Excess Returns

Excess Returns is dedicated to making you a better long-term investor and making complex investing topics understandable. Join Jack Forehand, Justin Carbonneau and Matt Zeigler as they sit down with some of the most interesting names in finance to discuss topics like macroeconomics, value investing, factor investing, and more. Subscribe to learn along with us.

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Yesterday · 57 min
Private Equity Chased Software. Big Tech Is Chasing AI. Dan Rasmussen on If They Are Making the Same Mistake Twice
Dan Rasmussen, founder and managing partner of Verdad Advisers and author of The Humble Investor, joins Kai Wu to examine the unraveling of private equity, the rise of private credit, and how AI is reshaping software, labor, and the economics of technology investing. They also explore the massive AI CapEx boom, why value investing has struggled in the intangible-heavy U.S. market, the unusual opportunity in Japanese small caps, and how investors can quantify intangible value in biotech. Subscribe on Spotify⁠⁠⁠ ⁠⁠⁠Subscribe on Apple Topics covered: Why private equity became a consensus trade and why exits are now clogged How leverage and high debt costs threaten private equity returns What publicly traded private equity funds reveal about true volatility and NAV discounts How private equity shifted from old-economy buyouts into software and healthcare technology Why AI may have erased code as a software moat while strengthening other intangible advantages How ARR lending helped private credit finance software buyouts and created an obsolescence mismatch What AI is doing to hiring, junior roles, productivity and the composition of work Why the AI CapEx boom may be a crowded, path-dependent overinvestment cycle Why traditional value metrics work better in Japan than in the intangible-heavy U.S. How Tokyo Stock Exchange reforms, buybacks and dividends can unlock value in Japanese small caps How R&D spend, specialist ownership and short interest can help quantify biotech value Timestamps: 00:00 Intro 04:03 Why private equity's debt burden changes the equity math 09:24 How private equity became a software momentum trade 13:29 Why code may no longer be a durable software moat 17:48 How private credit enabled software buyouts through ARR lending 23:56 AI productivity, jobs and why displacement is slower than expected 30:23 Why the AI CapEx boom may be the market's most crowded risk 34:29 Rational overinvestment, leverage and the timing risk in AI 38:46 Why consumers may capture more of AI's value than investors 44:07 Japan's below-book-value reform and the return of old-school value 51:03 Quantifying biotech value with R&D, specialist ownership and short interest 55:08 Dan's non-consensus views on private markets and Japan Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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Tuesday · 1 hr
Only 2.7% Beat the S&P for 20 Years | Ian Cassel on What Elite Stock Pickers Do Differently
Ian Cassel, founder of MicroCapClub and author of Stock Picker, joins Matt Zeigler to break down the mindset, temperament and core skills required to outperform as an active stock picker. They discuss microcap investing, position sizing, active patience, valuation, management quality, portfolio survival, benchmarking against the S&P 500 and how great investors evolve their edge over decades. Stock Picker: How to Develop the Mindset, Temperament, and Strategy to Outperform Wall Street https://amzn.to/4hU28ImTopics covered How an investor's motivations change as ambition gives way to family, legacy and the scarcity of time How Ian turned $20,000 into $120,000, then watched it fall to $8,000, and why that early win permanently shaped his risk tolerance Ian's four-part survival framework: recession-resistant growth, strong balance sheets, conservative valuation and signs of intelligent fanaticism Why balance-sheet strength is not just defensive and can let great companies act aggressively when competitors are forced to retreat Why Ian targets roughly a 25 percent CAGR without relying on multiple expansion The Judas goat lesson, talking your book on social media and why investors still have to do their own work Why comparing short-term returns can corrupt an investing process and why Ian measures himself against the S&P 500 over a 10-year horizon The five core stock-picking skills: identifying, analyzing, buying, selling and holding, plus why selling matters especially in microcaps Why position sizing should account for initial excitement, and why Ian now starts much smaller than he did earlier in his career Active patience, expanding your circle of competence and the difference between good, great and GOAT stock pickers Why temperament evolves with experience, why leverage can destroy otherwise good investing, and why the best investors keep sharpening their edge Why Ian is willing to back repeat-winner management teams before every piece of the business is fully in place Timestamps 00:00 Intro 06:58 The $20,000 to $120,000 win and 90 percent loss 11:02 Ian Cassel's four-part survival framework 15:02 Why strong balance sheets create offensive optionality 19:03 The Judas goat and social media stock promotion 23:18 Why comparison is the enemy for stock pickers 29:39 The five core stock-picking skills 34:43 Active patience and knowing what you are looking for 39:28 Good, great and GOAT stock pickers 47:02 How investor temperament evolves over time 52:03 Leverage, situational awareness and surviving to compound 57:24 Betting on repeat-winner management before the numbers arrive Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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August 22 · 1 hr 1 min
The Rally is Broadening. The Earnings Growth Isn't. Liz Ann Sonders on Which Breaks First
Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, joins us to explain why today's economy and stock market are increasingly defined by rotation, instability and a changing stock-bond relationship. We discuss AI capital spending and earnings concentration, Treasury yields and the deficit, immigration and labor supply, investor sentiment, market breadth, portfolio rebalancing, IPOs and the growing economic importance of the stock market wealth effect. Topics covered: Why the post-pandemic economy is moving through sector-level recessions and expansions instead of a traditional linear cycle The return of a more temperamental market regime, inflation volatility and the changing correlation between stocks and bonds Why volatility-based rebalancing may matter more than calendar-based rebalancing and why market leadership is broadening Immigration, labor shortages and why slower population growth changes how investors should interpret payroll data Federal deficits, entitlement spending, rising 30-year Treasury yields and why Treasury intervention cannot solve the underlying fundamentals How the AI spending boom, imports and hyperscaler capital expenditures are affecting GDP, bond issuance and capital markets Corporate profits versus labor compensation and why Liz Ann does not see an obvious near-term catalyst for convergence Kevin Warsh, reduced Fed guidance and why less communication could create more market uncertainty Attitudinal versus behavioral investor sentiment, the vibe session and why sentiment is becoming harder to use as a timing signal The AI cascade beyond mega-cap tech, the Neural Nine, small caps and why rotation may be the new momentum trade Margin debt, record household equity exposure and the risk that a future stock market decline feeds back into the economy S&P 500 earnings concentration, sell-side versus buy-side expectations, AI depreciation risk and the return of a major IPO cycle Timestamps: 00:00 Liz Ann Sonders on the unusual 2026 market and economic cycle 05:49 Portfolio construction, diversification and volatility-based rebalancing 11:39 Immigration, labor supply and the new payroll breakeven rate 17:38 Why long-term Treasury yields are rising and what the Treasury can and cannot fix 22:07 Corporate profits versus labor compensation as a share of GDP 27:37 Attitudinal versus behavioral sentiment and lessons from 2022 32:13 The vibe session, consumer confidence and conflicting investor expectations 37:14 The Neural Nine, widening stock dispersion and rotation as the new momentum 41:21 Margin debt, leveraged speculation and where the real risk may be 45:52 S&P 500 earnings growth, concentration and the sell-side versus buy-side gap 50:27 Hyperscaler AI capex, debt financing and signals from the corporate bond market 55:05 IPOs, FOMO and why investors should be careful about chasing new issues 60:05 Where to follow the real Liz Ann Sonders and avoid impersonator scams Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
August 20 · 1 hr
We Asked Andy Constan What Happens If AI Funding Breaks Before the Thesis — And if Warsh Blinks
Andy Constan is back on First Principles to explain why record stock prices, rising long-term Treasury yields and sticky inflation can all coexist, and why the next major market risk may come from the financing behind the AI CapEx boom rather than the eventual return on that investment. We discuss Kevin Warsh and Fed balance sheet policy, Treasury issuance and the quarterly refunding announcement, corporate bond and equity supply, Nvidia's $500 billion financing structure, and Andy's "not enough pie" framework for comparing AI earnings expectations with GDP and productivity growth. Follow First Principles on Spotify⁠ ⁠Follow First Principles of Apple Podcasts Topics covered Why rising long-term interest rates can be consistent with strong economic growth and record stock prices Why Andy does not see higher government interest costs creating an imminent U.S. debt crisis The "script to kill inflation" and why reducing the wealth effect may require lower stock, bond and asset prices How the Fed, Treasury and other policymakers have suppressed long-term interest rates and risk premiums Why Kevin Warsh's comments about the Fed balance sheet and letting the bond market "do the work" could signal a policy shift How Treasury bill issuance, coupon issuance and the quarterly refunding announcement can affect stocks, bonds and financial conditions Why the AI CapEx boom is shifting from cash flow funding toward massive corporate debt and equity issuance Andy's "hamburger thesis" and why the ability to finance AI infrastructure may matter before anyone knows the ultimate AI ROI Why capital markets can suddenly close after issuance booms and what that could mean for the AI investment cycle How Nvidia's $500 billion financing structure expands the pool of capital available to data center projects The "not enough pie" problem: why projected corporate earnings may require extraordinary GDP growth, productivity gains or a larger corporate share of the economy What Andy watches in new stock and bond deals for signs that investors are becoming unwilling to absorb more supply Timestamps 00:00:08 Why stocks, long-term yields and inflation can all rise together 00:07:18 The "script to kill inflation" and why short-term rates may not be enough 00:12:48 How policymakers have suppressed long-term interest rates 00:16:53 The Warsh "drumbeat" and a possible shift in Fed balance sheet policy 00:21:56 Why markets may be underestimating Warsh's willingness to fight inflation 00:26:27 Treasury bills versus coupons and the limits of current financing policy 00:31:33 The "hamburger thesis" behind the massive AI CapEx funding shift 00:38:41 Why AI financing may matter more than AI ROI in the short run 00:42:55 Breaking down Nvidia's $500 billion data center financing structure 00:47:51 The "not enough pie" problem for AI earnings and economic growth 00:52:03 Demographics, productivity and the limits on future GDP growth 00:56:14 What issuance prices reveal about capital market stress Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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August 18 · 1 hr 7 min
We Asked Value Legend Bob Robotti Why the Real AI Trade Isn't AI — And Why Passive Helps Stock Pickers
Bob Robotti, founder and CIO of Robotti & Company, joins Matt Zeigler and Bogumil Baranowski to explain why bottom-up value investing may be entering one of its best opportunity sets in decades. They discuss AI and reindustrialization, inflation and interest rates, passive investing, capital cycles, private equity, long-term ownership, and why today's neglected industrial businesses may offer opportunities that the market is missing. Bob Robotti on X https://x.com/BobRobotti Robotti & Company https://www.robotti.com Topics covered How Bob finds misunderstood businesses with latent earnings power Why his "grassroots macro" process starts with company-level supply and demand How AI spending is increasing demand for energy, copper, aluminum, cement and other physical assets Why North America's natural gas advantage could support a long-term reindustrialization cycle Why persistent inflation could force higher interest rates and lower valuation multiples Why no competitive moat is permanent, even for today's dominant technology companies How passive investing and shorter time horizons can create opportunities for fundamental stock pickers Why prolonged downturns can improve industry economics through consolidation and reduced capacity Why Bob views himself as an active owner rather than an activist investor Why he is skeptical of today's private equity model and its expansion into retirement portfolios The NewMarket investment that taught him the cost of selling a great business too early Why he thinks individual company research can outperform indexing over the next decade Timestamps 00:00 Intro 04:02 Grassroots macro and the search for latent earnings power 08:37 Why Bob started his own investment firm 13:00 How AI creates demand for the physical economy 17:59 Why Bob avoids the mega-cap technology companies 22:00 Inflation, interest rates and the valuation risk investors may be missing 26:07 Why no competitive moat is permanent 31:36 How passive investing creates opportunities for stock pickers 36:00 Why Bob believes the "fallen" areas of the market can rise again 40:06 How bad business conditions create better long-term investments 44:39 Active ownership, boards and understanding businesses from the inside 48:59 Why Bob is skeptical of modern private equity 55:15 The biggest loss of his career: selling a winner too early 01:03:32 The one investing lesson Bob would teach everyone Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
August 14 · 1 hr
Jim Paulsen Sees a Growth Scare Coming | The 34 Charts That Make Him Cautious
In this episode of The Jim Paulsen Show, Jim explains why weakening labor data, softening inflation, and lagged policy tightening could shift markets from inflation fears toward growth and recession fears. He also breaks down why the AI productivity boom may be overstated, how AI capital spending is supporting the economy, why Treasury yields look too high, and why investors may want to rebalance from new era technology stocks toward old era stocks and bonds. Subscribe to the Jim Paulsen Show on Spotify⁠⁠⁠ ⁠⁠⁠Subscribe to the Jim Paulsen Show on Apple Podcasts Topics Covered Why weak jobs data and benign inflation have changed the outlook for the Federal Reserve Labor force contraction, stalled job growth, and the risks facing consumer spending Housing affordability, services activity, real income, savings, and signs of economic weakness How the stock-bond correlation can reveal a shift from inflation fears to growth and recession fears Why Jim expects Fed rate cuts before year-end and sees downside risk for Treasury yields How higher oil prices, bond yields, and the dollar can hit stocks and the economy with a lag Why today's AI productivity boom may be a mirage rather than a repeat of the 1960s or 1990s How AI CapEx, core capital goods orders, and technology stocks are linked Why the 10-year Treasury yield may be mispriced relative to growth and inflation The widening divide between new era and old era stocks and what it could mean for portfolio allocation Timestamps 00:00 Jim's outlook: weak jobs, benign inflation, and growth fears 04:11 Labor force rollover and consumer warning signs 09:06 Real income collapse and economic surprise data 13:06 Why bond yields could fall below 4 percent 17:45 Why Jim expects Fed cuts instead of hikes 22:07 How policy tightening hits the economy with a lag 26:16 Why productivity gains can be a recession mirage 30:20 What a true productivity boom looks like 34:38 AI stocks as a leading signal for capital spending 39:08 Why Treasury yields may be mispriced 44:31 Oil, core inflation, and the case for easing 48:32 New era versus old era correlation as a warning 52:54 Why today's AI economy may be more vulnerable than dot-com 57:22 Portfolio allocation takeaways: bonds, old era, and tech Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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August 11 · 1 hr
We Asked T. Rowe's $8 Billion Tech Manager Why We Are in 1998 — And Why Software Is in Trouble
T. Rowe Price technology portfolio manager Dom Rizzo joins Jack Forehand and Kai Wu to break down the AI investment cycle, hyperscaler capital spending, semiconductor demand, and why the recent tech selloff may look more like 1998 than the end of the boom. They discuss AI return on investment, OpenAI and Anthropic, open versus closed models, financing the data center buildout, the future of software, labor productivity, and how to construct a global technology portfolio. Topics covered Why Dom sees similarities between the 2026 semiconductor correction and the 1998 selloff Why hyperscaler AI CapEx could accelerate from already historic levels What cloud revenue growth and operating margins say about AI return on invested capital Why end-user productivity is the key test for sustainable AI demand Open-weight models versus frontier labs and where AI economic value may accrue Why chips, memory, logic semiconductors, TSMC and ASML sit at critical points in the AI value chain How equity, debt and operating cash flow could finance the next stage of the data center buildout Why semiconductors remain cyclical even in a structurally capital-intensive AI boom Why AI agents could turn traditional enterprise software into data pipes AI productivity, labor displacement and the case for faster GDP growth How Dom thinks about technology portfolio construction, risk factors and global stock selection Timestamps 00:00 AI, the tech correction and the 1998 comparison 04:07 Why the AI capital spending cycle may only be halfway 12:33 The real test for AI demand: end-user ROI 17:00 Why frontier models may capture most of the economic value 21:23 Where the biggest AI moats and profit pools could emerge 28:12 Financing the AI buildout with equity and debt 36:03 Are semiconductors in a supercycle or still cyclical? 41:43 What AI agents mean for traditional software companies 46:03 AI productivity versus labor displacement 51:01 Building a portfolio for a technology revolution 56:06 Global tech opportunities and Dom's stock-picking framework Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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August 8 · 1 hr 3 min
David Rosenberg and Rich Bernstein on What Ends the AI Trade — And What They Own Instead
Richard Bernstein and David Rosenberg reunite to debate the Federal Reserve, inflation, the AI investment boom, market bubbles, gold and the case for international diversification. The former Merrill Lynch colleagues examine whether the Fed should raise rates, how AI CapEx is reshaping the U.S. economy, why credit markets may lead the AI trade, what is driving gold, and where investors may find opportunities outside the mega-cap U.S. market. Topics covered Why the Taylor Rule points toward higher rates and why Rosenberg thinks the Fed should not hike What slowing GDP growth, productivity and labor costs suggest about underlying inflation How AI CapEx and data center spending may be misallocating capital away from housing and the broader economy Why the current AI boom differs from the late-1990s technology bubble How credit spreads, CDS markets and financing costs could signal trouble in the AI trade before equities do What real interest rates, the U.S. dollar and central bank demand mean for gold Why Bernstein views gold as a portfolio spare tire rather than a short-term trade Why non-U.S. stocks and international markets may offer a better valuation and growth opportunity How AI exposure extends beyond the Mag Seven into financials, industrials and utilities Why CAPE valuations, leverage, sentiment and market positioning point to a highly speculative U.S. market Why diversification becomes most unpopular when investors may need it most What Bob Farrell's market rules say about crowded positioning and consensus forecasts Timestamps 00:00 Introduction 08:31 Why Rosenberg thinks the Fed should not hike 16:02 AI, data centers and capital misallocation 25:08 What is driving gold: real rates, the dollar and central banks 36:11 Why Bernstein sees a secular shift toward non-U.S. stocks 41:41 How AI concentration extends beyond the technology sector 48:31 International diversification as protection from AI concentration 54:06 Bob Farrell's Rule 9 and the danger of consensus 1:00:06 The housing-cycle warning Bernstein and Rosenberg saw before the financial crisis Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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August 6 · 59 min
4% Inflation. Stretched Valuations. Why Is the Market Still Risk-On? | Tian Yang
Tian Yang, head of research at Variant Perception and portfolio manager of the VPX ETF, explains how investors can use adaptive leading indicators, capital cycle analysis and behavioral signals to navigate a market shaped by AI spending, inflation and government intervention. He breaks down why the macro backdrop remains risk-on, what would signal a true market top, why a Federal Reserve rate hike may still be unlikely and how AI could reshape profits, jobs and portfolio construction. Variant Perception https://www.variantperception.com/ Variant Perception Cycle Aware US Equity ETF https://etf.variantperception.com/ Topics covered How first-principles thinking separates causal signals from noisy data Why static recession indicators and consumer sentiment have become less reliable How Variant Perception combines growth, inflation, policy and liquidity into a Macro Risk Indicator Why AI capital spending and low savings rates are supporting economic resilience How AI profits could broaden from hardware bottlenecks to adopters and complementary assets Why the sovereign technology race may extend the AI investment cycle What savings rates, liquidity, leverage and cash settlement reveal about recessions and market tops How potential SpaceX, Anthropic and OpenAI supply could affect public equity markets What capital cycle and crowding signals say about semiconductors and hyperscalers Why headline inflation may stay high without creating persistent core inflation How the K-shaped consumer, labor market and Federal Reserve reform shape the policy outlook How AI could widen economic inequality, compress wages and change investment research How the VPX ETF uses adaptive sector tilts, stock selection and active risk Timestamps 00:00 First principles, causal data and leading indicators 04:48 Why traditional recession indicators stopped working 09:00 Building the Macro Risk Indicator 13:02 How AI CapEx is keeping the economy resilient 17:18 Is the AI boom different from past bubbles? 21:32 Why rising savings rates often precede recessions 26:11 Why the market-top warning is amber, not red 30:58 Are semiconductors still cyclical? 36:22 Why an oil shock may not force the Fed to hike 42:12 How Kevin Warsh could reform the Federal Reserve 46:50 The increasingly bifurcated economy 51:11 How AI is changing investment research 55:38 Active risk, playing the game and avoiding forced errors Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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August 4 · 1 hr 1 min
The Biggest Leak in Finance | Brent Donnelly on Why You're Probably Too Bearish
Brent Donnelly joins Matt Zeigler to explain how professional traders build a durable edge through risk management, trading psychology, probabilistic thinking, and creative market analysis. Drawing from his new book, Trade Outside the Box: Advanced Thinking for Professional Traders, Brent breaks down why trading strategies decay, why rationality beats intelligence, how to avoid risk of ruin, and how lessons from poker, behavioral finance, and real-world experience can improve decision-making. Trade Outside the Box: Advanced Thinking for Professional Traders https://amzn.to/4h9bi3e Brent Donnelly on X https://x.com/donnelly_brent Spectra Markets https://www.spectramarkets.com Topics covered: Why fundamentals, technical analysis, behavioral finance, and quantitative methods are necessary but not sufficient for trading success How traders can develop an edge by connecting markets to poker, psychology, biology, auto racing, and video games Why profitable trading strategies decay as more investors discover and copy them How changing volatility regimes force traders to adapt their style and avoid becoming a one-trick pony Why mismatching a long-term investment thesis with a short-term stop loss can destroy a good idea How trading journals and P&L data help separate normal variance from a broken process Why the house money effect can make traders more reckless after large gains Why rationality, flexibility, and expected value matter more than credentials or raw intelligence How Bayesian thinking helps traders update probabilities and fight confirmation bias The difference between independent thinking and blind contrarianism Why avoiding risk of ruin, protecting family and health, and defining success beyond money are essential to a sustainable trading career Timestamps: 00:00 Introduction to Brent Donnelly and Trade Outside the Box 04:00 Why smart analysts often produce fully priced trade ideas 08:00 Poker discipline and avoiding boredom trades 12:00 How lead-lag correlation trading lost its edge 16:35 Matching a trade's stop loss to its time horizon 21:00 What trading data reveals about win rates and expected value 25:00 The house money effect and the danger of overearning 29:00 Why rational traders beat smarter traders 33:00 Strong opinions weakly held and Bayesian updating 37:00 Curating a balanced diet of bullish and bearish information 41:00 Using creativity and outside disciplines to find market edge 45:11 Avoiding risk of ruin and the lessons of Jesse Livermore 50:29 The Serenity Prayer and focusing on what traders can control 55:00 Choosing family and health over markets 59:00 Why your first thought may not be your own Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms, or their clients.
August 2 · 1 hr 11 min
A $20B Blowup. A War-Sized AI Bet. Was the Bottom Just a Margin Call? | Last Call
On this episode of our new market wrap show Last Call, we examine the hidden rotation beneath calm stock market indexes, including sharp AI and semiconductor volatility, small-cap strength, forced fund liquidations, higher rates and changing Federal Reserve guidance. Jack Forehand and Matt Zeigler are joined by Jim Paulsen, Ben Hunt, Brent Kochuba, Cameron Dawson and Dave Nadig to discuss stock market correction risk, the economics of the AI data center buildout, options flows, market leverage, regulation and what could drive volatility next.Follow Last Call on Spotify⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠Follow Last Call on Apple Podcasts⁠ Topics covered Why market indexes can hide sharp rotation, dispersion and volatility in semiconductors and high-beta technology stocks Jim Paulsen's Policy Pain framework linking oil, Treasury yields, dollar strength and lagged effects on stocks, bonds and economic growth Why technology stocks could enter a bear market while old-economy sectors, small caps and value stocks hold up Ben Hunt's World War AI thesis comparing the AI infrastructure buildout with inflation-adjusted World War II spending How hyperscalers, equity issuance, private credit and government financing could crowd out consumers and businesses Why data centers could consume nearly one quarter of U.S. electricity and lead to higher prices, rationing and government intervention What the Situational Awareness fund liquidation and Citadel portfolio transaction reveal about forced market flows How options correlations and narrow market breadth can separate a technical rebound from a fundamental AI bottom Risks from speculative retail investments, weakened regulators, leverage and cyclical semiconductor profit margins Why reduced Fed forward guidance could create surprise policy decisions and greater algorithmic market volatility Timestamps 00:00 Market rotation and AI volatility beneath the indexes04:07 Jim Paulsen on Policy Pain and market vulnerability09:23 Why tightening hurts stocks before helping bonds14:23 Tech bear market risk and a possible leadership shift18:23 Ben Hunt on World War AI, private credit and systemic risk26:00 Data center electricity demand and the energy constraint31:29 Brent Kochuba on the Situational Awareness liquidation36:00 The forced buying behind the AI stock rebound40:00 Why the liquidation bounce may not signal an AI bottom44:00 How forced flows distort fundamental market narratives48:00 Retail investing pitches, liquidity and cycle FOMO52:00 Deregulation by destaffing at the SEC and CFTC56:00 Semiconductor operating leverage and fragile S&P 500 margins01:00:07 Jack's grievance with the YouTube algorithm01:04:29 What happens when the Fed stops giving forward guidance01:08:34 How markets could react to a surprise Fed decision Learn more about the Excess Returns podcast network:⁠https://excessreturns.co⁠ No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
July 31 · 30 min
A War-Sized AI Bet. Private Credit Went All In. Will the Government End Up Owning It?
We are excited to announce the launch of a new podcast, Why Am I Reading This Now? with Ben Hunt. Stories and narratives are increasingly shaping markets, and Ben and his team at Perscient have developed a unique system for measuring how those narratives emerge, spread and change. In each episode, Ben and Matt Zeigler will examine the major issues facing investors through this narrative lens, helping listeners better understand the stories driving markets and what they could mean for the economy, policy and investment outcomes. We have included this first episode in the Excess Returns feed. To continue receiving new episodes, subscribe to the Why Am I Reading This Now? podcast on all major podcast platforms using the links below. Subscribe on Spotify Subscribe on Apple Topics covered Why AI CapEx and data center construction have become critical drivers of US economic growth How hyperscalers are shifting from cash flow financing to debt, equity issuance and private credit Why a slowdown in AI infrastructure spending could threaten markets, the economy and the financial system How trillions of dollars in AI investment may crowd out consumer credit, business investment and government borrowing Why data centers could consume a dramatically larger share of US electricity production How energy shortages could lead to higher utility costs, rationing and price controls Why the Iran war and higher oil prices may create a lasting increase in global energy costs How Perscient tracks the return of bearish AI narratives and growing political opposition to data centers Why both political parties may support government ownership, loan guarantees, bailouts and economic stimulus How competition with China could become the narrative used to justify greater government control of the AI industry Timestamps 00:00 Introducing Why Am I Reading This Now? with Ben Hunt 04:00 How debt, equity issuance and private credit are financing AI CapEx 08:06 Data center electricity demand and the energy crowding-out problem 13:21 Why an AI bailout may become politically inevitable 17:30 Oil shifts from a temporary shortage to a structural supply reduction 22:00 The bearish AI narrative returns as political opposition grows 26:00 Government ownership, price controls and the AI competition with China
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July 29 · 55 min
He Called It the Worst Chart Imaginable. Then He Bought It | Rupert Mitchell on Cracks in the Mag 7
Rupert Mitchell of Blind Squirrel Macro joins Matt Zeigler to explain how surging AI capital spending, mega-cap share issuance and expensive U.S. technology stocks could reshape global equity leadership. They discuss the case for equal-weight stocks, energy equities, gold, UK small caps, Uzbekistan and Turkey, along with the risk that a surprise Federal Reserve hike could trigger a broader unwind in leveraged markets. Rupert Mitchell on X https://x.com/SquirrelMacro Blind Squirrel Macro https://www.blindsquirrelmacro.com Topics covered Why the S&P 500 versus the rest of the world remains Rupert's chart of truth How the Bushy portfolio uses international equities, gold, commodities and hedges as an alternative to a traditional 60/40 portfolio Why positive stock-bond correlation has weakened the diversification case for long-duration bonds How AI data center spending, mega IPOs and new share issuance could reverse the buyback-driven de-equitization of U.S. markets Why Rupert is long the equal-weight S&P 500 and short the Nasdaq 100 as market leadership broadens How China's growing power in oil markets may create a price collar that supports energy producers, refiners, midstream companies and offshore services What a surprise Federal Reserve hike or death shot could mean for technology stocks, private credit, private equity and leveraged risk assets Why deeply discounted UK small and mid-cap stocks may benefit from buybacks, takeovers, pension capital and investment trust activism The opportunity in Uzbekistan's privatization program and the role of Templeton in improving governance Why Turkey's inflation-tested companies, strategic geography and cheap valuations may offer an attractive emerging-market setup Timestamps 00:00 Intro 04:00 Bushy portfolio changes across energy, commodities and precious metals 08:54 How AI capital spending and equity issuance threaten the buyback era 13:00 Equal-weight valuations and the long RSP, short QQQ trade 17:02 China's oil price collar and the energy equity re-rating 22:18 The Fed death shot and the danger of an unpriced hike 30:06 Peak populism and the historic valuation gap in UK equities 34:10 M&A, pension capital and UK investment trusts 38:50 Uzbekistan's privatization opportunity 43:39 Turkish equities, inflation and geopolitical leverage 49:13 Why stress-tested businesses may offer better value 53:39 Blind Squirrel Macro and Benny and the Squirrel Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
July 28 · 1 hr 7 min
The Warren Buffett Portfolio: Robert Hagstrom on What Wall Street Gets Wrong About Risk
On the latest 100 Year Thinkers, Robert Hagstrom joins Matt Zeigler and Bogumil Baranowski to revisit the 25th anniversary edition of The Warren Buffett Portfolio and explain why volatility is not the same as investment risk. They discuss concentrated portfolios, active share, business valuation, behavioral finance, complex adaptive systems, and Warren Buffett’s warning that the market’s casino can overwhelm its cathedral. The Warren Buffett Portfolio – 25th Anniversary Edition https://amzn.to/3TVXoru Robert Hagstrom on X https://x.com/RobertGHagstrom Equity Compass https://www.equitycompass.com/ Topics covered Why Markowitz’s definition of risk as variance shaped modern portfolio theory Why Buffett views permanent capital loss, not volatility, as the real investing risk What Hagstrom’s study of 3,000 portfolios revealed about concentration and market outperformance The difference between know-something investors and investors better served by indexing How benchmark awareness creates closet indexers and weakens active management What loss aversion and prospect theory explain about investor behavior Why Darwin, William James, and complex adaptive systems offer better models for markets Buffett’s cathedral and casino metaphor for business ownership versus speculation The El Farol problem, Jim Simons, and why successful market models stop working Why options trading, leveraged ETFs, and record single-stock dispersion may be strengthening the casino How to evaluate portfolios using cash flow, return on invested capital, and look-through earnings Why permanent capital and System 2 thinking are essential for focused investing Timestamps 00:00 Intro 04:00 Why Markowitz defined risk as variance 11:47 What 3,000 portfolios revealed about concentration 17:17 Know-something versus know-nothing investors 22:23 Kahneman, loss aversion, and modern portfolio theory 26:58 Darwin, pragmatism, and adaptive markets 32:28 Buffett’s cathedral and casino metaphor 37:37 The El Farol problem and why markets resist prediction 42:08 Why investors crave market forecasts 46:16 Why investing is most intelligent when businesslike 51:38 Record stock dispersion, options, and leveraged ETFs 56:00 Measuring portfolio progress through business economics 01:00:43 Why permanent capital enables focus investing 01:04:43 How markets survive widespread investor mistakes Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms, or their clients.
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July 25 · 56 min
Even God Would Be Fired | Wes Gray on Bubbles, AI Valuations and Why Size Was Never the Edge
Wes Gray joins us to explain how factor investors should think about high market valuations, S&P 500 concentration, value investing, small caps, artificial intelligence and the behavioral challenge of staying invested for the long term. He also breaks down Section 351 ETF exchanges, including how appreciated portfolios can move into an ETF without an immediate taxable sale, why direct-indexing portfolios are a major use case and how the ETF wrapper is reshaping asset management. Wes Gray on X https://x.com/alphaarchitect Alpha Architect https://alphaarchitect.com ETF Architect https://etfarchitect.com Long-Only Value Investing: Does Size Matter? https://alphaarchitect.com/wp-content/uploads/2022/11/AA-JBISFactorInvesting22LongOnlyValueInvesting.pdf Even God Would Get Fired as an Active Investor https://alphaarchitect.com/wp-content/uploads/2021/08/Even_God_Would_Get_Fired_as_an_Active_Investor.pdf Topics covered Why high valuations may lower long-term expected returns without providing a reliable market-timing signal How S&P 500 concentration creates a major large-cap, quality and growth factor bet Why earnings and operating income may be better value metrics than book-to-market in an intangible economy Why valuation may matter more than company size for long-only value investors How unprofitable companies and low-quality stocks can distort small-cap value indexes Whether AI has changed the historical relationship between growth and value investing How AI may eliminate short-term trading edges while leaving long-horizon opportunities intact Why even an investor with perfect foresight could suffer severe drawdowns and get fired How passive investing flows may affect market prices and factor returns How Section 351 exchanges can solve problems created by appreciated SMAs, tax-loss harvesting and direct indexing The 25/50 diversification rules, cost-basis transfer and tax-deferral mechanics of ETF conversions Why assets continue moving from mutual funds, hedge funds and separate accounts into ETFs Why enduring underperformance may be necessary to earn higher long-term returns Timestamps 00:00 Alpha Architect, ETF Architect and building an ETF platform 04:00 Can factor investors time a market bubble? 08:03 Intangible assets and the problems with book-to-market 13:42 The quality problem inside small-cap value indexes 18:18 Has technology changed the growth-versus-value equation? 23:25 Can AI create lasting investment alpha? 27:42 Are investors behaving better today? 34:39 How Section 351 ETF exchanges work 39:48 The diversification rules for tax-deferred ETF conversions 44:34 How cost basis and deferred taxes carry into the ETF 49:07 Mutual fund, hedge fund and SMA conversions 54:13 Why investors should embrace underperformance Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
S1 · E469
July 23 · 57 min
Not a Time for Big Bets | Aahan Menon on What 60 Years of Regime Data Says About Today’s Market
Aahan Menon, founder of Prometheus Research, joins Jack Forehand to explain what systematic macro data says about economic growth, inflation, Federal Reserve policy, oil prices, AI investment and the outlook for stocks and bonds. They examine why nominal GDP remains stable, why traditional recession indicators have failed, how consumer dissaving is boosting corporate profits, and why today's unusually balanced regime probabilities make this a difficult time for large macro bets. Aahan Menon on X https://x.com/AahanPrometheus Prometheus Research https://www.prometheus-macro.com Topics covered Why geopolitical volatility and disrupted market trends make concentrated macro bets unusually difficult What Prometheus Research's daily GDP nowcast says about stable nominal growth Why AI capital spending matters but consumer spending still drives the US economy How household dissaving and the wealth effect are supporting corporate profits Why the economy and Federal Reserve policy may be increasingly sensitive to stock prices How oil prices are driving inflation volatility and changing expectations for interest rates Why demand-driven inflation is more persistent than supply-driven inflation How technology investment has weakened traditional recession and business-cycle indicators The value and limitations of timing Federal Reserve policy with systematic macro data What macro regime probabilities, valuations and expected returns suggest for stocks, bonds and diversification Timestamps 00:02 Why this is a difficult time for big macro bets 05:02 A daily GDP nowcast shows stable nominal growth 09:21 Consumer dissaving and the future economic risk 13:23 The wealth effect linking stocks, spending and profits 17:52 Oil prices and extreme inflation volatility 22:23 Separating persistent demand inflation from supply shocks 27:27 Why traditional recession indicators stopped working 32:55 How technology is changing the business cycle 37:42 Why timing Federal Reserve cycles matters for bond returns 42:28 The limitations of alternative data and short histories 47:33 Macro regime forecasts and expected returns 51:54 Why the macro backdrop still supports equities 56:19 Why investors can finally get paid to diversify Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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July 21 · 1 hr 15 min
We Asked the Man Who Mapped the AI Economy If the Boom Is Real — And Who Keeps the Money
Azeem Azhar joins Kai Wu to break down the real economics of the AI boom, including the $110 billion demand base, where profits may accrue across chips, hosting, foundation models and applications, and whether spending can translate into enterprise productivity. They discuss AI infrastructure bottlenecks, open-source competition, vertical integration, organizational redesign, software moats, human judgment and the signals investors can use to identify companies turning AI adoption into durable competitive advantage. The State of the AI Economy https://intelligence.exponentialview.co/assets/ev-state-of-ai-economy-2026.pdf Why AI Isn't Showing Up on Your Bottom Line https://www.exponentialview.co/p/why-ai-isnt-showing-up-on-your-bottom-line Azeem Azhar on X https://x.com/azeem Exponential View https://www.exponentialview.co/ Topics Covered The size and growth rate of real generative AI demand How the AI stack divides between chips, hosting, foundation models and applications Why memory and energized data centers may be the key AI infrastructure bottlenecks Open-source models, proprietary pricing and enterprise assurance Vertical integration and foundation model labs moving into applications How AI value could flow to consumers rather than infrastructure providers Why AI productivity requires workflow and organizational redesign What investors can learn from earnings calls, hiring and enterprise spending Forward-deployed engineers, consulting firms and vendor lock-in Which intangible business moats strengthen or weaken as intelligence becomes abundant Timestamps 00:00 The economics and sustainability of the AI boom 06:34 Mapping the four layers of the AI stack 10:43 Vertical integration and cross-stack competition 15:31 Why memory is becoming an AI infrastructure bottleneck 20:01 Open-source models versus proprietary AI 24:36 Why foundation model labs are moving up and down the stack 28:51 Could AI profits become consumer surplus? 33:00 Why more copilots cannot create an AI-native company 37:17 Job postings and the intangible investments behind AI adoption 44:16 Can forward-deployed engineers transform legacy companies? 49:15 Which business moats strengthen or weaken in the AI economy? 54:20 Do foundation models really have network effects? 59:00 Why judgment, verification and human provenance become more valuable 01:04:56 The exponential gap in data centers and education 01:10:06 How Azeem uses AI to deepen research and generate ideas Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
July 18 · 57 min
It Only Happens at Bottoms | Andy Constan on the Options Extreme That Showed Up at the Highs
On the Latest First Principles, Andy Constan explains what the options market is signaling about the AI and semiconductor boom, why he believes earnings expectations have outrun the size of the economy, and where the next risks may emerge. We discuss speculative call buying, single-stock volatility, AI capital spending, consumer dissaving, the Fed put, Kevin Warsh's monetary policy framework, and the looming reset of US tariffs.Topics covered: * Why parabolic moves in AI infrastructure and semiconductor stocks may reflect a speculative bubble * What rising single-stock volatility and unusually low market correlations reveal beneath a calm index * Why out-of-the-money calls became more expensive than puts and what that says about investor positioning * How investors can hedge concentrated stock gains by selling calls and buying protective puts * Why the AI bubble may be hiding in earnings expectations rather than traditional valuation multiples * Andy's economic pie framework and why projected corporate profits may exceed the GDP available to support them * How AI competition, open-source models, job displacement and subsidized token usage affect the return on AI investment * Why capital spending and consumer dissaving are supporting economic growth, and where those drivers could weaken * Whether the Federal Reserve could eventually buy equity ETFs and the inflationary consequences of a permanent Fed put * How lower short-term rates and a smaller Fed balance sheet could rebalance Main Street and Wall Street * Why expiring Section 122 tariffs could create a near-term shift in inflation, growth and the federal deficit Timestamps: 00:02 Why the options market is flashing a warning on AI stocks 04:02 Extreme stock dispersion beneath a calm market 08:49 The signals of a speculative call-buying frenzy 13:00 How to hedge a stock position without calling the top 18:36 Why earnings expectations may be the real AI bubble 23:00 The economic pie cannot support every company's forecasts 27:00 AI job displacement and the widening gap between winners and losers 31:59 How capital spending and consumer dissaving are sustaining growth 36:00 When the return on AI investment starts to matter 40:26 Could the Fed buy stocks in the next financial crisis? 44:53 How Kevin Warsh might respond when markets and employment collapse 48:58 Lower rates, a smaller balance sheet and wealth inequality 52:59 The tariff deadline investors may be overlooking Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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July 16 · 1 hr 1 min
Jack Schwager on Timeless Lessons from Elite Traders
Jack Schwager joins Excess Returns to discuss Market Wizards: The Next Generation and the extraordinary young traders profiled in the newest installment of the Market Wizards series. He explains how traders turned small accounts into fortunes, survived devastating losses, built exceptional risk-adjusted records and adapted from day trading to longer-term strategies, while revealing the psychology, risk management and commitment behind elite trading performance. Jack Schwager on X https://x.com/jackschwager Market Wizards: The Next Generation https://amzn.to/4psEOmH Topics covered How video games, prop trading firms and modern technology shaped a new generation of traders How Jack Schwager finds candidates and verifies extraordinary trading track records Why return-to-risk measures can reveal more than the Sharpe ratio Lukas Froelich's astonishing 2020 performance and the limits of compounding and scalability Simon Rousseau's journey from a $40,000 borrowed account to nearly $500 million How breaking risk rules led to massive losses even after extraordinary success Kristjan Kullamägi's path from security guard to more than $100 million after repeated account blowups Phil Goedeker's success with short selling, option selling and unusually strong risk control Rick Bandazian Jr.'s merger arbitrage edge and more than a decade without a losing month Why financial markets may remain uniquely difficult for artificial intelligence to solve Lance Breitstein's apprenticeship, deliberate practice and shift from day trading to longer-term positions What traders and long-term investors can learn about talent, discipline, persistence and human nature Timestamps 00:00 Intro to Market Wizards: The Next Generation 04:33 How Jack finds exceptional traders and how the trading ecosystem changed 09:15 Auditing Lukas Froelich's extraordinary 2020 returns 14:03 Simon Rousseau: turning $40,000 into nearly $500 million 18:42 The $50 million Carvana loss and the danger of breaking trading rules 22:54 Kristjan Kullamägi: from security guard to more than $100 million 28:36 Phil Goedeker and the risk of negative asymmetry strategies 32:41 Hedging option risk during the Liberation Day market selloff 37:34 Trading personality and Rick Bandazian Jr.'s no-loss record 41:36 Can artificial intelligence ever become a Market Wizard? 45:42 Lance Breitstein: choosing mentorship over a higher salary 49:42 What long-term investors can learn from elite traders 53:52 Innate talent, human nature and all-consuming commitment 57:58 What the next generation of trading may look like Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.
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July 14 · 1 hr 6 min
The Recession the Unemployment Rate Can't See | Eric Pachman on the Data Beneath the Jobs Report
Eric Pachman of Data 4 The People joins Matt Zeigler to explain why headline employment and inflation data may be giving investors an incomplete picture of the U.S. economy. They examine falling labor force participation, Medicaid-funded healthcare jobs, wage quality, oil and diesel shortages, consumer financial stress and how AI can make public data more useful. Eric Pachman on X https://x.com/EricPachman Data 4 The People https://www.data4thepeople.com/ Main topics covered Why the establishment survey and household survey can tell very different labor market stories Why unemployment may miss weakening labor force participation and disappearing working-age Americans The decline in participation among older workers and men How healthcare and Medicaid-funded care have become the engine of U.S. job growth Why Medicaid cuts could create a major employment and consumer spending risk What occupational wage data reveals about the quality of new jobs and home healthcare pay The differences between CPI, PCE and core inflation and why the standard measures can be misleading How crude oil grades, refinery design and 3-2-1 crack spreads shape energy prices Why falling diesel inventories could spread inflation through transportation, food and retail What the single-income stress test reveals about household fragility, poverty and multiple-job holders How Data 4 The People is using AI to build public-interest data research tools Timestamps 00:00 Intro 04:41 Why the unemployment rate can miss a labor crisis 11:24 Healthcare jobs, aging America and the Medicaid care economy 18:44 The Wage Ledger and the hidden quality of U.S. job growth 24:18 Why inflation is moving higher 30:48 Why every equity investor needs to understand oil 36:00 Crack spreads and the refinery mismatch problem 44:05 Why diesel is the inflation risk that matters most 48:34 The single-income stress test and consumer fragility 54:42 Data 4 The People's nonprofit mission 59:00 Building an AI research assistant for public data 01:03:37 Where to follow Eric and Data 4 The People Learn more about the Excess Returns podcast network: https://excessreturns.co No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

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