The Rational Reminder Podcast

• Episode 361: Alex Edmans - Finding "The Truth" in Economics, Finance, and Life

  Today, Ben plays lone host for the first time as we welcome Alex Edmans to the show. Alex is a Professor of Finance at London Business School as well as an accomplished speaker, author, investment banker, and financial advisor. To start, Alex describes his involvement in the formation of a new law in the UK before defining ‘misinformation’ and where confirmation bias fits in. Then, we assess the impact severity of confirmation bias, biased search versus biased interpretation, the role of generative AI in confirmation bias, and the levels of susceptibility within confirmation bias. We also explore the role of black-and-white thinking in concealing the truth, Alex’s Ladder of Misinference as seen in May Contain Lies, the 10,000-hour rule and other famous statements of misinformation, and how the idea of a narrative may influence how people interpret and misinterpret facts. We end with how to guard against the plague of data mining in research, data as evidence and what this implies for evidence in financial economics, and Alex shares helpful advice for determining truth in any circumstance.   Key Points From This Episode:   (0:03:27) Alex Edmans walks us through the erroneous evidence that influenced a new UK law. (0:07:13) Misinformation; living in a post-truth world; and where confirmation bias fits in. (0:12:06) The severity of confirmation bias, and biased search versus biased interpretation. (0:18:19) Unpacking generative AI and the susceptibility thresholds of confirmation bias.   (0:21:25) How black-and-white thinking makes the truth more elusive. (0:25:40) Understanding Alex’s Ladder of Misinference as seen in May Contain Lies. (0:28:17) Debunking the 10,000-hour rule and other enduring statements of misinformation. (0:38:10) The second step on the Ladder of Misinference: Why facts are not data. (0:42:42) How the idea of a narrative influences how people interpret or misinterpret facts. (0:44:25) Why data is not evidence, and examining the plague of data mining in research. (0:48:36) Guarding against data mining and the consequences of investing with misinformation.   (0:53:01) When data is evidence, and what this says about evidence in financial economics. (0:55:49) Why evidence may not be proof. (0:59:14) Practical advice for seeking the truth for important decisions and in everyday life.   Links From Today’s Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/  Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemind Rational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected] Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Alex Edmans — https://alexedmans.com/  Alex Edmans on LinkedIn — https://www.linkedin.com/in/aedmans  Alex Edmans on X — https://x.com/aedmans  London Business School — https://www.london.edu/  Fulbright Fellows | MIT — https://ir.mit.edu/projects/fulbright-fellows/  Atkins — https://www.atkins.com/  ‘Matthew Walker's “Why We Sleep” Is Riddled with Scientific and Factual Errors’ — https://guzey.com/books/why-we-sleep/  ‘Grit: The Power of Passion and Perseverance | Angela Lee Duckworth | TED’ — https://www.youtube.com/watch?v=H14bBuluwB8    Books From Today’s Episode:   May Contain Lies — https://maycontainlies.com/  Grow the Pie — https://mybook.to/Grow-the-Pie Outliers — https://www.amazon.com/Outliers-Story-Success-Malcolm-Gladwell/dp/0316017930  Why We Sleep — https://www.goodreads.com/book/show/34466963-why-we-sleep  Start with Why — https://www.amazon.com/Start-Why-Leaders-Inspire-Everyone/dp/1591846447  Grit — https://www.amazon.com/Grit-Passion-Perseverance-Angela-Duckworth/dp/1501111108    Papers From Today’s Episode:   ‘CEO-Employees Pay Ratio, Employees’ Productivity and Firm Performance: Evidence from UK’ — https://www.researchgate.net/publication/391787593_CEO-Employees_pay_ratio_employees'_productivity_and_firm_performance_evidence_from_UK  ‘A Theory of Fair CEO Pay’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4294589 

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• Episode 360 – Gerard O'Reilly: The Components of Net Returns

  What if “just buying the market” isn’t the end of the story? In this episode, we are joined by Gerard O’Reilly, Co-CEO and Co-CIO of Dimensional Fund Advisors, for a deep dive into what really drives net investment returns. Gerard returns to the Rational Reminder podcast to explain the key principles that differentiate Dimensional’s approach from traditional indexing—and why implementation, flexibility, and detail matter so much more than investors might think. We explore the concept of hidden costs in index investing, how index reconstitution and trading frictions erode returns, and the nuanced decisions that shape a market portfolio: defining the market, excluding low-returning stocks, optimizing tax efficiency, and more. Gerard breaks down how Dimensional’s rules-based, evidence-backed process improves outcomes through smart exclusions (like IPOs and high asset-growth firms), precise trading, securities lending, and better handling of corporate actions. From the dangers of chasing low fees to the surprising benefits of thoughtful execution, this conversation is a masterclass in next-level investing.   Key Points From This Episode:   (0:01:07) Why Gerard was invited back: Dimensional’s approach to hidden costs and net returns. (0:02:38) Looking beyond “index good, fees bad”—why investors should dig deeper. (0:04:21) Gerard’s background: From Caltech rocket scientist to Dimensional co-CEO. (0:06:22) How Dimensional differs from market-cap weighted index funds. (0:08:42) Four components of net returns: Two increase returns, two decrease them. (0:12:45) Defining the market: Free float, liquidity thresholds, and dynamic inclusion. (0:17:52) How small-cap index definitions can create return differentials as high as 10%. (0:22:03) What securities Dimensional excludes—and why: low-profitability growth, high asset growth, IPOs, and REITs. (0:29:26) Why IPOs are excluded for 6–12 months and the mechanics behind inclusion. (0:33:16) Why Dimensional’s exclusions aren’t like traditional active management. (0:35:09) The “Great British Bake-Off” analogy: baking better portfolios with the same ingredients. (0:38:13) How securities lending boosts returns—and how Dimensional does it better. (0:42:09) Managing corporate actions (like M&A) to reduce cash drag. (0:45:18) How Dimensional deals with buybacks and new share issuance.  (0:47:29) Momentum, short-term reversals, and securities lending fees as trading signals. (0:50:36) Why Dimensional may lend out stocks that have negative momentum. (0:52:42) How trading costs affect net returns and Dimensional’s execution edge. (0:56:06) Hidden costs of indexing: Index fund rebalancing and price impact. (1:03:19) Why focusing solely on fees is misleading—and what “value for service” really means. (1:06:18) DFUS: A case study of Dimensional’s market series outperforming index funds. (1:08:44) How Dimensional builds portfolios with intentional tilts toward higher expected returns. (1:12:35) What excites Gerard: Expanding access, ETF innovations, and global growth.   Links From Today’s Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/  Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected] Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Gerard O’Reilly — https://www.dimensional.com/us-en/bios/gerard-k-oreilly Dimensional Fund Advisors: https://www.dimensional.com/ Episode 322: Marco Sammon — https://rationalreminder.ca/podcast/322Marco Sammon  Episode 198: Gerard O’Reilly — https://rationalreminder.ca/podcast/198

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• Episode 359 - The Most Controversial Topics in Personal Finance

  For the first time as a host combination, Ben, Dan, and Cameron sit down to discuss the most controversial topics in personal finance. We begin with identity and how it informs decision-making. Then, we revisit the renting versus buying debate, why this remains a highly controversial topic, the ins and outs of income investing, and understating the fervor of dividend investing. We also unpack FIRE as a branch of self-help; how it informs happiness; and how personality influences one’s approach to the FIRE principle. To end, we closely examine Bill Bengen’s 4% rule, and the Aftershow encourages us to maintain high podcasting standards while revealing what you can look forward to in our latest Rational Reminder t-shirt release.    Key Points From This Episode:   (0:01:25) Cameron’s positive LinkedIn experience regarding insurance.  (0:08:10) How identity informs decision-making.  (0:15:24) Why renting versus buying a home remains a controversial topic.  (0:27:50) Income investing, covered calls, and the fervor of dividend investing. (0:46:34) FIRE: Financial independence, retire early. (0:54:36) Unpacking FIRE as a branch of self-help, and the role of FIRE in happiness.  (1:07:07) How personality and identity inform one’s approach to FIRE. (1:10:34) Addressing the 4% rule.  (1:14:16) The Aftershow: Setting and keeping high standards, and Rational Reminder t-shirts.    Links From Today’s Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/  Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — https://www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected]  Rational Reminder Merchandise — https://shop.rationalreminder.ca/ Benjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/  Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/  Episode 358: Eli Beracha: An Academic Perspective on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/358  Episode 214: Jay Van Bavel: Shared Identities and Decision Making — https://rationalreminder.ca/podcast/214   Episode 260: Prof. James Choi: Practical Finance — https://rationalreminder.ca/podcast/260  Episode 273: Professor Samuel Hartzmark: Asset Pricing, Behavioural Finance, and Sustainability Rankings — https://rationalreminder.ca/podcast/273   Episode 95: Scott Rieckens (Playing with FIRE): Finding Financial Education, Perspective, and Freedom — https://rationalreminder.ca/podcast/95  Episode 258: Prof. Meir Statman: Financial Decisions for Normal People — https://rationalreminder.ca/podcast/258   Bonus Episode - Prof. Meir Statman: A Wealth of Well-Being — https://rationalreminder.ca/podcast/2024/4/18/bonus-episode-prof-meir-statman-a-wealth-of-well-being   Episode 230: Prof. Robert Frank: Success, Luck, and Luxury — https://rationalreminder.ca/podcast/230   Episode 135: William Bengen: The 5% Rule for Retirement Spending — https://rationalreminder.ca/podcast/135  Episode 164: Comprehensive Overview: The 4% Rule — https://rationalreminder.ca/podcast/164   Episode 357: AMA #6 — https://rationalreminder.ca/podcast/357  Morgan Housel — https://www.morganhousel.com/   ‘Renting vs. Buying a Home: What People Get Wrong’ — https://www.youtube.com/watch?v=j4H9LL7A-nQ   MobLand — https://www.imdb.com/title/tt31510819/  Ray Donovan — https://www.imdb.com/title/tt2249007/  Animal Kingdom — https://www.imdb.com/title/tt5574490/    Books From Today’s Episode:    Rich Dad Poor Dad — https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1612680194    Self Help, Inc.: Makeover Culture in American Life — https://www.amazon.com/Self-Help-Inc-Makeover-American/dp/0195337263    Papers From Today’s Episode:    'Motivated Numeracy and Enlightened Self-Government' - https://www.cambridge.org/core/journals/behavioural-public-policy/article/abs/motivated-numeracy-and-enlightened-selfgovernment/EC9F2410D5562EF10B7A5E2539063806    ‘Nevertheless, They Persist: Cross-country differences in homeownership behavior’ — https://www.sciencedirect.com/science/article/abs/pii/S1051137721000590    ‘Rent or Buy? Inflation Experiences and Homeownership within and across Countries’ — https://www.researchgate.net/publication/379974645_Rent_or_Buy_Inflation_Experiences_and_Homeownership_within_and_across_Countries     ‘Dividend Policy, Growth, and the Valuation of Shares’ — https://www.researchgate.net/publication/24102112_Dividend_Policy_Growth_and_the_Valuation_Of_Shares    ‘Chapter 3 - Behavioral Household Finance*’ — https://www.sciencedirect.com/science/article/abs/pii/S2352239918300046    ‘Common Risk Factors in the Returns on Stocks and Bonds’ — https://www.sciencedirect.com/science/article/abs/pii/0304405X93900235     ‘The Dividend Disconnect’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2876373    ‘A Devil's Bargain: When Generating Income Undermines Investment Returns’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4580048    ‘The Financialization of Anti-Capitalism? The Case of the “Financial Independence Retire Early” Community’ — https://www.tandfonline.com/doi/full/10.1080/17530350.2021.1891951    ‘High Income Improves Evaluation of Life But Not Emotional Well-Being’ — https://www.pnas.org/doi/10.1073/pnas.1011492107     ‘Income And Emotional Well-Being: A Conflict Resolved’ — https://www.pnas.org/doi/10.1073/pnas.2208661120   

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  1:18:19
• Episode 358 – Dr. Eli Beracha: Renting versus Buying a Home

  Dr. Eli Beracha has recently been recognized by The Journal of Real Estate Literature as the world’s third best in research productivity, and today, we are honoured to be joined by this top industry expert to bring more clarity to the renting versus buying debate. We use Dr. Beracha’s ‘Lessons from Over 30 Years of Buy Versus Rent Decisions: Is the American Dream Always Wise?’ and ‘Housing Ownership Decision-Making in the Framework of Household Portfolio Choice’ papers as the basis for most of today’s conversation, beginning with why owning a home is deeply rooted in the perception of the American dream. Then, we discover how to measure the true price of home ownership, how the American dream and other psychological factors influence one’s decision-making, how hard assets perform compared to stocks and bonds, and why renting comes out ahead of buying nine times out of ten. We also learn why owning is for the inherently wealthy, the ins and outs of Dr. Beracha’s rent versus buy index, the rate of property appreciation versus stock appreciation, and how renting influences saving habits compared to owning a home. To end, we dive deeper into the risk-adjusted wealth accumulation of home ownership versus renting, and Dr. Beracha compares the efficiency of the real estate market to the stock market while detailing everything to take into account to be fully-equipped to make your decision to rent or buy.   Key Points From This Episode:   (0:00:00) Why Dr. Eli Beracha is one of the world’s best to discuss renting vs buying a home.  (0:05:32) Understanding why owning a home is deeply entrenched in the American dream. (0:06:10) The various aspects to consider when measuring the price of home ownership.  (0:07:57) Weather Dr. Beracha agrees with the adage “renting is throwing money away.” (0:09:36) What the price of a home should represent, and how psychology influences decisions.  (0:16:48) Unpacking Dr. Beracha’s 2012 paper subtitled, ‘Is the American Dream Always Wise?’  (0:19:51) Hard assets versus stocks and bonds, and why renting pips buying most of the time.  (0:26:00) Why many still choose to own a home despite long-term financial discrepancies.   (0:30:53) The ins and outs of Dr. Beracha’s rent versus buy index.  (0:39:46) Why homeowners are usually wealthier than renters even though renting is “cheaper.” (0:42:03) Property appreciation, stock appreciation, and the renter’s savings rate. (0:47:41) How home ownership influences saving habits compared to renting.  (0:49:46) The risk-adjusted wealth accumulation of home ownership versus renting. (0:58:40) Dr. Beracha compares the efficiency of the real estate market to the stock market.  (1:03:22) Everything you need to take into account to make your decision to rent or buy.   Links From Today’s Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/  Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected] Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dan Bortolotti on LinkedIn — https://www.linkedin.com/in/dan-bortolotti-8a482310/  Episode 325: Addressing 200+ Comments on Renting vs. Owning a Home — https://rationalreminder.ca/podcast/325   Episode 196: Sebastien Betermier: Hedging, Sentiment, and the Cross-Section of Equity Premia — https://rationalreminder.ca/podcast/196  Dr. Eli Beracha — https://www.theberachateam.com/  Dr. Eli Beracha on LinkedIn — https://www.linkedin.com/in/eli-beracha-b8082250/  Dr. Eli Beracha on Instagram — https://www.instagram.com/dreliberacha/  Tibor and Sheila Hollo School of Real Estate | FIU — https://business.fiu.edu/academics/departments/real-estate/   KBIS Capital — https://kbiscapital.com/  Journal of Real Estate Literature — https://www.tandfonline.com/journals/rjel20    Papers From Today’s Episode:    ‘Lessons from Over 30 Years of Buy Versus Rent Decisions: Is the American Dream Always Wise?’ — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1814227    ‘Housing Ownership Decision-Making in the Framework of Household Portfolio Choice’ — https://www.tandfonline.com/doi/abs/10.1080/10835547.2017.12091472  ‘Findings from a Cross-Sectional Housing Risk-Factor Model’ — https://www.researchgate.net/publication/236023682_Findings_from_a_Cross-Sectional_Housing_Risk-Factor_Model

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  1:07:22
• Episode 357 – AMA #6

  Cameron joins Ben for his first AMA as we bring you the sixth edition of our Listener Questions and Investing Lessons mini-series. Diving right in, Ben and Cameron share their stance on the multi-host format of the Rational Reminder podcast before walking us through the new PWL Retirement Planning Tool. Then, we unpack our venture with OneDigital, recent changes at PWL Capital, how we make each episode of this show, and how we allocate our time across podcast and business responsibilities. We also examine our protocol regarding guests, why Cameron and Ben would never gamble with their own money, how the human condition prevents the full comprehension of investing as a principle, and smart money moves to make under current market conditions. To end, we discuss the effects of a capital gains tax increase, common mistakes to avoid in managing personal finances, programs and technologies for financial advisors, and the After Show, which ends with an important discussion on testicular cancer.          Key Points From This Episode:   (0:00:00) How Ben and Cameron feel about the multi-host format of this podcast. (0:01:12) The new PWL Retirement Planning Tool, developed by Braden Warwick.  (0:03:13) Joining OneDigital and other PWL changes from the past four months.  (0:09:05) Behind the scenes: Making a Rational Reminder podcast episode. (0:12:38) Allocating time for research, preparation, creating content, and business. (0:17:27) How guests inform our approach to research and preparation.  (0:19:29) The reasons why we’re not risk-averse but have no appetite for gambling. (0:24:26) Why investing has been largely solved, except for the human aspect.  (0:30:13) The most “rational” investing practices under current market conditions.  (0:34:25) How to approach a capital gains tax increase, and why banks do what they do. (0:38:03) The most costly mistakes when it comes to managing personal finances. (0:40:12) Why we don't offer advice-only planning for DIY investors. (0:44:07) Financial app tips and tricks and programs and technologies to be aware of.  (0:48:23) The After Show: Alternate personalities, noise filtering, and testicular cancer.     Links From Today’s Episode: Meet with PWL Capital — https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/  Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — [email protected] Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Braden Warwick on LinkedIn — https://www.linkedin.com/in/braden-warwick-a40b48a3  PWL Capital Retirement Planning Tool — https://research-tools.pwlcapital.com/research/retirement  OneDigital — https://www.onedigital.com/   Episode 341: PWL's Next Chapter — https://rationalreminder.ca/podcast/341  Episode 355: Do Index Funds Incur Adverse Selection Costs? — https://rationalreminder.ca/podcast/355   Episode 200: Prof. Eugene Fama — https://rationalreminder.ca/podcast/200  Episode 100: Prof. Kenneth French: Expect the Unexpected — https://rationalreminder.ca/podcast/100  Episode 93: Cliff Asness from AQR: The Impact of Stories, Behaviour and Risk — https://rationalreminder.ca/podcast/93  Episode 270: What Happened to All the Billionaires? with Victor Haghani and James White — https://rationalreminder.ca/podcast/270   Episode 11: Robb Engen: Simple vs. Complex — https://rationalreminder.ca/podcast/11  Episode 203: S*** (Misguided) Financial Advisors Say — https://rationalreminder.ca/podcast/203  The Money Scope Podcast — https://moneyscope.ca/   Financial Advisor Success Ep 433: When You 10X Your Advisory Firm to over $20M of Revenue…And Want to 10X Again, with Cameron Passmore — https://www.kitces.com/blog/cameron-passmore-pwl-capital-10x-revenue-growth-advisory-firm/  The Podcast Consultant — https://thepodcastconsultant.com/    The Long View — https://www.morningstar.com/podcasts/the-long-view   Eli Beracha on LinkedIn — https://www.linkedin.com/in/eli-beracha-b8082250/   CIBC Mutual Funds — https://www.cibc.com/en/personal-banking/investments/mutual-funds.html  Microsoft Excel — https://www.microsoft.com/microsoft-365/excel  Python — https://www.python.org/  Monte Carlo — https://www.montecarlodata.com/  ChatGPT — https://chatgpt.com/    Papers From Today’s Episode:    ‘The Arithmetic of Active Management’ — https://www.jstor.org/stable/4479386  ‘Lifetime Portfolio Selection under Uncertainty: The Continuous-Time Case’ — https://www.jstor.org/stable/1926560    

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  56:13

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