Excess Returns

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.

Excess Returns is a business podcast hosted by Unknown Host, with 569 episodes on record and a Required Pod Score of 80.

Unknown Host hosts Excess Returns, a business show with 569 episodes published.

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  Episode #490

  Ed Yardeni Still Sees S&P 10,000 by 2029. So Why Is He Getting More Cautious?

  Oct 4, 202659 minS1

  Ed Yardeni of Yardeni Research explains why he still sees the S&P 500 reaching 10,000 by 2029, even as higher oil prices and bond yields make him more cautious near term. His destination hasn't changed, but the timetable has: he has pushed his 8,400 target to mid-2027 while retaining his Roaring 2020s outlook. In this conversation with Justin Carbonneau and Jack Forehand, Ed distinguishes an earnings-led bull market from a speculative melt-up, explains why retiring baby boomers keep spending, and makes the case for AI's benefits spreading beyond the Magnificent Seven. He also weighs the return of the bond vigilantes, diesel's inflation impact, global diversification and the risks that could challenge his optimistic base case. Topics covered: Ed Yardeni's FEMO: fabulous earnings momentum versus fear of missing out Why strong earnings can support stocks even as valuation multiples fall The assumptions behind Ed Yardeni's S&P 500 target of 10,000 by 2029 Retiree wealth, consumer spending and Ed Yardeni's G-shaped economy AI, productivity and data as a fourth factor of production Why Ed Yardeni favors the “impressive 493” as potential AI beneficiaries Cloud revenue, compute demand and the returns on AI capital spending Bond vigilantes, fiscal deficits and the difference between growth-driven yields and a debt crisis How diesel costs could feed into core inflation Global diversification and the bond market's role in guiding Fed policy Chapters: 00:00 Ed Yardeni's bull case and near-term caution 04:26 The Roaring 2020s and retiree spending 08:53 Technology and the productivity thesis 13:06 AI, economic growth and data as a resource 18:22 Why the economy is more than AI spending 24:10 AI returns and the impressive 493 29:48 Valuations, S&P 10,000 and rising bond yields 38:42 Government debt and demand for Treasuries 43:34 Diesel inflation and global diversification 47:41 Fed policy and signals from the bond market 51:55 Yardeni Research's process and tools 56:19 Why Ed Yardeni favors a G-shaped economy Learn more about the Excess Returns podcast network: https://excessreturns.co

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  Excess Returns

  The 10-Year Hit a 24-Year High. Nobody Is Buying Puts. Are You Watching the Wrong Market?

  Oct 3, 202656 min

  Andy Constan, Brent Kochuba and Eric Pachman examine rising bond yields, options positioning and the inflation risks facing stocks. What happens if the rate relief traders are betting on never arrives? On this month's Last Call, Jack Forehand and Matt Zeigler connect three perspectives on the market. Andy Constan explains why stronger growth and debt supply can push yields higher without signaling a bond crisis. Brent Kochuba examines options flows that suggest traders are still leaning toward a rebound. Eric Pachman traces the path from refinery constraints and diesel shortages to freight costs and consumer inflation. Jack and Matt close with the investment implications of AI spending, efficiency and adoption. Follow Last Call on Spotify⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠Follow Last Call on Apple Podcasts⁠ Topics covered: Andy Constan on growth, AI capital spending and the supply of debt Why Andy Constan sees more attractive bonds without calling for a recession How higher yields can constrain stock returns even when growth remains strong Brent Kochuba on bond volatility, calm equities and bets on falling yields Why Brent Kochuba is watching both upside surprises and downside risk Eric Pachman on crack spreads and why cheaper crude may not mean cheaper fuel How diesel prices can flow through freight bills into CPI Eric Pachman on wage inequality and what national averages miss AI spending, productivity and the difference between slower growth and contraction The practical obstacles to bringing AI agents into everyday life Chapters:00:00 Rising yields and the outlook for stocks05:26 Andy Constan: Growth, debt supply and higher yields12:01 Why bonds look more attractive after the selloff18:33 Brent Kochuba: Options flows and bets on rate relief23:21 Equity complacency and risks in both directions31:12 Eric Pachman: Diesel shortages, crack spreads and inflation40:06 Wage inequality and the limits of average inflation44:40 AI capital spending, productivity and investment returns50:34 AI adoption, automation and everyday obstacles 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.

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  Episode #489

  They Beat All US Stock Funds Since 2003 | Michael Baron on the AI Winners Investors Miss

  Oct 1, 20261h 2mS1

  Michael Baron of Baron Capital explains his case for AI beneficiaries beyond the biggest tech stocks, including software companies the market fears will be disrupted. He joins Matt Zeigler and Justin Carbonneau to discuss how competitive advantages, management quality, and a long investment horizon shape the firm's growth portfolios. Baron Capital's co-president and portfolio manager walks through the firm's investments in Tesla and SpaceX, from vertical integration and autonomous driving to reusable rockets, Starlink, and the potential for AI infrastructure in space. He also explains why proprietary data may strengthen some software businesses, how the firm manages positions as winners grow, and what would make him sell. The conversation closes with lessons from Ron Baron on curiosity, primary research, and building conviction. Topics covered: Finding growth opportunities across technology, financial services, real estate, and consumer businesses Why Michael Baron believes some apparent AI losers could become beneficiaries Proprietary data and the investment cases for Shopify, Guidewire, FactSet, MSCI, and Gartner Tesla's evolution, energy business, and the potential economics of autonomy and software SpaceX's reusable rockets, Starlink, and Michael Baron's vision for AI infrastructure in space Valuing businesses over a long horizon and assessing reliance on key leaders Lessons from Ron Baron and the importance of management relationships during market stress Letting winners run while managing concentration, leverage, and portfolio correlations Distinguishing portfolio trims from selling when a competitive advantage deteriorates Why Michael Baron believes AI will increase the importance of investment judgment Learn more about Baron Capital: https://www.baroncapitalgroup.com/ Chapters: 00:00 Michael Baron on finding growth beyond technology 04:16 AI disruption and the opportunity in software 10:54 Tesla, Elon Musk, and vertical integration 18:33 Long-term valuation and key-person risk 23:28 SpaceX, Starlink, and AI infrastructure in space 34:11 Lessons from Ron Baron and the firm's future 40:08 Evaluating management and competitive advantages 47:11 Time as an edge and managing growing positions 54:11 When to trim a position and when to sell 58:11 Curiosity, primary research, and conviction 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.

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  Excess Returns

  The Game Was Rigged in Their Favor. 28% Went Bust Anyway | Kris Abdelmessih on How to Size Bets

  Sep 29, 202650 min

  How much of your portfolio does a good investment idea deserve? Kris Abdelmessih of Moontower joins Matt Zeigler to explain why having an edge is only part of the decision: position size can determine whether favorable odds translate into long-term growth or damaging losses. Through a coin-flipping experiment and everyday examples, Kris makes the Kelly Criterion accessible without a complicated derivation. The conversation explores the difference between expected returns and compounded wealth, why growth-maximizing bets can still be uncomfortable, and how uncertain probabilities make a case for betting less. From portfolio decisions to insurance and extended warranties, the goal is to build better intuition about how much risk to take. Topics covered: How a favorable coin-flipping game exposed costly mistakes in bet sizing Why maximizing the expected payoff of one bet differs from maximizing long-term compounded growth How oversized bets can undermine an otherwise profitable opportunity The Kelly Criterion's three inputs: probability of winning, probability of losing, and payoff Why a constant percentage of your bankroll means changing the dollar amount after wins and losses How different payoffs change the appropriate size of a bet Applying the framework to hypothetical self-insurance and extended-warranty decisions Why full Kelly can involve substantial drawdowns, and the tradeoffs of fractional Kelly Working backward from a position size to the odds needed to justify it Allowing for uncertainty in your estimates and preserving capital for future opportunities The essay behind this conversation: After this post you will be sizing bets in your head https://www.panoptica.com/after-this-post-you-will-be-sizing-bets-in-your-head/ Research discussed: Rational Decision-Making Under Uncertainty: Observed Betting Patterns on a Biased Coin https://arxiv.org/abs/1701.01427 Kris Abdelmessih's Moontower newsletter: https://moontower.substack.com/ Moontower: https://moontower.ai/ Kris Abdelmessih on X: https://x.com/KrisAbdelmessih Chapters: 00:00 Position sizing and the favorable coin-flip experiment 04:45 Why a good bet can produce bad outcomes 13:49 The Kelly Criterion formula explained 18:10 Adjusting your bankroll and accounting for the payoff 23:03 Applying Kelly to a self-insurance decision 30:25 Full Kelly, drawdowns, and reasons to bet less 34:59 Working backward from bet size and evaluating warranties 41:09 Volatility drag, uncertain odds, and the experiment's results 46:09 How much capital does your edge deserve? 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.

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  Episode #488

  We Asked the Data Journalist Who Rebuilt the Jobs Report What the Headline Number Hides

  Sep 26, 20261h 14mS1

  What are headline jobs and inflation numbers missing about the economy investors actually face? Eric Pachman of Data 4 The People joins Matt Zeigler to examine how a changing workforce, rising fuel costs, and differences in household spending could affect inflation, consumer demand, and corporate margins. Using interactive data tools, Eric looks beneath monthly payroll reports, maps changes in America's labor force, and traces how diesel prices can work their way into retail prices. He also shares a grocery-price study that challenged his own assumptions about CPI and explains how he is using AI to make rigorous data journalism more accessible. Topics covered: Why monthly jobs reports need context, including survey uncertainty and revisions How to spot unusual industry-level payroll changes and assess the quality of jobs added What county-level labor force trends reveal about aging and rural America Eric Pachman's research on foreign-born workers and the limits of replacement assumptions How a shrinking supply of workers could create pressure on service prices How diesel costs flow through freight surcharges, retailer margins, and consumer prices What to watch for in retailer earnings calls as companies weigh price increases Why household income, driving habits, and spending patterns change the experience of inflation What Eric Pachman's Kroger study found about CPI, the Thrifty Food Plan, and store brands Using AI to test assumptions and expand access to data journalism Explore Eric Pachman's research and interactive tools: https://www.data4thepeople.com/ The Men Who Vanished: Testing Labor Market Displacement https://www.data4thepeople.com/p/the-men-who-vanished How do the government's grocery prices stack up against the real ones? https://www.data4thepeople.com/p/kroger-shelf-vs-cpi-thrifty-food-plan/ Chapters: 00:00 Introduction and Data 4 The People's mission 09:20 Spotting unusual changes in the jobs data 18:27 Mapping America's changing labor force 27:00 Foreign-born workers, aging, and labor supply 34:51 Energy costs and the path to consumer inflation 47:49 Why your inflation experience differs from CPI 56:12 Personal inflation tools and testing grocery prices 1:02:36 AI, data journalism, and challenging your own bias 1:11:17 Where to find Eric Pachman's work and tools 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.

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