Excess Returns

Excess Returns
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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.

  1. 7 HR AGO

    They Call It a Lottery Ticket. The Data Says Otherwise | D.A. Wallach on The Hidden Alpha of Biotech

    Biotech is one of the few areas in investing where specialized knowledge may still generate persistent alpha. In this episode of Excess Returns, D.A. Wallach, venture capitalist and co-founder of Time BioVentures, joins us to explain how biotech investing works, why development-stage drug companies behave like portfolios of options, and why specialist investors play such a large role in this market. We also explore the cycles that have driven biotech performance, the impact of interest rates and capital flows, and how AI and global competition may reshape the industry in the years ahead. D.A. Wallach – Twitterhttps://x.com/DAWallach Topics covered include • Why biotech may be one of the last areas where specialist investors can generate persistent alpha• The “bag of options” framework for valuing development-stage biotech companies• How probabilities of drug success and clinical base rates drive biotech valuations• Why rising interest rates hit biotech stocks harder than many other sectors• How capital flows and investor narratives create boom-and-bust cycles in biotech• What happened to biotech during the pandemic surge and the post-COVID downturn• Why AI and tech narratives compete with biotech for investor attention• The role of specialist biotech hedge funds in the public markets• How large pharmaceutical companies drive returns through biotech acquisitions• Differences between biotech venture capital and traditional tech venture investing• How venture investors evaluate drug development programs and scientific evidence• Portfolio construction and diversification when investing in highly uncertain biotech companies• The emerging role of China in clinical trials and global drug development• Whether AI can improve drug discovery, clinical trials, and pharmaceutical R&D productivity• Why investors should avoid rigid value vs growth ideologies and stay adaptable Timestamps 00:00 Why biotech investing requires specialized knowledge01:40 Is biotech one of the last places for persistent active alpha?02:45 The “bag of options” model for valuing biotech companies05:00 Drug development phases and probabilities of success07:00 Using base rates to estimate clinical trial success09:20 Estimating total addressable markets for new drugs11:10 Why rising interest rates hurt biotech valuations13:00 Capital flows and why biotech underperformed in recent years15:30 The biotech boom and bust around the COVID pandemic18:00 How AI and tech compete with biotech for investor capital22:20 The role of specialist biotech hedge funds24:00 How pharmaceutical acquisitions drive biotech returns25:20 How biotech venture capital differs from tech VC30:50 Why biotech investors must evaluate complex scientific data34:20 Where AI may improve drug discovery and R&D productivity42:00 Portfolio construction and diversification in biotech venture investing44:30 Volatility, valuation marks, and private market pricing48:00 Managing risk across different drug technologies and disease areas49:30 Why China is becoming important for clinical trials53:00 Why biotech investing must be viewed as a global industry54:30 The importance of flexibility between value and growth investing58:50 Will investing become more systematic and quantitative over time

    1h 5m

  2. 1 DAY AGO

    14% for Tech. 1% for Everyone Else | The Weekly Wrap – 3/14/2026

    Follow Two Quants and a Financial Planner on Spotify⁠ ⁠Follow Two Quants and a Financial Planner on Apple In this episode, we break down the most important insights from the week on Excess Returns,, with insights from Vitaliy Katsenelson, Jim Paulsen, and Joseph Shaposhnik. Markets today are being shaped by powerful crosscurrents including AI disruption, defense spending, macro policy shifts, and historically high valuations. In this episode, we highlight the biggest ideas from our conversations and explore what they mean for investors trying to navigate an uncertain world. Topics include the importance of humility in investing, the potential disruption of software by AI, the growing divergence within the economy, and why long-term structural trends like defense spending may create new opportunities.Topics Covered • Why humility may be the most important trait for investors in a rapidly changing world• How uncertainty around AI, geopolitics, and macro policy is widening the range of possible market outcomes• Why some investors are reducing exposure to software businesses amid AI disruption• The importance of management teams that can adapt and evolve in periods of technological change• Jim Paulsen’s framework for understanding the “new era” economy versus the rest of the economy• Why a small portion of the economy may now be driving overall GDP growth• The idea that successful investing may be about being “least wrong” rather than perfectly right• How long-term structural trends like defense spending could create a multi-year investment tailwind• Why experienced investors focus on analyzing businesses rather than reacting to headlines• The potential deflationary impact of AI and how lower prices could shift spending across the economy• Why high market valuations may act as a headwind for future returns• The importance of deep research and preparation when unexpected events hit markets• Jim Paulsen’s concept of “policy juice” and how fiscal and monetary policy drive bull markets• Whether a new wave of policy support could broaden the current market rally beyond mega-cap tech Timestamps 00:00 Introduction02:00 Why humility matters more than ever in investing08:50 AI disruption and the future of software businesses18:07 The growing gap between the “new era” economy and the rest of the economy25:00 Surviving first and being the least wrong as an investor31:43 The potential defense spending supercycle37:44 AI’s deflationary impact and how innovation reshapes economies44:42 Why valuations act as a long-term headwind for stocks50:56 How investors should respond to geopolitical events56:49 Jim Paulsen on policy juice and the future of the bull market

    1h 5m

  3. 3 DAYS AGO

    The $1 Trillion Supercycle Hidden in Plain Sight | Joseph Shaposhnik

    On this episode of Excess Returns, Matt Zeigler and Bogumil Baranowski speak with Rainwater Equity ETF portfolio manager Joseph Shaposhnik about how long-term investors should think about markets in an era defined by geopolitical shocks, AI disruption, and unprecedented capital investment cycles. The conversation explores how disciplined investors can stay focused on durable businesses and long-term free cash flow rather than reacting to short-term headlines. Joseph explains how his team evaluates companies during major events, why the AI boom may create both massive disruption and opportunity, and where he believes the most attractive investment opportunities exist today. Topics covered in this episode • Why most macro headlines and geopolitical events rarely have lasting impacts on great businesses• How long-term investors should analyze conflicts and market shocks without overreacting• The defense spending supercycle and why aerospace and defense may benefit from rising geopolitical tensions• How Joseph evaluates the AI investment cycle across semiconductors, software, and hyperscalers• Why semiconductor companies may offer a lower-risk way to benefit from AI growth• The risks created by massive AI infrastructure CapEx and concentration around specific AI models• Why some software companies may face significant disruption from AI tools and LLMs• How AI could reshape business models that rely on packaging public or commoditized data• The potential rotation from the Magnificent Seven to the other 493 companies in the S&P 500• Why capital intensity may change the long-term attractiveness of some technology companies• The role of management quality and capital allocation in navigating technological disruption• Fragile vs anti-fragile business models in an AI-driven economy• Where AI may create unexpected winners across industrial and traditional industries• Why long-term investors should still prioritize durable cash flow compounding businesses Timestamps 00:00 Introduction and why most headlines have limited long-term impact on businesses02:00 How experienced investors think about geopolitical shocks and market headlines04:00 Defense spending tailwinds and the aerospace and defense supercycle06:45 How investors should react when major market news breaks11:10 How Joseph evaluates the AI boom and which companies benefit most14:15 The case for opportunities outside the Magnificent Seven17:15 How rising AI CapEx is changing the economics of major tech companies21:25 Why hyperscalers face increasing concentration risk23:00 Why semiconductor suppliers may be the best positioned AI investments27:15 Why Joseph reduced exposure to software companies33:00 The importance of learning organizations and adaptive management teams37:00 AI, labor markets, and whether high-income jobs face disruption41:00 Fragile vs anti-fragile companies in the age of AI46:00 Where AI could create unexpected business winners52:00 How great management teams adapt during technological disruption57:00 How AI may accelerate entrepreneurship and innovation59:00 Why investors should remain focused on sustainable cash flow01:02:00 What the next generation of long-term compounders may look like

    1h 6m

  4. 6 DAYS AGO

    Survival First. Returns Second | Vitaliy Katsenelson on Investing Amid Extreme Uncertainty

    In this episode of Excess Returns, Matt Zeigler and Bogumil Baranowski speak with Vitaliy Katsenelson, CEO of Investment Management Associates and author of Soul in the Game. The conversation explores how value investing is evolving in a world shaped by artificial intelligence, rapidly changing economic dynamics, and historically high market valuations. Vitaliy discusses why humility and diversification are increasingly important for investors today, how to balance quality and valuation when selecting stocks, and what he has learned about selling decisions, portfolio construction, and long-term investing discipline. The discussion also moves beyond markets into deeper ideas about passion, creativity, and why investing, like art, is ultimately a creative pursuit driven by curiosity and lifelong learning. Topics covered in this episode Why high stock market valuations may create a headwind for future returns The math behind long-term stock market returns and the role of earnings growth versus valuation changes Whether the dominance of mega-cap technology companies represents a structural shift in markets Why AI investment could lead to both massive innovation and large amounts of wasted capital The importance of humility in investing during periods of rapid technological and economic change Why Vitaliy increased the number of stocks in his portfolio due to greater uncertainty How investors can think about what will not change in a rapidly evolving world The evolution from statistical value investing to focusing on business quality and management Why cheap stocks are often expensive and how narrative bias can trap value investors The importance of evaluating management integrity and avoiding companies with questionable leadership How Vitaliy thinks about selling decisions and recognizing when an investment thesis is broken Why many investors make their biggest mistakes by selling winners too early The concept of being a value buyer but a growth holder when fundamentals improve Why updating valuation models as businesses improve is critical to capturing long-term upside Lessons learned from great investors and the importance of surrounding yourself with thoughtful peers The idea of building a personal operating system for investing and life Passion, patience, and process as the three pillars of long-term investment success Why investing is fundamentally a creative pursuit similar to art and music The deeper motivations behind investing and why for many great investors it is not ultimately about money Timestamps 0:00 Vitaliy on humility and why the range of outcomes in investing is expanding 2:00 The math behind long-term stock market returns 4:00 Why high valuations can become a headwind for future returns 6:00 Big tech growth and whether large companies now have structural advantages 8:00 AI investment and the risk of massive capital misallocation 10:30 Learning AI and why investors must adapt to rapid technological change 14:00 Why humility leads to diversification and larger portfolios 20:00 The evolution from cheap stocks to quality investing 25:30 Selling discipline and recognizing when a thesis is broken 34:30 Letting winners run and avoiding the mistake of selling too early 42:00 Learning from other great investors and building your own framework 44:30 Passion, patience, and process in investing 52:00 Why great investors are motivated by more than money 1:01:40 The connection between investing, creativity, and classical music

    1h 12m

  5. 9 MAR

    What War Charts and AI Bubbles Miss | The Weekly Market Insight – March 8, 2026

    Follow Two Quants and a Financial Planner on Spotify Follow Two Quants and a Financial Planner on Apple In this new weekly Excess Returns recap, Jack Forehand and Matt Zeigler highlight the most important investing insights from recent conversations across the Excess Returns podcast network. Drawing on discussions with Andy Constan, Rob Arnott, Kai Wu, Ben Hunt, Rupert Mitchell, Meb Faber and others, the episode connects ideas across macro, markets, AI, credit cycles and valuation. The conversation focuses on timeless investing principles investors can apply today, including how to evaluate expert opinions, how AI may reshape markets and jobs, what defines a true market bubble, why international stocks may be benefiting from global fiscal spending, and why the best opportunities in markets often come after long periods of underperformance. Topics covered in this episode How to evaluate expert opinions during major market events and filter signal from noise Andy Constan’s framework for judging credibility based on experience and confidence Why charts showing markets rising after wars are often misleading data mining The difference between believing in AI technology and believing AI stocks are good investments How AI could both replace and augment human work through the task based structure of jobs Rob Arnott’s definition of a market bubble using implausible growth assumptions Why many technology leaders ultimately fail to justify the expectations priced into their stocks The difference between software companies whose moat is code and those with durable intangible advantages How brand, switching costs, distribution and network effects protect enterprise software companies Why AI may be one of the most disruptive technologies in history and what that means for markets Meb Faber on the myth that the easy money has already been made in international and value stocks The behavioral challenge of holding unpopular strategies through long periods of underperformance Rob Arnott on why small cap value could outperform large cap growth over the next decade Ben Hunt on the point in every credit cycle when lenders say no more How rising costs of capital can trigger boom bust credit cycles Rupert Mitchell on why global equity markets often follow government fiscal spending The growing role of international fiscal policy and capital flows in global market leadership Timestamps 00:00 Introduction and the idea behind the weekly Excess Returns recap show03:00 Andy Constan on how to evaluate experts and filter market commentary11:40 Why charts showing markets rising after wars can be misleading17:00 Kai Wu on AI technology versus AI investments and the future of work25:37 Rob Arnott on how to define a market bubble using valuation assumptions29:35 Kai Wu on software moats, intangible assets and enterprise software durability35:31 Rob Arnott on how disruptive AI could be for the global economy39:54 Meb Faber on why the easy money has never been made in markets43:57 Rob Arnott on small cap value versus large cap growth opportunities48:39 Ben Hunt on credit cycles and the moment lenders pull back55:56 Rupert Mitchell on fiscal spending and global equity market performance

    1h 2m

  6. 7 MAR

    1% Growth. Zero Jobs | Jim Paulsen on the Recession Hiding in Plain Sight

    Subscribe to the Jim Paulsen Show on Spotify Subscribe to the Jim Paulsen Show on Apple Podcasts In this episode of the Jim Paulsen Show, Jim joins Jack Forehand and Justin Carbonneau to break down the macro forces shaping today’s markets and economy. Jim explains why the economy may be far weaker than headline GDP numbers suggest, how technology and AI investment are masking weakness in the broader economy, and why leadership in the stock market may be shifting. The conversation also explores the market implications of geopolitical conflict, the relationship between policy and market leadership, and how investors should think about AI’s long-term economic impact. Topics covered in this episode How geopolitical events like the Iran conflict affect markets, volatility, oil prices, and investor sentiment Why market reactions to geopolitical shocks often fade once the situation is “vetted” by investors The relationship between oil prices, the US dollar, and global financial markets Why Paulsen remains constructive on international stocks and emerging markets despite recent volatility Why energy and food now represent a much smaller share of consumer spending than in past inflation cycles The argument that inflation fears may be overstated given structural disinflationary forces in the economy How AI and technological innovation can destroy some jobs while simultaneously creating new economic demand Why technological progress often lowers costs and expands markets rather than simply eliminating work The concept that the “new economy” driven by technology investment is now large enough to influence overall GDP growth Paulsen’s analysis showing that roughly 11 percent of the economy tied to new-era investment is growing rapidly while the remaining 89 percent is barely growing Why the broader economy may resemble a recession even while headline GDP remains positive How the dominance of large technology companies in indexes like the S&P 500 may be masking weakness in the broader market The historical “toggle” between technology leadership and broader market leadership in equity markets Why policy conditions like the yield curve and monetary easing often drive leadership shifts toward value, small caps, and cyclical stocks Whether the Federal Reserve could begin easing policy without a traditional recession Why policy support may eventually broaden the bull market beyond technology stocks Timestamps 0:00 Jim Paulsen on geopolitical volatility, oil prices, and market reactions2:50 How investors should think about the Iran conflict and market implications10:50 The relationship between oil prices, the US dollar, and safe-haven flows12:20 Why Paulsen likes international and emerging market stocks14:30 Why higher oil prices may not lead to sustained inflation18:40 AI disruption and the economic debate around jobs and productivity23:00 How innovation historically creates new demand and economic growth29:40 Technology is the tail wagging the economic dog33:30 Why the “new economy” is growing far faster than the rest of the economy37:00 Evidence that most of the economy may already resemble a recession41:00 Profit growth disparity between technology and the rest of the economy45:40 Why the stock market can mask weakness in the broader economy46:30 The historical leadership toggle between tech and the broader market49:00 Valuation differences between technology and other sectors50:30 How policy conditions influence market leadership55:00 Signs that leadership may already be shifting beyond tech57:00 Could the Fed ease without a traditional recession59:00 What a policy shift could mean for the next phase of the bull market

    1h 2m

  7. 5 MAR

    The Widest Valuation Gap in History | Rob Arnott on What Investors Are Missing About AI

    Rob Arnott returns to Excess Returns to discuss the biggest questions facing investors today, including the impact of geopolitical conflict, the valuation gap between U.S. and international markets, the long-term investment implications of artificial intelligence, and why extreme spreads between growth and value may present major opportunities. Arnott, founder of Research Affiliates and pioneer of fundamental indexing, explains why AI itself is not necessarily a bubble but many AI stocks may be priced for implausible growth. He also discusses why small cap and value stocks may offer some of the most compelling long-term opportunities in decades, how market narratives drive valuations, and why diversification beyond the U.S. could be critical for investors. Throughout the conversation, Arnott draws on decades of market history to explain how bubbles form, why profit margins tend to mean revert, and how investors should think about positioning portfolios for the next market cycle. Topics covered in this episode: • Why Rob Arnott believes AI is real but many AI stocks may be in a bubble • How market narratives can push valuations far beyond fundamentals • Why U.S. stocks trade at roughly twice the valuation multiples of international markets • The widening valuation gap between growth and value stocks • Why small cap stocks may be one of the most attractive opportunities today • The massive capital spending required to build the AI ecosystem • How technological revolutions historically destroy jobs but create new opportunities • Why investors should learn to use AI tools to remain competitive • The definition of a market bubble based on implausible growth expectations • Lessons from the dot-com bubble and the history of dominant technology companies • Why profit margins tend to mean revert over time • The long-term outlook for international stocks and diversification • How fundamental indexing works and why it can create rebalancing alpha • The concept of the “Trifecta” approach combining value, core indexing, and growth • The risks of conglomerate premiums and the diversification discount • Why the largest companies in the market rarely remain dominant over long periods • How investors should think about balancing growth exposure with cheaper opportunities Timestamps: 00:00 AI vs AI Stocks: Why Arnott Sees a Bubble 00:01 Introduction to Rob Arnott and Research Affiliates 02:13 The Iran Conflict and How War Impacts Markets 06:41 U.S. Valuations vs International Opportunities 08:50 The Extreme Spread Between Growth and Value 10:00 The Small Cap Opportunity and Index Effects 13:08 The Citrini AI Paper and Long-Term Technology Shifts 14:09 How Technological Revolutions Destroy and Create Jobs 16:00 How AI Is Already Changing Investment Research 20:00 Why AI Tools Are Still Losing Money 23:40 How Investors Should Think About AI Exposure 25:21 Arnott’s Definition of a Market Bubble 27:41 Lessons from the Dot-Com Bubble 28:34 Profit Margins and Mean Reversion 30:34 Technology Moats and Competitive Disruption 32:12 Will Mean Reversion Still Work in Markets? 36:02 The Case for International Stocks 41:39 The Trifecta: A New Framework for Indexing 51:15 Why Expensive Slow-Growth Companies Underperform 56:25 Conglomerate Premiums and Mega Cap Tech 57:00 The Long-Term Case for Value and Small Caps 01:00:00 Why Market Leaders Rarely Stay on Top

    1h 3m

  8. 3 MAR

    100% Out of US Stocks | Andy Constan on AI, War Risk and the Shift Abroad

    In this episode of Excess Returns, we welcome back Andy Constan of Damped Spring Advisors for a wide-ranging discussion on geopolitical risk, AI and productivity, capital flows, credit markets, fiscal policy, and the shift from US to international equities. Andy walks through the framework he uses to evaluate uncertainty, from wars and geopolitical shocks to the long-term implications of artificial intelligence, and explains why capital markets and funding conditions may matter more than bold narratives. We also explore growth, inflation, Fed policy, and the structural case for global diversification in today’s macro environment. Main topics covered A practical framework for analyzing geopolitical shocks, including red flags, green flags, and how to evaluate information quality during times of uncertainty How markets are pricing the current conflict with Iran across oil, equities, bonds, gold, and volatility Why historical market performance after wars may offer limited predictive value due to small sample sizes How to think about AI from a macro perspective, including GDP growth versus GDP share and who ultimately captures the gains The capital markets implications of massive AI-related capex and whether equity and credit markets can fund current spending plans Growth, inflation, and the Fed: how fiscal stimulus, wealth effects, QT, and labor market trends are shaping the current macro backdrop Why Andy has shifted away from US assets toward international markets, including the role of bond yields and global risk parity A critical look at the Trump accounts proposal and the broader issue of fiscal deficits and capital allocation The key risks Andy is watching over the next three to six months, especially around credit markets and funding conditions Timestamps 00:00 Introduction and overview of discussion topics 01:01 Framework for evaluating geopolitical shocks and information quality 11:46 Market reaction to the Iran conflict and asset pricing implications 23:00 Why historical war data may not be reliable for market forecasting 27:03 How to analyze AI’s impact on productivity and economic growth 37:00 AI capex, credit markets, and funding risks 42:24 Growth, inflation, and Fed policy in the current cycle 49:20 The case for international equities over US markets 56:20 Trump accounts, fiscal policy, and capital allocation 01:02:23 What Andy is watching most closely in the months ahead

    1h 4m
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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.

Information

  • Creator
    Excess Returns
  • Years Active
    2019 - 2026
  • Episodes
    476
  • Rating
    Clean
  • Copyright
    © 905628
  • Show Website
    Excess Returns

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