Charles D. Ellis: The Loser's Game | Rational Reminder 244

When it comes to the world of investing, there are many options available to consumers. The range of financial products available can be overwhelming and confusing. Additionally, investing is not only about the rate of return but also about what you are investing for and why. To help us unpack this complicated subject is Charles Ellis, a highly respected investment consultant and founder of Greenwich Associates, a strategy firm focused on financial institutions. He is also a famous author and has written several books on the topic of finance and investment, such as Winning the Loser's Game which provides readers with insights into making the best financial decisions in an increasingly unpredictable market. In our conversation, we discuss why indexing is the better investment option, how the investment space has changed over time, tailoring your investment decisions to suit your needs and desires, and why looking at the bigger financial picture is essential. We also delve into why investors can be their own worst enemies, what advisors and investors should avoid, the theme of his book Inside Vanguard, various investment strategies, and much more. Tune in and hear insights on indexing, wise investing, and how to win the ultimate game from industry legend Charles Ellis!

Timestamps:
0:00 Intro
4:18 Charley defines a "Loser's Game"
8:21 Why money management is a loser's game
11:38 How the market has changed since writing about the loser's game
19:09 Whether or not the sentiment toward active management is negative
22:03 Types of investor who should not invest in low-cost index funds
30:27 What investors and their advisors should be focused on
37:25 The importance of a well-defined investment policy statement
39:01 What investors can do to protect themselves from themselves
40:43 The most under-appreciated action investors can take to be more successful
50:16 Charley's opinion on Vanguard's entry into private equity
55:27 Where Charley sees the biggest future opportunities in the field of investment
1:00:15 What has made Vanguard successful as a company
1:08:14 What Charley has learned about personal motivation and productivity
1:12:04 Charley defines success in his life
1:14:12 Outtake

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[thomas]

I was deeply pleased listening to this discussion. I appreciate Charles' wisdom and the nuances in his examples and arguments. Thanks so much for this!

[zarilliontrading]

Outstanding interview gentlemen! Charles is a another legend and terrific guest. Thank you Cameron and Ben! Great job!!

[whatisheartscontbe]

What a great talk. So thankful that such smart people exist!

[ajrobbins]

The outtake at the end is neat. Luck is the unsung hero of life that only ever gets credit for tragedy.

[Zadeska]

This was a great podcast!

I do wish they also had more debates with guests who don't share their point of view of only index investing. They interviewed Professor Brad Cornell in episode 151, but I don’t think there are many debates in their podcast series with people who don't share their philosophy that index investing is the best way to invest. I really hope they haven't adopted a "if they don't index invest, they're not smart enough to be on the podcast" mentality.

Would be really cool if they interviewed Dr. Aswath Damodaran.


Anyway, well done!

[rajeshbhatia]

I've been a big fan of Charlie and Jack for a long time. It's so nice to see his interview. Sad we won't see Jack on this show 😔

[robinspanier]

I have Conceded with my own Stock picking and Trading after Thousands of Hours wasted on figuring it all out.
There is simply no free lunch. Everything i found could be explained with risk factors at the end and a potential small alpha was always insignificant with trading costs and additional taxes to pay.

I feel free now that i index.
And good about it at the same time because i know that i gave it my best.

The only reason i managed to figure it all out was because i did ALOT of backtesting using my own software.
so i am not suprised that most people will never truly get it

[johntroy]

Thank you Charles for your insight.... I'm 58 and I just bought your book Winning The Losers Game.

[BradKaellner]

We might have a lot more information and computing power today, but human psychology hasn't changed

[haroldspanier]

Always the best quality content!! Thank you!

[AAkCN]

Great talk about the most important parts of investing kept simple

[mjs]

I like how he says it doesn’t apply to him and he can beat the market at any time. Lol.

[nthomp]

What on Earth, why did you shave your head if you have great hair