Excess Returns

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Aug 2026

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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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August 28, 202657 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.

August 25, 2026Episode 4781 hr 0 min

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/4hU28Im Topics 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.

August 22, 2026Episode 4771 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, 20261 hr 0 min

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.

August 18, 2026Episode 4761 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, 20261 hr 0 min

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.

August 11, 2026Episode 4751 hr 0 min

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.

August 8, 2026Episode 4741 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.

August 6, 2026Episode 47359 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.

August 4, 2026Episode 4721 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.