "Firm-level political risk: Measurement and effects." The quarterly journal of economics 134, no. 4 (2019): 2135-2202. Julio, Brandon, and Youngsuk Yook. "Political uncertainty and corporate investment cycles." The Journal of Finance 67, no. 1 (2012): 45-83. Kelly, Bryan, Ľuboš Pástor, and Pietro Veronesi. "The price of political uncertainty: Theory and evidence from the option market." The Journal of Finance 71, no. 5 (2016): 2417-2480. Leippold, Markus, and Felix Matthys. "Economic policy uncertainty and the yield curve." Review of Finance 26, no. 4 (2022): 751-797. Nguyen, Nam H., and Hieu V. Phan. "Policy uncertainty and mergers and acquisitions." Journal of Financial and Quantitative Analysis 52, no. 2 (2017): 613-644. Pastor, Lubos, and Pietro Veronesi. "Uncertainty about government policy and stock prices." The Journal of Finance 67, no. 4 (2012): 1219-1264. Pástor, Ľuboš, and Pietro Veronesi. "Political uncertainty and risk premia." Journal of Financial Economics 110, no. 3 (2013): 520-545. Wang, Junbo, Chunchi Wu, Xiaoguang Yang, and Ye Zhou. "Policy uncertainty and corporate bond issuance costs." Review of Quantitative Finance and Accounting (2025): 1-42.   Soundtrack: The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.