Randy Cass’s booming voice fills a room. Randy likens himself to Jim Cramer, the host of CNBC’s Mad Money. I disagree with that comparison — Cramer is obnoxious on Mad Money, whereas Randy Cass is dynamic but well spoken. Randy became a household name, at least among Canadian business watchers, when he co-anchored the show Market Sense on BNN with Catherine Murray. The show was a success. While both anchors were highly adept in the financial markets, their personalities were almost complete opposites, with an effect like the dynamic between Kevin O’Leary and Amanda Lang from the long-running CBC show The Lang & O’Leary Exchange. Randy Cass’s tenure on Market Sense wasn’t as long-running as Catherine’s, though, as he departed the show after three years, in 2012, to focus his energy on Nest Wealth, a robo-advisor company.
Nest Wealth provides investors access to low-cost, high-quality managed investment accounts at the click of a mouse. This is how Nest Wealth works: first they get to know you and your financial goals, second they invest your money in low-cost ETFs, and then third, they monitor and rebalance your portfolios. The philosophy that drives their investment accounts is based on the Efficient Market Theory (EMT) and the idea that passive investing beats active investing. With the exception of Som Seif, who actually develops ETFs that track the market, Randy is the only other individual featured in this book who actually stands by EMT, which was popularized by Burton Malkiel in his book A Random Walk Down Wall Street. This is what Randy has to say on the topic: “Studies demonstrate that over the long term, passive investing — building a portfolio to perform like the market instead of trying to beat it — does better than active management. Over the last five years in Canada, nearly 80% of actively managed Canadian Equity Funds failed to perform as well as the S&P/TSX Composite.” Compelling data like this makes Nest Wealth’s mandate to “be the market” instead of “beat the market” a viable option for investors. The active managers in this book have for the most part beaten the market, but the evidence is clear: the majority of managers won’t grow your money faster than the market.
All portfolios in Nest Wealth are built on three rules by David Swensen, the chief investment officer of Yale University, as available on the Nest Wealth website:
During the interview, Randy explained that he had suffered a bout of disillusionment, as we all do in some form, upon first entering the workforce. He started as an articling intern at a law firm, but saw that the career path to becoming a partner was fraught with stress and that the long days wouldn’t magically vanish once he “made it.” One Sunday morning, he was working across from a senior partner, and he realized that he would still be working Sundays at a law firm no matter how much success he had. The difference between Randy and the average person is that Randy actually made a crucial change in his life to redirect his path. He actually wrote to Jim Cramer, got his surprisingly astute advice, and then from then on, blazed a path through the investment industry.
Prior to founding Nest Wealth, Randy managed quantitative portfolios at the Ontario Teachers’ Pension Plan and institutional assets at Orchard Asset Management. Randy’s last startup, First Coverage, developed a proprietary technology-based system that measures the effectiveness of information given by the sell side to institutional investing clients. It won multiple awards as a top startup, including a financial services Morningstar award for best use of technology in Canada. First Coverage expanded into the United States and the U.K. and was ultimately sold to a U.K. company in 2011.
The interview with Randy is informative, though I’ve removed parts of some responses in which Randy sounded too much like a salesman for Nest Wealth to keep the information balanced. What you’ll glean, instead, is the effectiveness of Randy’s entrepreneurial drive and a strong foundation in the markets, as well as the merits of the Efficient Market Theory. As a bonus, Randy shares his experiences with FX trading — a job that he can laugh about now.
Efficient Market Theory (EMT): the belief that markets constantly incorporate all available information into the prices in the market, and that the markets are therefore efficient.
Foreign Exchange (FX) Trading: trading in and out of currencies, which are traded on the FX market.