The Long View

We’re doing something a little different this week. Amy Arnott and Dan Lefkovitz are flipping the microphone around and interviewing the anchor host of this podcast, Christine Benz, about her new her book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement. Christine is director of personal finance and retirement planning for Morningstar. She has been with the company since 1993, where she’s served as director of the fund research team, editor of Morningstar Mutual Funds, and cofounder of this podcast in 2019. She has written several books about investing. Christine is a proud graduate of the University of Illinois. Background Bio and archive [https://www.morningstar.com/people/christine-benz] How to Retire How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement [https://linktr.ee/christine_benz] by Christine Benz The Psychology of Money [https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681] by Morgan Housel Nonfinancial Aspects of Retirement Michael Finke [https://www.theamericancollege.edu/about-the-college/our-people/faculty/michael-finke] Jordan Grumet [https://jordangrumet.com/] Laura Carstensen [https://longevity.stanford.edu/people-2/laura-carstensen/] Annuities, Retirement Portfolio Planning, and Social Security Wade Pfau [https://www.wadepfau.com/] Retirement Income Style Awareness [https://retirementresearcher.com/landing/risa/] William Bernstein [https://en.wikipedia.org/wiki/William_J._Bernstein] Fritz Gilbert/The Retirement Manifesto [https://www.theretirementmanifesto.com/about/] “The Ultimate Pre-Retirement Checklist [https://www.theretirementmanifesto.com/the-ultimate-pre-retirement-checklist/],” by Fritz Gilbert, The Retirement Manifesto, March 27, 2018. Freedom for Fido [https://freedomforfido.com/] Mary Beth Franklin [https://marybethfranklin.com/] Jonathan Guyton [https://cornerstonewealthadvisors.com/who-we-are/advisory-team/#team-0] “Decision Rules and Maximum Initial Withdrawal Rates [https://www.financialplanningassociation.org/sites/default/files/2021-11/2006%20-%20Guyton%20and%20Klinger%20-%20Decision%20Rules%20and%20SWR%20%281%29.PDF],” by Jonathan Guyton and William Klinger, FPA Journal. Jamie Hopkins [https://www.forbes.com/sites/jamiehopkins/] The Bucket Approach Harold Evensky [https://en.wikipedia.org/wiki/Harold_Evensky] “The Bucket Approach to Building a Retirement Portfolio [https://www.morningstar.com/portfolios/bucket-approach-building-retirement-portfolio],” by Christine Benz, Morningstar.com, Nov. 23, 2022. “The Bucket Approach Is Flawed—Here’s a Better Way [https://www.forbes.com/sites/robertberger/2020/08/02/the-bucket-strategy-is-broken-heres-a-better-way/],” by Rob Berger, Forbes.com, Aug. 2, 2020. “Do You Need More Than 3 Buckets? [https://www.morningstar.com/retirement/do-you-need-more-than-3-buckets]” by Christine Benz and Susan Dziubinski, Morningstar.com, May 22, 2024. Housing Mark Miller [https://www.morningstar.com/people/mark-miller] Healthcare, Long-Term Care, and Estate Planning Carolyn McClanahan [https://lifeplanningpartners.com/how-we-help/meet-the-team/] Cameron Huddleston [https://cameronhuddleston.com/] Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances [https://www.amazon.com/gp/product/111953836X/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=111953836X&linkCode=as2&tag=cameronhuddle-20&linkId=e7111a9233c8f21a967be9cc4f2a46ed], by Cameron Huddleston, June 25, 2019. Jennifer Rozelle [https://www.indianaestateelderlaw.com/our-team/about-jennifer-rozelle/] Other “Carl Richards: ‘Let’s Focus on Being a Little Less Wrong Tomorrow [https://www.morningstar.com/portfolios/carl-richards-lets-focus-being-little-less-wrong-tomorrow],‘” The Long View podcast, Morningstar.com, May 13, 2020.

Our guest this week is Dr. Hendrik Bessembinder. Hank is the professor in Francis J. and Mary B. Labriola Chair in Competitive Business at Arizona State University’s Department of Finance. Prof. Bessembinder’s research focuses on market design and trading, including stock, foreign exchange, fixed income, futures, and energy markets, as well as on measuring long-term investment performance. He’s published numerous articles in the Journal of Finance, Journal of Financial Economics, and Review of Financial Studies, among others. In today’s conversation, we’ll focus on the most widely cited and influential of Prof. Bessembinder’s papers, which is entitled, Do Stocks Outperform Treasury Bills? The paper’s key findings could have implications for stock investors of all stripes. So, we were excited to talk to Hank and dig into his work. You can find this paper and other follow-on work that Hank has done on SSRN and we’ll link to it in the show notes. Background Bio [https://search.asu.edu/profile/10341] Research “Do Stocks Outperform Treasury Bills? [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447]” by Hendrik Bessembinder, ssrn.com, June 3, 2018. “Wealth Creation in the US Public Stock Markets 1926 to 2019 [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3537838],” by Hendrik Bessembinder, ssrn.com, Feb. 13, 2020. “Which US Stocks Generated the Highest Long-Term Returns [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4897069],” by Hendrik Bessembinder, ssrn.com, July 22, 2024. “Long-Horizon Stock Returns Are Positively Skewed [https://academic.oup.com/rof/article/27/2/495/6564241],” by Adam Farago and Erik Hjalmarsson, Review of Finance, April 6, 2022. “Why Has IPO Underpricing Changed Over Time? [https://www.jstor.org/stable/3666262]” by Tim Loughran and Jay Ritter, Financial Management Journal, Autumn 2004. “Long-Run Stock Market Returns: Probabilities of Big Gains and Post-Event Returns [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3873010],” by Hendrik Bessembinder, ssrn.com, Dec. 27, 2021. “Extreme Stock Market Performers, Part I: Expect Some Drawdowns [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3657604],” by Hendrik Bessembinder, ssrn.com, July 21, 2020. “Shareholder Wealth Enhancement, 1926 to 2022 [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4448099],” by Hendrik Bessembinder, ssrn.com, June 17, 2023. “Long-Term Shareholder Returns: Evidence From 64,000 Global Stocks [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251],” by Hendrik Bessembinder, Te-Feng Chen, Goeun Choi, and K.C. John Wei, ssrn.com, March 6, 2023. “Predictable Corporate Distributions and Stock Returns [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2287642],” by Hendrik Bessembinder, ssrn.com, Nov. 24, 2014. Other Center for Research in Security Prices [https://www.crsp.org/] (CRSP) “What Is Jensen’s Measure (Alpha), and How Is It Calculated? [https://www.investopedia.com/terms/j/jensensmeasure.asp#:~:text=Jensen's%20alpha%20is%20a%20measure,asset%20pricing%20model%20(CAPM).]” by James Chen, Investopedia.com, July 1, 2024.

Our guest on the podcast today is Kathy Stokes. Kathy is director of Fraud Prevention Programs with AARP, where she leads AARP’s efforts to educate older adults on the risks that fraud represents to their financial security. Kathy currently serves on the advisory council to the board of the International Association of Financial Crimes Investigators and on the advisory council to the Senior Issues Committee of the North American Securities Administrators Association. Kathy also serves on a Federal Reserve Working Group on scam information sharing. Before joining AARP, Kathy managed her own company, KSM Communications, and she also held various roles in public affairs at the Brookings Institution, Ernst & Young, Mercer, and the Employee Benefit Research Institute. She received her bachelor’s degree in rhetoric and communications at the University of Pittsburgh and her master’s in American government at Johns Hopkins University. Background Bio [https://www.fosi.org/people/kathy-stokes] International Association of Financial Crimes Investigators [https://www.iafci.org/] Senior Issues Committee of the North American Securities Administrators Association [https://www.nasaa.org/industry-resources/senior-issues/] Federal Reserve Fraud Definitions Work Group [https://fedpaymentsimprovement.org/news/press-releases/members-fraud-definitions-work-group/] Financial Fraud “6 Common Types of Investment Fraud and How to Identify Them [https://www.aarp.org/money/scams-fraud/info-2024/common-investment-scams.html#:~:text=In%202023%2C%20people%2050%20and,loss%20was%20at%20least%20%249%2C500.],” by Cheryl Winokur Munk, aarp.org [http://aarp.org/], April 11, 2024. “Data Spotlight: Who Experiences Scams? A Story for All Ages [https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2022/12/who-experiences-scams-story-all-ages],” by Emma Fletcher, ftc.gov [http://ftc.gov/], Dec. 8, 2022. “Data Spotlight: Social Media: A Golden Goose for Scammers [https://www.ftc.gov/news-events/data-visualizations/data-spotlight/2023/10/social-media-golden-goose-scammers],” by Emma Fletcher, ftc.gov [http://ftc.gov/], Oct. 6, 2023. “Americans Reported Losing a Record $10 Billion to Scams and Fraud in 2023 [https://www.aarp.org/money/scams-fraud/info-2024/2023-ftc-consumer-losses.html],” by Christina Ianzito, aarp.org [http://aarp.org/], Feb. 9, 2024. “Many Americans Worry About Becoming Scam Victims, New Report Finds [https://www.aarp.org/money/scams-fraud/info-2024/aarp-fraud-awareness-report.html],” by Christina Ianzito, aarp.org [http://aarp.org/], May 8, 2024. “Precious Metals Scams Target Investors Amid the Pandemic [https://www.aarp.org/money/scams-fraud/info-2022/precious-metals.html],” by Hanna Kozlowska, aarp.org [http://aarp.org/], Jan. 19, 2022. “What You Need to Know to Protect Yourself Against Bank Scams [https://www.aarp.org/money/scams-fraud/info-2023/bank-impersonation-fake-text-messages-emails-calls.html],” by Patrick J. Kiger, aarp.org [http://aarp.org/], Aug. 12, 2024. Crypto and AI “What to Know About Cryptocurrency Scams [https://www.aarp.org/money/scams-fraud/info-2019/cryptocurrency.html],” by Patrick J. Kiger, aarp.org [http://aarp.org/], March 15, 2024. “New Technology Has Supercharged an Old, Formidable Foe: Fraud [https://www.linkedin.com/pulse/new-technology-has-supercharged-old-formidable-foe-fraud-boudreau-ructe/],” by Martha Boudreau, linkedin.com [http://linkedin.com/], April 18, 2024. “AI Fuels New, Frighteningly Effective Scams [https://www.aarp.org/money/scams-fraud/info-2024/ai-scams.html],” by Christina Ianzito, aarp.org [http://aarp.org/], April 3, 2024. Senior Fraud “‛She Hooked Me’: How an Online Scam Cost a Senior Citizen His Life’s Savings [https://www.wsj.com/arts-culture/books/online-scammer-steals-live-savings-6a510f6d],” by Feliz Solomon, wsj.com [http://wsj.com/], June 8, 2024. “5 Ways to Prevent Elder Financial Exploitation [https://www.aarp.org/money/scams-fraud/info-2021/prevent-elder-financial-exploitation.html],” by John Rosengren, aarp.org [http://aarp.org/], June 10, 2024. “How to Keep a Loved One With Cognitive Decline Safe From Scams [https://www.aarp.org/money/scams-fraud/info-2024/protect-older-parents-from-scams.html],” by Christina Ianzito, aarp.org [http://aarp.org/], June 28, 2024. Resources Brokercheck.finra.org [https://brokercheck.finra.org/] Investor.gov [https://www.investor.gov/] BankSafe [https://www.aarp.org/ppi/banksafe/] Thinkingaheadroadmap.org [https://thinkingaheadroadmap.org/] aarp.org/scammap [https://www.aarp.org/money/scams-fraud/tracking-map/] AARP Fraud Watch Network Helpline: 877-908-3360 [https://www.aarp.org/money/scams-fraud/helpline.html] Internet Crime Complaint Center (IC3) [https://www.ic3.gov/]

On today’s podcast, we’ll chat with two global asset-allocation specialists, Omar Aguilar from Charles Schwab and Sébastien Page from T. Rowe Price. Omar is CEO and chief investment officer for Schwab Asset Management. Before joining Schwab in 2011, he worked at a variety of firms including Financial Engines, ING Investment Management, Lehman Brothers, Merrill Lynch Investment Management, and Bankers Trust. And Sébastien Page is head of Global Multi-Asset Investing at T. Rowe Price, where he oversees a team of investment professionals dedicated to the firm’s multi-asset portfolios. He’s a member of T. Rowe Price’s Asset Allocation Committee, and he’s also a member of the Management Committee of T. Rowe Price Group. Prior to joining the firm in 2015, Sébastien was an executive vice president at Pimco, where he led a team focused on research and development of multi-asset solutions. And he was a senior managing director at State Street Global Markets before that. Background Bios: Omar Aguilar [https://www.aboutschwab.com/omar-aguilar] Sébastien Page [https://www.troweprice.com/financial-intermediary/us/en/search.html/biokey/3647e633-86f5-44ec-8da9-37b7f0401e9e] Beyond Diversification: What Every Investor Needs to Know About Asset Allocation [https://www.amazon.com/Beyond-Diversification-Every-Investor-Allocation/dp/1260474879/?_encoding=UTF8&pd_rd_w=uGgLe&content-id=amzn1.sym.b0f81224-c575-416a-93d9-20e612928432%3Aamzn1.symc.c7d845cb-4910-45f5-9826-0c6eb52c18fa&pf_rd_p=b0f81224-c575-416a-93d9-20e612928432&pf_rd_r=TAZRKH2JANXV5C3MHSAK&pd_rd_wg=dvnDT&pd_rd_r=67e00eea-2290-45b9-9370-9a5cf7a545db&ref_=pd_hp_d_atf_ci_mcx_mr_ca_hp_atf_d], by Sébastien Page Current Economic Environment “Eight Ways RIAs, Investors View Markets Over the Next Year: Schwab [https://www.thinkadvisor.com/2024/06/14/8-ways-rias-investors-view-markets-over-the-next-year-schwab/],” by Dinah Wisenberg Brin, thinkadvisor.com, June 14, 2024. “The Fed Will Now Focus on Unemployment and Labor Markets, Says Charles Schwab’s Omar Aguilar [https://www.cnbc.com/video/2024/07/15/the-fed-will-now-focus-on-unemployment-and-labor-markets-says-charles-schwabs-omar-aguilar.html?&qsearchterm=omar%20aguilar],” Video interview on Closing Bell: Overtime, cnbc.com, July 15, 2024. “All Eyes on Central Banks [https://www.troweprice.com/financial-intermediary/us/en/insights/articles/all-eyes-central-banks.html],” 2024 Global Market Outlook Midyear Update, troweprice.com, June 2024. “Inflation’s Ripple Effect on the Economy [https://www.youtube.com/live/RNSGCEgNbTk],” Market Overtime interview with Omar Aguilar, youtube.com. “Why a Weaker Jobs Market Is Sparking Recession Fears [https://www.npr.org/2024/08/02/nx-s1-5060216/jobs-labor-employers-hiring-economy-recession],” by Scott Horsley, npr.org, Aug. 2, 2024. “Inflation Coming Down Too Fast Could Hurt Earnings, Says T.Rowe Price’s Sebastien Page [https://www.cnbc.com/video/2024/01/30/inflation-coming-down-too-fast-could-hurt-earnings-says-t-rowe-prices-sebastien-page.html],” Video interview on Closing Bell: Overtime, cnbc.com, Jan. 30, 2024. “The Four Horsemen of the Recession [https://www.linkedin.com/pulse/four-horsemen-recession-s%C3%A9bastien-page/],” by Sébastien Page, linkedin.com, June 2, 2023. “US Economy in ‘Solid Position’ Despite Slowing Job Growth, Says Schwab’s Aguilar [https://www.cnbc.com/video/2023/08/04/u-s-economy-is-overall-in-a-pretty-good-position-says-schwabs-aguilar.html],” Video interview on Squawk on the Street, cnbc.com, Aug. 4, 2023. “Special Topic: Can the Fed Cut Rates With Financial Conditions This Loose? [https://www.linkedin.com/pulse/special-topic-can-fed-cut-rates-financial-conditions-loose-page-72gme/?trackingId=NCcSCLToSJ6I4W3AfVrozA%3D%3D]” by Sébastien Page, linkedin.com, June 27, 2024. “2024 Global Market Outlook: Tectonic Shifts Create New Opportunities [https://www.linkedin.com/pulse/embracing-change-uncovering-opportunities-2024-s%C3%A9bastien-page-bbihe/?trackingId=J5m3Zf8rRQqOLTLvRROmHg%3D%3D],” by Arif Husain, Sébastien Page, and Justin Thomson, linkedin.com, Dec. 21, 2023. Asset Allocation “Perspective: Asset Classes Versus Risk Factors or Asset Classes and Risk Factors? [https://www.pm-research.com/content/iijpormgmt/50/3/32]” by Sébastien Page, The Journal of Portfolio Management, Dec. 31, 2023. “The Myth of Diversification Reconsidered [https://www.pm-research.com/content/iijpormgmt/47/8/124],” by William Kinlaw, Mark Kritzman, Sébastien Page, and David Turkington, The Journal of Portfolio Management, August 2021. “Personalized Target-Date Funds [https://www.pm-research.com/content/iijpormgmt/50/5/57],” by Kobby Aboagye, Sébastien Page, Louisa Schafer, and James Tzitzouris, The Journal of Portfolio Management, March 2024. “The Hottest Debate in Asset Allocation: Value vs. Growth Stocks [https://www.linkedin.com/pulse/hottest-debate-asset-allocation-value-vs-growth-stocks-page-curbe/?trackingId=mJmj9heLSIS1ftT5RAedjg%3D%3D],” by Sébastien Page, linkedin.com, April 25, 2024. “The Sector X-Ray [https://www.linkedin.com/pulse/sector-x-ray-s%C3%A9bastien-page/?trackingId=rJ0zIbhNTjKo3Ed00eUl0A%3D%3D],” by Sébastien Page, linkedin.com, Aug. 31, 2023. Valuation and Interest Rates “When Valuation Fails [https://www.linkedin.com/pulse/when-valuation-fails-s%C3%A9bastien-page-fpkie/?trackingId=pj0RQ95DSLWC4Zg7SsMjqA%3D%3D],” by Sébastien Page, linkedin.com, May 29, 2024. “Relative Valuation: A Crucial but Imperfect Guide [https://www.linkedin.com/pulse/relative-valuation-crucial-imperfect-guide-s%C3%A9bastien-page-d6fge/?trackingId=pOgsT%2BdkS5Wb1Ft91b%2Bq8Q%3D%3D],” by Sébastien Page, linkedin.com, Feb. 8, 2024. “Is the Market Broadening? [https://www.linkedin.com/pulse/market-broadening-s%C3%A9bastien-page-xvsme/?trackingId=%2F7b6XjefTUGUB3RpewHenw%3D%3D]” by Sébastien Page, linkedin.com, Jan. 8, 2024. “Let’s Get Real (About Interest Rates) [https://www.linkedin.com/pulse/lets-get-real-interest-rates-s%C3%A9bastien-page-zpjge/?trackingId=HFnTOPwmSbWpbx8%2B48h1eQ%3D%3D],” by Sébastien Page, linkedin.com, March 7, 2024. Other “The Sahm Rule Recession Indicator Definition and How It’s Calculated,” by Mallika Mitra, Investopedia.com [https://www.investopedia.com/what-is-the-sahm-rule-8637564], Aug. 5, 2024.

Our guest on the podcast today is Jackie Cummings Koski. She is a certified financial planner, and she is the author of a new book, F.I.R.E. For Dummies. FIRE stands for financial independence, retire early. Jackie is also the co-host of a podcast, Catching Up to FI, geared toward people getting a late start on financial independence. She is founder and CEO of Money Letters, LLC, which is geared toward providing financial education. She received her undergraduate degree in communications and journalism from Augusta University and her master’s degree in personal financial planning and financial therapy from Kansas State University. Background Bio [https://www.linkedin.com/in/jackiecummingskoski/] F.I.R.E. for Dummies [https://www.amazon.com/F-I-R-Dummies-Jackie-Cummings-Koski-ebook/dp/B0CXH6BZQY/?_encoding=UTF8&pd_rd_w=WXE5r&content-id=amzn1.sym.f76d456a-cb0d-44de-b7b0-670c26ce80ba&pf_rd_p=f76d456a-cb0d-44de-b7b0-670c26ce80ba&pf_rd_r=142-4022541-3232033&pd_rd_wg=CEaov&pd_rd_r=3d2feea5-fedf-4a98-9d22-35c131b927cd&ref_=aufs_ap_sc_dsk] Catching Up to FI [https://catchinguptofi.com/] podcast FInominal Women [https://www.finomenalwoman.com/] How It Began/Resources “Financial Independence, Retire Early (FIRE) Explained: How It Works [https://www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp],” by Alexandra Kerr, Investopedia.com, Aug. 16, 2024. “This Women Grew Her Wealth and Retired by Age 49—Here Are 5 Major Steps She Took to Do It [https://www.cnbc.com/select/5-things-to-retire-early-in-40s/],” by Jasmin Suknanan, cnbc.com, Jan. 2, 2024. Choose FI [https://www.choosefi.com/] 1500 Days to Freedom [https://www.1500days.com/] Root of Good [https://rootofgood.com/] Mad Fientist [https://www.madfientist.com/] Jamila Souffrant [https://jamilasouffrant.com/] Health Savings Accounts “Health Savings Account (HSA): How HSAs Work, Contribution Rules [https://www.investopedia.com/terms/h/hsa.asp],” by Julia Kagan, Ivestopedia.com, July 22, 2024. “How an HSA Is Helping One Woman Achieve FI/RE Toward Early Retirement [https://hsastore.com/articles/learn-hsa-fire-early-retirement.html],” hsastore.com. Other “Most US States Will Soon Require Personal Finance Courses in School [https://www.scrippsnews.com/us-news/education/most-us-states-will-soon-require-personal-finance-courses-in-school],” by Justin Boggs, scrippsnews.com, July 1, 2024. Better Investing [https://www.betterinvesting.org/] Affordable Care Act (ACA) [https://www.healthcare.gov/glossary/affordable-care-act/] “Jamila Souffrant: ‘What Type of Life Do You Actually Want to Live?’ [https://www.morningstar.com/podcasts/the-long-view/5376ecd7-c1cc-4226-a953-5ee313551cfb]” The Long View podcast, Morningstar.com, May 28, 2024.