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. 8 hr ago

    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 Editionhttps://amzn.to/3TVXoru Robert Hagstrom on Xhttps://x.com/RobertGHagstrom Equity Compasshttps://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 Intro04:00 Why Markowitz defined risk as variance11:47 What 3,000 portfolios revealed about concentration17:17 Know-something versus know-nothing investors22:23 Kahneman, loss aversion, and modern portfolio theory26:58 Darwin, pragmatism, and adaptive markets32:28 Buffett’s cathedral and casino metaphor37:37 The El Farol problem and why markets resist prediction42:08 Why investors crave market forecasts46:16 Why investing is most intelligent when businesslike51:38 Record stock dispersion, options, and leveraged ETFs56:00 Measuring portfolio progress through business economics01:00:43 Why permanent capital enables focus investing01:04:43 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.

  2. 3 days ago

    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.

  3. 5 days ago

    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.

  4. 6 days ago

    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.

  5. 18 Jul

    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.

  6. 16 Jul

    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.

  7. 14 Jul

    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.

  8. 11 Jul

    Jim Paulsen Sees a Correction Coming | The 33 Charts That Turned Him Cautious

    Jim Paulsen joins us to explain why weakening economic momentum, tightening financial conditions and extreme AI enthusiasm could set the stage for a 10% to 20% stock market correction. We discuss labor market weakness, the growing divide between technology and the broader economy, fading tech leadership, market complacency, bond yields and the demographic forces that could keep US growth and inflation lower for years. Jim also explains why he does not expect a recession or the end of the long-term bull market, but believes investors may need to reduce their concentration in AI and technology stocks as leadership quietly shifts toward the broader market. Jim Paulsen on X https://x.com/jimwpaulsen Paulsen Perspectives https://paulsenperspectives.substack.com/ Main topics covered • Why Jim expects a 10% to 20% market correction without a recession • What zero job creation, declining full-time employment and rising unemployment reveal about the labor market • Why housing starts, real disposable income and GDP forecasts point to weaker economic growth • How higher Treasury yields, oil prices, a stronger dollar and slower money growth have tightened financial conditions • Why the economic damage from an oil shock often appears after oil prices peak • The widening earnings and economic divide between AI investment and the rest of the economy • What investor positioning, shrinking liquidity and low defensive exposure reveal about market complacency • Why strong earnings momentum does not eliminate the risk of a market decline • Evidence that technology, communication services and the Magnificent Seven are losing market leadership • Why old economy sectors may outperform technology during the next stage of the bull market • How weak labor force growth could push economic growth, inflation and Treasury yields lower • Why demographics, immigration and productivity will shape the long-term US economic outlook Timestamps 00:00 Why Jim Paulsen expects a 10% to 20% market correction 04:32 The labor market weakness investors may be overlooking 08:42 Housing, disposable income and GDP growth are deteriorating 13:03 How tighter financial conditions could slow the economy 17:09 Why oil shocks and the yield curve threaten earnings growth 21:41 Investor complacency and the disconnect between markets and Main Street 25:54 How today’s AI boom differs from the dot-com bubble 30:20 Defensive stocks reach an extreme last seen near major market tops 34:36 Record earnings expectations, momentum and extreme valuations 39:00 Technology, communication services and the Magnificent Seven lose momentum 43:00 The hidden market rotation from new era to old era stocks 47:01 Why Jim expects Treasury yields to fall below 3% 51:43 The demographic forces suppressing growth and inflation 55:45 America’s long-term growth challenge and what could change it

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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.

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  • Creator
    Excess Returns
  • Years Active
    2019 - 2026
  • Episodes
    540
  • Rating
    Explicit
  • Copyright
    © 905628
  • Show Website
    Excess Returns

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