Where do stock returns actually come from? The answers to this deceptively simple question might change your investing perspective. We dive into this foundational investing topic after sharing community updates and chatting about our books and TV series of the week. A key concept in understanding where returns come from, we unpack how stock returns are impacted when companies migrate across size and value portfolios. While exploring how migration differently affects value and growth stocks, we also break down why book equity and growth drive capital gains for growth portfolios but not for value stocks. Linked to this, we discuss stock convergence as they relate to growth and value stocks. Looking deeper into the stock returns, we assess research on why valuation changes in asset classes are critical in determining expected returns. We touch on how valuations lead to an unfair depiction of international stock performance before asking: how justified are valuation changes to value and growth stocks? From understanding stock returns, we jump into our mini-planning topic on Canadian work from home tax reductions, followed by our Talking Sense segment. We wrap our conversation by sharing some bad financial advice. Join us to hear what it is, and to learn more about the anatomy of stock returns.

Links From Today’s Episode:
Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/t....
Rational Reminder Website — https://rationalreminder.ca/
The Coaching Habit — https://boxofcrayons.com/the-coaching...
‘Migration’ — https://papers.ssrn.com/sol3/papers.c...
Hendrik Bessembinder — https://wpcarey.asu.edu/people/profil...
‘The Anatomy of Value and Growth Stock Returns’ — https://papers.ssrn.com/sol3/papers.c...
‘The Long Run Is Lying to You’ — https://www.aqr.com/Insights/Perspect...
Episode with Cliff Asness — https://rationalreminder.ca/podcast/93
‘Always Looking Back: Evidence-Based Investing Tells You What's Behind, Not What's Ahead’ — https://www.forbes.com/sites/forbesfi...
Rick Ferri — https://rickferri.com/
Daniel and Jorge Explain the Universe — https://www.iheart.com/podcast/105-da...