Excess Returns

Can The Mag7 Continue to Grow? $MSFT $GOOGL $NVDA $TSLA $META $AMZN $AAPL I continue to be bullish on their new innovations creating digital infrastructure that replaces physical infrastructure, lowering costs and increasing value for users. High profit margins allow for innovation rates far above what was historically possible. But historically growing at high rates was also impossible for such large companies. Which way do you think these companies will go? Listen in to @practicalquant and I discuss on the incredible @excessreturnpod.

"Not only did they cut, but they did surprise cuts. And this is from the same guy who 40% ago had used the term irrational exuberance to describe the stock market. He was cutting into a stock market that was up 40% from when he made those comments." Andy Constan on how the Fed reaction to LTCM added fuel to the tech bubble.

"Growth is bad in finance." -@MarcRuby Marc Rubinstein breaks down why on @excessreturnpod, including what it means for private credit, banks, and your portfolio. New episode out now! youtu.be/tEL92UnZW5o?si…

Berkshire Hathaway director Chris Davis: "I've always felt that the line between growth and value is a strange one. A business that grows profitably is more valuable than a business that doesn't grow — so growth is a component of value." (h/t @excessreturnpod)

There has been a lot of debate about how to adjust traditional value metrics in a high intangible world. Elena Koziaeva explains how Bridgeway approaches the problem differently by de-emphasizing value and putting more weight on sentiment.

“The reason why a bubble regime is so difficult is because it plays precisely on human nature.” In the first episode of First Principles with Andy Constan, Andy breaks down what history teaches us about bubbles and what those lessons might mean for today’s AI-driven market. Topics covered: • Why bubbles are almost impossible to identify in real time • The root conditions that can turn into a bubble • How escalation events push markets into dangerous territory • What 1987, the dot-com bubble, housing, bonds and AI have in common • Why the Netscape moment may rhyme with today’s AI moment • How Long-Term Capital helped fuel the final phase of the tech bubble • Why AI capex and semiconductor expectations matter so much • The biggest mistake investors make in bubble regimes

For anyone looking for audio links for the new show, they are here: Spotify: bit.ly/4v5veb9 Apple: bit.ly/4dhsYWJ

I shit post bubble. I long form nuance youtu.be/XXS28h0Jvh0

"I've always felt that the line between growth and value is a strange one because a business that grows profitably is more valuable than a business that doesn't grow." Chris Davis on why growth and value were never meant to be opposites - and how the opportunity can shift between them

"Canals were the most obvious losers from the railway mania, and they did lose in the end. But actually, you did better investing in canal stocks between 1845 and 1850 than you did in railways." Edward Chancellor on what railroads in Britain can teach us about AI.

Really excited to launch our new show First Principles with @dampedspring Many shows offer opinions on the market and economy. We will focus on the principles that drive them. In our first episode, we discuss what history teaches us about bubbles. bit.ly/4dncJHE

@systvest Thank you!

Nice episode!

@tobibog Yes. That is part of it. Also, IPOs as a group are not great performers either, and you exclude them.

@excessreturnpod Could you this be a better Approach because you filter out stocks that are small due to their bad performance?

"They want the stocks to be small now when we're ranking them, but they also want the stocks to have been small a year ago." The existence of the small-cap premium has been one of the most debated ideas in factor investing. Elena Koziaeva explains Bridgeway’s research showing why the way we define “small” may change the answer.

Berkshire Hathaway director Chris Davis: "It doesn't make any sense for money to be free." "We went through, really since 1981, a period in which the cost of money continued to fall relentlessly — and it got to absurdity. It got to zero." "It was a really anomalous time and I think it allowed for an enormous amount of bad behavior to take root." (h/t @excessreturnpod)

"The last thing I want is a regular dividend." Chris Bloomstran on what Berkshire should do with its big cash pile - and the lessons about deploying cash that Buffett learned from 2008.

Great interview with the author of "The Price of Time" Edward Chancellor by Kai Wu: Thought you might enjoy this @m3_melody ✌️ We Asked a Renowned Financial Historian What Investors Get Wrong About B... youtu.be/X8seA57CwCo?si… via @YouTube

I had Edward Chancellor, my former GMO colleague, on "The Intangible Economy" today. I consider him the world's foremost expert on capital cycles, and it was great to get his take on the current AI capex boom. @chancellor_e Spotify: bit.ly/42xaHzT Apple: bit.ly/4dBWXtQ

How great is this... amazing conversation @bogumil_nyc and @ckaiwu, the cross-overs between your disciplines, this is excellent to hear you explore out loud.

"I'm trying to find Tom Brady not in college, not in high school, but in fifth grade midget football." Ian Cassel and Chris Mayer on finding great micro-cap stocks