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. 9 HR AGO

    The Moment Common Knowledge Changed | Last Call - With Andy Constan, Ben Hunt, Brent Kochuba and Eric Pachman

    This episode of our new market wrap show Last Call breaks down the biggest market drivers right now through three distinct lenses: macro, narrative, and flows. With an oil shock driven by geopolitical conflict, rising volatility, and conflicting economic signals, the discussion focuses on what actually matters beneath the surface and how investors should think about positioning in an environment where nothing is clearly priced in. Follow Last Call on Spotify⁠⁠⁠ ⁠⁠⁠Follow Last Call on Apple Podcasts⁠ Jack and Matt bring together Andy Constan, Ben Hunt, Brent Kochuba, and Eric Pachman to analyze the ripple effects of higher oil prices, the “common knowledge” shift in markets, the role of options flows in driving short-term moves, and why traditional economic indicators like unemployment may be telling a misleading story. Andy Constan Twitterhttps://x.com/dampedspring Ben Hunt Twitterhttps://x.com/EpsilonTheory Brent Kochuba Twitterhttps://x.com/spotgamma Eric Pachman Twitterhttps://x.com/epachman Topics covered: How oil supply shocks impact GDP, inflation, and consumer spending Why higher oil prices act as a tax on the economy and shift growth dynamics The difference between supply shocks and demand shocks in energy markets Why central banks may be unable to respond to an oil-driven slowdown The “common knowledge” framework and how narratives reshape markets Why the Strait of Hormuz has become the key global economic bottleneck Oil exporters vs importers and how that divide is driving asset performance Why energy equities may outperform in a prolonged geopolitical conflict How volatility is being driven by oil prices and geopolitical risk The relationship between VIX and oil during crisis periods Why $100 oil could trigger a major volatility spike and equity selloff The JP Morgan collar trade and how options positioning can pin markets How dealer hedging flows influence short-term price action Why markets may appear disconnected from negative news The limits of predicting what is “priced in” during uncertain environments Why diversification matters more when macro visibility is low How unemployment data can mislead by excluding people leaving the workforce The difference between unemployment rate and labor force participation Structural decline in rural economies and the migration to urban centers How labor force trends explain the divergence in economic experiences across the US Timestamps:00:00 Oil shock as a GDP tax on consumers00:16 Strait of Hormuz as global economic chokepoint00:29 Why $100 oil could send VIX to 5000:39 Why unemployment rate may be misleading01:07 What Last Call is and how the episode is structured02:28 Macro, narrative, and flows framework for markets03:44 How oil supply shocks impact growth and inflation06:00 Why higher oil prices reduce discretionary spending07:00 Oil’s impact on inflation and central bank policy09:39 Scenario analysis for oil prices and market outcomes12:28 Is the oil shock priced into markets?16:00 Why oil vs assets may be mispriced20:00 Ben Hunt on the “common knowledge” market shift25:00 Why the Strait of Hormuz changes everything29:00 Portfolio implications: long energy vs global equities33:00 Brent Kochuba on oil, VIX, and market volatility linkage36:00 Why $100 oil is the key risk threshold for equities40:00 JP Morgan collar trade and market pinning dynamics44:00 Why options flows can override macro narratives short term52:00 Eric Pachman on unemployment vs labor force reality59:00 Structural decline in labor force across US counties

    1hr 10min

  2. 2 DAYS AGO

    The Private Credit Apocalypse That Isn’t Coming | Larry Swedroe Dispels the Myths

    In this episode of Excess Returns, we sit down with Larry Swedroe to break down one of the most debated topics in markets today: private credit. Larry walks through what private credit actually is, why it has grown so rapidly since 2008, and where he believes the biggest misconceptions and risks are for investors. We dig into the structure of the market, how liquidity and credit risk really work beneath the surface, and why the media narrative around private credit may be overstating systemic risks. We also explore how investors should think about diversification, illiquidity premiums, and the potential impact of AI on credit markets and software lending. Larry Swedroe Twitter https://twitter.com/larryswedroe Larry Swedroe Substack https://larryswedroe.substack.com Topics covered What private credit is and how it evolved after the 2008 financial crisis Why private credit is not a single asset class and how risk varies across structures The three key risks in private credit: credit risk, liquidity risk, and concentration risk How illiquidity premiums work and why they can be a major source of return Differences between private credit funds, BDCs, and open architecture platforms Why diversification is critical and how concentration risk can be hidden How rising interest rates are impacting defaults and underwriting standards Media misconceptions around defaults, losses, and valuation marks in private credit The real systemic risk of private credit vs the banking system How liquidity actually works in interval funds and stress scenarios What happens in a recession and how private credit compares to equities and high yield bonds The role of software lending and how AI disruption could impact credit portfolios How to evaluate private credit managers including scale, underwriting, and leverage The importance of credit culture and avoiding “reach for yield” behavior Whether private credit should be accessible to retail investors and the risks involved The concept of earning “beta” in private credit vs trying to pick winning managers AI’s growing role in investment research and the risks of overfitting and false signals Timestamps 00:00 Why private credit is less risky than banks for systemic stability 01:12 Introduction and episode overview 03:00 What private credit is and how it grew after 2008 05:21 Who provides capital to private credit funds 07:11 Why private credit is not a monolithic asset class 08:00 The three key risks in private credit 09:00 Illiquidity premium and why it can be a “near free lunch” 12:00 Credit risk and importance of senior secured lending 16:00 Concentration risk and why diversification matters 18:11 Are defaults rising and what the data actually shows 21:00 Media narratives vs actual credit losses 23:50 Could private credit cause a financial crisis 25:50 How to analyze portfolios and why most investors can’t 28:44 Should investors think about indexing private credit 30:12 Can private credit work for retail investors 32:26 Mass redemption risk and liquidity stress scenarios 36:00 Sources of liquidity inside private credit funds 41:37 Software lending and AI disruption risk 47:00 Private equity valuations and spillover into credit risk 49:43 Key checklist for evaluating private credit investments 56:30 How AI is changing financial research and investing

    1 hr

  3. 3 DAYS AGO

    Nothing Is Priced In | Bob Elliott on Why Investors Are Misreading the Oil Shock

    This episode of Excess Returns features Bob Elliott discussing the growing fragility in the global economy as an oil shock collides with a shift from an income-driven to a savings-driven system. The conversation explores why markets may be mispricing the economic impact of higher oil prices, how inflation and growth dynamics could unfold, and what this means for investors navigating an increasingly volatile macro environment. Bob also breaks down how to think about global macro investing today, including why traditional portfolios may be poorly positioned for a wider range of outcomes, how macro managers are adapting to shifting conditions, and how AI-driven productivity gains could impact economic growth, labor, and markets. Bob Elliott on Twitter https://twitter.com/BobEUnlimited Unlimited Funds website https://www.unlimitedfunds.com Topics covered The shift from an income-driven economy to a savings-driven economy and why it creates fragility Why an oil shock acts as both an inflation driver and a tax on real consumer spending How higher gas prices mechanically reduce discretionary spending and economic growth Why markets may be underpricing the economic impact of the current oil shock The link between oil prices, inflation expectations, and real demand destruction How global markets respond to shocks through deleveraging and volatility spikes Why gold and other winning trades can fall during risk-off environments The sequencing of inflation first and growth slowdown later in shock-driven cycles How central banks are likely to respond to a stagflationary shock Lessons from 2022 and 2008 for understanding today’s macro environment Why stocks and bonds may both be mispriced in the current regime The difference between consumer surplus and true productivity gains from AI Why AI-driven job losses and economic growth cannot coexist without major dissaving The most likely path for AI as a productivity enhancer rather than a job destroyer How to think about measuring productivity in a technology-driven economy The role of second- and third-order effects in macro investing How global macro strategies identify mispricings across asset classes The concept of using the “wisdom of the crowd” from hedge fund positioning Why macro strategies can perform in both rising and falling markets How macro fits into a portfolio as a diversifier versus long-only assets Why the future investment environment may require broader strategy diversification Timestamps 00:00 Oil shock meets a savings-driven economy 01:00 Framing the macro environment: oil, inflation, and growth 02:12 What a savings-driven economy means for market fragility 04:46 Why household income vs spending divergence matters 07:00 First principles of an oil shock and demand inelasticity 08:00 How oil price spikes flow through to inflation 13:00 Global market reactions and emerging market dynamics 14:00 Deleveraging and volatility driving asset price reversals 15:44 Why gold declines during macro stress events 17:17 Institutional positioning and ETF flows in gold 17:34 Inflation first, growth slowdown later: sequencing the impact 19:24 Is the economic damage already done 22:00 How macro investors operate in low-conviction environments 29:19 What the Fed should do versus what it will do 31:00 Comparing today’s environment to 2022 inflation dynamics 33:00 Why markets are pricing in almost nothing 34:00 AI and the link between labor, income, and spending 37:11 Productivity vs consumer surplus in AI adoption 40:00 Why better tools don’t necessarily mean higher productivity s 46:00 How global macro strategies are constructed 48:00 Using hedge fund positioning as a signal 56:00 Why the opportunity set for macro may be expanding

    58 min

  4. 5 DAYS AGO

    The 0.1% Winners | Chris Mayer and Robert Hagstrom on Why Outliers Drive Returns

    Subscribe to the 100 Year Thinkers of Spotify⁠ ⁠Subscribe to the 100 Year Thinkers of Apple In this episode of our new show, 100 Year Thinkers, Robert Hagstrom and Chris Mayer explore how investors should think about base rates, extreme outcomes, and the realities of long-term wealth creation in markets. Applying the work of Michael Mauboussin, the conversation challenges conventional ideas like mean reversion and highlights why a small number of companies drive most stock market returns—and what that means for portfolio construction. This episode brings together Robert Hagstrom and Chris Mayer to explore how investors should think about base rates, extreme outcomes, and the realities of long-term wealth creation in markets. The conversation challenges conventional ideas like mean reversion and highlights why a small number of companies drive most stock market returns—and what that means for portfolio construction. Topics covered • Why markets are driven by extreme outcomes and power laws, not averages • The Best & Bessembinder research showing a handful of stocks create most wealth • Base rates vs outliers and when to trust historical probabilities • Why the 100 bagger framework focuses on studying winners, not predicting them • Portfolio construction as a way to capture asymmetric upside • Buffett’s approach to consistency, durability, and long-term operating history • Inside view vs outside view and how narratives distort investing decisions • Why AI may be breaking traditional base rate assumptions in software and tech • The limits of mean reversion and why it can lead investors astray • Return on invested capital and how competition erodes excess returns over time • Identifying durable moats and why most advantages eventually get attacked • Winner-take-all dynamics and how they shape long-term investing outcomes • The twin engines of returns: earnings growth and multiple expansion • Return on incremental capital as a key driver of long-term compounding • Intangible assets and why accounting understates true business value • Amazon as a case study in misunderstood profitability and reinvestment • AI CapEx cycle and why current spending may not be sustainable long term • Why great businesses matter more than great management in long-term investing Timestamps 00:00 Why extreme outcomes drive stock market returns 01:00 Base rates vs studying 100 baggers 03:00 Power laws and why markets are a game of outliers 05:00 Just 46 companies created half of all market wealth 07:00 Buffett on consistency and long-term operating history 10:00 How to think about base rates in AI, energy, and macro cycles 12:00 Does AI invalidate historical base rates? 15:00 Inside view vs outside view in investment decision making 19:00 Buffett’s “certainty at a discount” framework 23:00 How often investors should evaluate businesses vs prices 29:00 Mean reversion myths and where it breaks down 33:00 Return on invested capital and competitive pressure 36:00 Moats, winner-take-all markets, and long-term dominance 41:00 Twin engines of compounding: growth plus multiple expansion 43:00 Return on incremental capital and forecasting future returns 47:00 Intangibles and why accounting distorts real business value 50:00 Amazon, CapEx cycles, and hidden profitability 53:00 AI infrastructure buildout and the future of returns

    1hr 12min

  5. 21 MAR

    Big Decline. Options Support Gone | Brent Kochuba on the Fragile Market Setup

    Subscribe to the OPEX Effect on Spotify⁠ ⁠Subscribe to the OPEX Effect on Apple Podcasts This episode breaks down the growing tension beneath the surface of today’s markets, where volatility signals, options positioning, and macro risks like war and inflation are increasingly misaligned. Brent Kochuba and Jack Forehand explain why markets appear calm despite heavy hedging, and what that disconnect could mean for a potential volatility spike and downside move ahead. Brent Kochuba on Twitterhttps://twitter.com/SpotGamma SpotGamma Websitehttps://spotgamma.com Topics covered in this episode • Why volatility looks elevated beneath the surface even as markets remain relatively calm• The growing gap between implied volatility VIX and realized volatility and what it signals• How options expiration OPEX can create turning points in both price and volatility• Why current positioning is unusually put-heavy and what that means for downside risk• The role of market makers and hedging flows in driving market moves• How geopolitical risks like the Iran conflict are changing options behavior and hedging demand• Why correlation is spiking and what it says about investors moving from stock picking to asset allocation• The breakdown of traditional diversification including the 60/40 portfolio• How credit markets and liquidity risks could amplify equity volatility• The impact of zero DTE options and why traders are shifting to longer-duration hedges• The significance of the JP Morgan collar trade and key levels to watch into month-end• Why volatility spikes often follow periods of suppressed market movement• The potential for a sharp upside rally if geopolitical risks suddenly resolve• How options positioning can help both traders and long-term investors with timing decisions Timestamps 00:00 Volatility premium vs low market movement disconnect01:00 Why markets feel calm despite rising risks05:20 Explosion in options volume and impact of Monday Wednesday Friday expirations07:00 How market maker hedging flows drive price movements08:40 Dynamic hedging and why options impact evolves over time09:20 Why OPEX can trigger market turning points10:30 VIX expiration effects and short-term volatility suppression13:00 Negative gamma and how it amplifies market volatility14:10 Why hedging demand remains high despite OPEX clearing16:00 Jump risk scenario and potential VIX spike to 4017:10 Shift from zero DTE trading to longer-term hedging18:00 Put-heavy positioning across equities and indices20:40 Size and significance of the current OPEX event22:20 VIX spike dynamics around expiration23:40 JP Morgan collar trade and key SPX levels25:00 Why OPEX often marks short-term market lows or highs28:30 Review of prior OPEX signals and market setup30:00 Rising correlation and shift to asset allocation mindset32:00 Dispersion breakdown and implications for equities34:00 Software sector volatility and AI disruption narrative36:30 Using options signals for better timing decisions39:00 Correlation spike and risk-off behavior across markets41:30 Why investors are avoiding calls and piling into puts44:30 Cross-asset correlation breakdown and bond hedge failure48:00 Credit market risks and spillover into equities49:00 Extreme VIX vs realized volatility spread50:50 Why realized volatility remains unusually low52:30 Oil, inflation, and macro feedback loops

    1hr 10min

  6. 19 MAR

    The War Markets Can't Price | Jared Dillian on the Regime Change Investors Miss

    In this episode, Jared Dillian joins Excess Returns to break down why markets consistently misprice major regime shifts, geopolitical risks, and inflation shocks—and what that means for investors today. The conversation explores how changing correlations, Fed policy constraints, commodities, and portfolio construction are reshaping the investing playbook in 2026. Jared Dillian Twitter https://twitter.com/DailyDirtNap Daily Dirt Nap https://www.dailydirtnap.com Topics Covered Why markets fail to price low-frequency, high-impact events like war and geopolitical shocks The concept of regime change and why investors struggle to adapt to new market environments The breakdown of the 60/40 portfolio and stock-bond correlation in an inflationary regime Commodities bull market dynamics and why energy, agriculture, and hard assets may outperform The role of options and “long gamma” positioning in uncertain macro environments Bitcoin as a liquidity trade vs. store of value and how sentiment drives crypto cycles Fed policy, oil prices, and why central banks follow the “path of least embarrassment” Inflation psychology, consumer behavior, and risks of 1970s-style market conditions Political bias in investing and how ideology shapes portfolio decisions Risks in private equity and private credit, including valuation marks and liquidity issues The Awesome Portfolio framework and why diversification across asset classes reduces drawdowns AI, productivity shifts, and how technological change impacts markets and labor trends Timestamps 00:00 Why markets misprice geopolitical risk and regime change 02:00 Ukraine, Iran, and delayed market reactions to obvious risks 05:00 Overreaction cycles and the Peloton example 06:00 What it means to be long gamma in investing 09:00 Oil volatility and asymmetric risk opportunities 10:00 Regime change explained through stock-bond correlation breakdown 12:00 Non-stationarity and why investing rules constantly change 14:00 Why most investors fail to adapt to new regimes 17:00 Position sizing, risk management, and staying “small” 19:00 Commodities bull market and broad participation across assets 20:30 Bitcoin as a liquidity sponge and sentiment-driven asset 22:00 Fed policy, inflation, and the path of least embarrassment 25:00 Oil-driven inflation vs demand destruction dynamics 27:00 Inflation psychology and real-time indicators 29:00 Are we entering a 1970s-style macro regime 31:00 How political views shape investment strategies 35:00 Learning from past mistakes and adapting to new trends 37:00 Private equity and private credit valuation risks 40:00 Liquidity cycles and refinancing risk in credit markets 43:00 The Awesome Portfolio explained 46:00 Behavior, drawdowns, and why diversification works 49:00 Real estate allocation and portfolio construction 51:00 Labor trends, productivity, and changing work dynamics 54:00 AI productivity boom vs social media drag 57:00 The dangers of consensus thinking and unpopular views

    1hr 3min

  7. 16 MAR

    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 – Twitter https://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 knowledge 01:40 Is biotech one of the last places for persistent active alpha? 02:45 The “bag of options” model for valuing biotech companies 05:00 Drug development phases and probabilities of success 07:00 Using base rates to estimate clinical trial success 09:20 Estimating total addressable markets for new drugs 11:10 Why rising interest rates hurt biotech valuations 13:00 Capital flows and why biotech underperformed in recent years 15:30 The biotech boom and bust around the COVID pandemic 18:00 How AI and tech compete with biotech for investor capital 22:20 The role of specialist biotech hedge funds 24:00 How pharmaceutical acquisitions drive biotech returns 25:20 How biotech venture capital differs from tech VC 30:50 Why biotech investors must evaluate complex scientific data 34:20 Where AI may improve drug discovery and R&D productivity 42:00 Portfolio construction and diversification in biotech venture investing 44:30 Volatility, valuation marks, and private market pricing 48:00 Managing risk across different drug technologies and disease areas 49:30 Why China is becoming important for clinical trials 53:00 Why biotech investing must be viewed as a global industry 54:30 The importance of flexibility between value and growth investing 58:50 Will investing become more systematic and quantitative over time

    1hr 5min

  8. 15 MAR

    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

    1hr 5min
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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
    482
  • Rating
    Clean
  • Copyright
    © 905628
  • Show Website
    Excess Returns

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