Portfolio Engineering Concepts

Episode 67: Why owning individual stocks in a portfolio has a high probability of a negative outcome

Why owning individual stocks in a portfolio has a high probability of a negative outcome

By JAMES PARKYN & FRANÇOIS DOYON LA ROCHELLE

In this Episode, James Parkyn & François Doyon La Rochelle will be reviewing a paper published in July 2024 by professor Hendrik Bessembinder titles “Which U.S. Stocks Generated the Highest Long-Term Returns?”. 

His findings in this research paper make the case that owning individual stocks in a portfolio has a high probability of a negative outcome. 

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Read The Script:

1)   INTRODUCTION:

François Doyon La Rochelle:  

You’re listening to Capital Topics, episode #67! 

This is a monthly podcast about passive asset management and financial and tax planning ideas for the long-term investor.  

Your hosts for this podcast are James Parkyn and me François Doyon La Rochelle, both portfolio managers with PWL Capital. 

In our podcast today we will review the findings from a research report from Dr. Hendrik Bessembinder published in July 2024 entitled “Which U.S. Stocks Generated the Highest Long-Term Returns?”  

Enjoy! 

2) WHY OWNING INDIVIDUAL SOCKS IN A PORTFOLIO HAS A HIGH PROBABILITY OF A NEGATIVE OUTCOME  :

François Doyon La Rochelle: 

We are back after a short summer break, I hope our listeners also enjoyed some time off. I will start this off.  We believe our listeners will find Today’s topic very insightful.  The mantra about stocks is that in the long run, you will make money despite the volatility in the short term.  What gets lost in translation about this fundamental investing belief is that it only really applies to buying the market.  Our regular Listeners know we preach broad market ETFs as optimal for most individual investors.  So, it was interesting to see research that strongly supports this investing strategy.  This summer an academic financial economist we follow, Dr. Hendrik Bessembinder - a professor at Arizona State University’s W.P. Carey School of Business - published a paper that makes the case that owning individual stocks in a portfolio has a high probability of a negative outcome.  James, why don’t you report on Professor Bessembinder’s findings?  …Read More

Links:

- Which U.S Stocks Generated the Highest Long-Term Returns? by Hendrik Bessembinder at Department of Finance, W.P. Carey School of Business – Arizona State University 

Episode 53: The Debate About a Balanced Portfolio of 60% Stocks and 40% Bonds and a Review of the C.D. Howe Report on RRIF Mandatory Withdrawal Rules

The Debate About a Balanced Portfolio of 60% Stocks and 40% Bonds and a Review of the C.D. Howe Report on RRIF Mandatory Withdrawal Rules

By JAMES PARKYN & FRANÇOIS DOYON LA ROCHELLE

In this Episode, James Parkyn & François Doyon La Rochelle discuss a recent report from the C.D. Howe Institute that highlights the need to revamp the rules surrounding Registered Retirement Income Funds (RRIFs) withdrawals.

They also tackle the current debate over the classic way of building a balanced portfolio which is an allocation of 60% stocks & 40% bonds.

Read The Script:

1)   INTRODUCTION:

François Doyon La Rochelle: You’re listening to Capital Topics, episode #53!

This is a monthly podcast about passive asset management and financial and tax planning ideas for the long-term investor.

Your hosts for this podcast are James Parkyn and me François Doyon La Rochelle, both portfolio managers with PWL Capital.

In this episode, we will discuss the following points:

For our first topic, we will review and comment on the C.D. Howe Institute report on RRIF Mandatory Withdrawal Rules.

And next, for our main topic, we will tackle the debate regarding the classic 60/40 balanced portfolio.

Enjoy!

1) REVIEW OF THE C.D. HOWE REPORT ON RRIF MANDATORY WITHDRAWAL RULES :

François Doyon La Rochelle: In our first topic today, we will discuss a recent report from the C.D. Howe Institute that highlights the need to revamp the rules surrounding Registered Retirement Income Funds (RRIF) withdrawals because demographics and economic realities have changed since the rules were introduced. The report from C.D. Howe is entitled “Live Long and Prosper. Mandatory RRIF Drawdowns Raise the Risk of Outliving Tax-Deferred Saving”..…Read More

Episode 49: Professor Ken French: Five Things I Know about Investing

In this episode of Capital Topics, James Parkyn and François Doyon La Rochelle discuss an essay titled "Five Things I Know About Investing", written by the distinguished Professor of Finance Ken French who's a giant in Academic Financial Economics.  

Links:

- « Five Things I Know About Investing » by Kenneth R. French : Five Things I Know about Investing | Dimensional

-Podcast #48: 2022 Investing Lessons & 2023 Outlook : Episode 48: 2022 Investing Lessons & 2023 Outlook — Capital Topics

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