Excess Returns

“We’re going to get a government bailout in another form.” America may spend as much on AI infrastructure, in inflation-adjusted dollars, as it spent fighting World War II. On the debut episode of Why Am I Reading This Now?, Ben Hunt breaks down why the AI buildout may be too important to slow, and who ultimately pays for it. ✅ Why AI CapEx is driving a major share of U.S. economic growth ✅ How private credit became central to the buildout ✅ Why data centers could consume 25% of U.S. electricity ✅ How higher energy and capital costs could reshape markets ✅ Why the government may eventually take an ownership stake in AI

If you didn't check this out yet - 'tis what the weekend is made for. @EpsilonTheory updating the World War AI thesis:

"There is no disconnect in my mind to be able to say these two things and keep a straight face. I am super optimistic on the long-term prospects of the US economy and stock market, and I am hella bearish on how expensive the S&P five hundred market cap weight is." "There's a great quote that we end the book on from old J.P. Morgan, and he says, "The man who is a bear on the future of the United States will always go broke." Meb Faber on balancing short-term valuation concerns with long-term optimism.

"The dot-com boom and bust was almost entirely equity funded. You're saying, 'So what?' Well, when the bust came, there were shareholders who lost sixty, seventy, eighty, or even ninety percent of their money. You felt sorry for them, but the loss was restricted to the shareholders." "The problem with the AI CapEx boom is not only is it immense, but a big chunk of it is funded with debt, the debt coming from private capital rather than banks. And there is a very real chance that if there's a correction and companies start having problems, that problem is gonna show up as distress and default and that pain doesn't stay restricted." Aswath Damodaran on the difference between the dotcom boom and AI.

OH NO People that actually look at the data can recognise the macro realities vs the macro myths

The top 9 ideas (mostly about declining transparency) from the latest issue of Click Beta (with a playlist of course). Here's the article: etf.com/sections/news/… Here's the playlist. open.spotify.com/playlist/2eCB0…

We are excited to launch a new show: Why Am I Reading This Now? hosted by @EpsilonTheory and @CultishCreative In each episode, they will use Perscient’s narrative data to explore the major stories driving markets and what they mean for investors. Subscribe: 🎙️bit.ly/3TsHLYx 🍏bit.ly/451s6Sx

Why are you reading this now? Because @EpsilonTheory has a new show on @excessreturnpod - and the first episode is all about how WORLD WAR AI is progressing: youtu.be/iAtsLTVmfHs?si…

The Fed has ALWAYS been sensitive to equity prices. The increase in the wealth effect just magnifies that existing sensitivity:

“All of this movement away from transparency and frequency of disclosure is just flat-out bad for investors.” What happens when the Fed offers less guidance, companies disclose less information and the economic data investors rely on becomes less trustworthy? On the latest Click Beta, Cameron Dawson, Dave Nadig and Matt Zeigler discuss: ✅ Who benefits when public markets become less transparent ✅ Why less Fed guidance could increase rate volatility ✅ How semiannual reporting could widen Wall Street’s information edge ✅ Why traditional recession indicators have stopped working ✅ What could land on the Fed’s balance sheet in the next crisis ✅ Why physical books and records matter more in an AI-driven world ✅ What Metallica can teach investors about success, reinvention and selling out

“Whenever equity prices have fallen really dramatically, we’ve seen effects in the economy, and the Fed has eased.” “While I think there’s probably going to be more sensitivity to what’s happening in the equity market, I think that sensitivity has always existed.” Some view the “Fed put” as a relatively new phenomenon. Aahan Menon explains why it has been part of the Fed’s reaction function all along.

Five Lessons from Jack Schwager: 1. Big Returns Mean Little Without a Long Record 2. Bad Stretches Are Part of Getting Better 3. The Hard Part Is Protecting Yourself From Yourself 4. Even the Best Are Wrong More Than Half the Time 5. The Market Gives You What You Actually Want excessreturnspod.substack.com/p/walk-on-wate…

“Those labels should not do the work for you. You don’t want to just put a label on something and let that label do your thinking.” “You have to look at it like you’d look at any other business. Start taking apart the segments, assessing their competitive position, looking at their growth rates, how much capital they’re going to need and what kind of returns they can potentially earn on that capital.” When a company like SpaceX goes public, investors will hear plenty of exciting labels. Chris Mayer explains why those labels, and the analogies that come with them, are no substitute for doing the real work of valuing the business.

“I wrote up a call to buy one of the worst-looking charts that you could possibly imagine.” Rupert Mitchell joins us to explain why he bought the equal-weight S&P 500 against the Nasdaq 100—and why the trade may have much further to run. We also discuss: ✅ How AI spending is turning the corporate buyback bid into new share issuance ✅ Why mega-cap technology leadership may finally be cracking ✅ How China has created a price collar that could benefit energy stocks ✅ Why bonds may no longer provide the diversification investors expect ✅ The takeover bid beneath deeply discounted UK equities ✅ Emerging-market opportunities in Uzbekistan and Turkey

Got questions about Federal Reserve uncertainty, the decline of market transparency, and what weaker economic data means for investors? Don't click bait, CLICK BETA! Out now on @excessreturnpod ft. @DaveNadig and @CameronDawson: youtu.be/FrW8B-6KZYI?si…

“You have to love that endeavor enough to devote your life to it. And not for the money, for the endeavor itself, for the game of winning against all these other players.” Ed Seykota said, “Win or lose, everybody gets what they want out of the market.” @jackschwager explains how that idea applies both to the great traders he has studied and to his own path as a writer.

He previously called it the worst chart imaginable, but on this episode of @excessreturnpod, we have @SquirrelMacro explaining why he bought it. When you're ready for a break from all the Fed-talk, come take a trip around the world with me and Rupert: youtu.be/4Ow-sQzII_Q?si…

"As you reduce the number of stocks in the portfolio, you're increasing the odds that you will beat the market, but you're also increasing the odds that you're going to underperform the market by a significant degree." Robert Hagstrom tested 3000 portfolios for his book, the Warren Buffett portfolio. He explains what he learned about focused investing.

The View from the Office. I met up with Jack Forehand, co-host of the Excess Returns podcast, at the Bryant Park cafe. I had the quinoa salad. Jack had a grilled chicken sandwich. Jack is also the co-founder of SignalBridge Wealth and co-author of The Guru Investor. We were introduced by Sunpointe Investments managing director and podcaster Matt Zeigler, who spent two years telling us we needed to meet. Jack started Excess Returns more than six years ago with Justin Carbonneau. Matt joined a few years later. The group now runs about a dozen shows and is building a network modeled on Colossus, the firm behind Patrick O'Shaughnessy’s podcasts. One example is Intangible Economy, a new show hosted by money manager Kai Wu about the shift toward intangible assets in investing and technology. The first guest was Michael Mauboussin. One episode put Jack on my radar: an interview with Cliff Asness. To land the interview, he said the team turned to a novel approach. They suggested an interview that would be focused on Cliff’s older papers and blog posts, effectively a Greatest Hits from his research. Jack has great insights about building an audience. Much of the growth to 70,000 subscribers came from figuring out titles and thumbnails. Jack said a title alone can make a tenfold difference in views. He feeds transcripts through five language models with the same prompt, generating 125 candidate titles, then filters them on patterns that worked. Jack said the goal is to convert the viewer of the last episode into the next show. That makes YouTube completely different from audio, where subscribers see new episodes but there is no algorithm pushing growth. In finance, bearish content does the best. Jack said the pull comes from human negativity bias and YouTube’s recommendation engine. The all-time top videos on many finance channels are old episodes predicting an apocalypse. Excess Returns refuses to play that game, in part because big guests don’t want to appear under thumbnails calling a crash. Platforms punish you for sending people away. Jack said cross-posting is fine, but cross-linking gets crushed. The network stopped linking between platforms and now posts natively on each one, growing YouTube, Spotify, Twitter and Substack independently. Jack says you have to continually experiment. For a time, Excess Returns stopped posting on YouTube Shorts after concluding it dragged down the watch-through rate on full episodes. More recently, they have started posting on YouTube Shorts again. Landing big guests comes down to relationships. Jack said major names want to be treated well and need confidence the final product won’t embarrass them. You can connect with Jack via LinkedIn or X or DM me for a warm intro. @CultishCreative @practicalquant @excessreturnpod

Excess Returns Quote of the Day: Jerry Parker "This whole pursuit of smoothness is totally wrongheaded. You don't wanna make anything smooth. It's gonna continue to work if it's choppy and bumpy."