James Choi - Portfolio Theory in a Spreadsheet
3/5/20261 hr 14 min
In this episode, we welcome back James Choi, Professor of Finance at the Yale School of Management, to unpack one of the most important—and misunderstood—questions in personal finance: How much of your portfolio should be in stocks? Drawing on his new paper, Practical Finance: An Approximate Solution to Lifecycle Portfolio Choice, James walks us through the classic portfolio choice problem first solved by Robert C. Merton, later extended by Francisco Gomes and co-authors, and now made dramatically more usable through a spreadsheet-based approximation. We explore how risk aversion, wealth, labor income risk, and expected returns shape optimal asse...
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First 90 secondsBenjamin Felix· Host0:00
[upbeat music] This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We are hosted by me, Benjamin Felix, chief investment officer, and Cameron Passmore, chief executive officer at PWL Capital.
Cameron Passmore· Host0:17
And welcome to episode three ninety-nine. Ben, we had feedback from a listener, at least one listener, that they wished that kind of the podcast would go back to its more mathy roots. Well, I would suggest that today absolutely crushed that request, and this conversation with repeat guest Professor James Choi, phenomenal. Phenomenal and interesting person in terms of what he's up to and how he thinks and how he communicates. Absolutely delivered on being more mathy, but also extremely practical. His whole brand is practical finance, right? Making complicated decisions easier, which is also what this podcast is all about. But wow, what a conversation. You have to queue it up, but man, I thought it was phenomenal.
Benjamin Felix· Host1:10
I saw James speak at a conference last year. He was actually speaking about Scott Seaderberg's paper. He was a discussant. It was a great discussion of that paper, and he made a bunch of really interesting points that he covers in one of his new papers. So I of course read that paper, which I think was a work in progress last