Jack Forehand @practicalquant

“You can explain the demise of value investing through the lens of applying traditional metrics to sectors that are now exposed to technological innovation.” On the latest Excess Returns, Kai Wu joins us to discuss his new paper, “AI Disruption: Moats and Value Traps.” We discuss: ☑️ Why traditional value investing has struggled in disrupted industries ☑️ How investors can identify potential software survivors ☑️ Why “code is not the moat” ☑️ How intangible assets like brand, human capital, IP and network effects can protect companies ☑️ Why AI adoption matters, but may not be enough on its own

"I don't love that phrase. I think it's really hard to time when the top is." "I feel like every time there's been a top, two things have been in place: hubris and debt." "I don't even know what I would do with that information anyway because I don't think I can time the peak, and I feel like I'd rather be a couple weeks late and ride it over the edge than miss out on the continued upside." Adam Parker on if we are in a bubble (and if it even matters from a practical standpoint)

“Any bit of share that technology takes comes from somebody else. And so that speaks to jobs. It speaks to incomes. If technology is going to take more of the share, everything else is going to get less of the share.” In the 1990s, tech was starting from a much smaller base. Today, tech is already a major share of the market and the economy. Andy Constan on why that changes the math.

"Collectively this decade, the stock market has been shown to be a lot smarter than the individuals who try to predict what's gonna happen next. And every time the people say, 'Well, the stock market is detached from reality or doesn't know what's going on,' more often than not, they've been the ones who've been proven wrong, not the stock market." "There's so many examples of that, where just saying, 'I'll just wait till the headlines tell me.' By the time it's in the headlines, it's already too late. The market has moved on." Ben Carlson on why waiting for the coast to be clear is a terrible investment strategy.

Ever wonder how @EpsilonTheory actually writes one of his notes? We just launched Epsilon Theory: Unplugged on @Panoptica_ai. Weekly, we'll feature a written note by one of our favorite contributors + a short podcast conversation about the HUMAN process that produced it. 👇

“The code is not the moat.” On the latest Excess Returns, @ckaiwu joins us to break down his excellent new paper, “AI Disruption: Moats and Value Traps.” We discuss: ☑️ Why traditional value investing has struggled in industries exposed to disruption ☑️ How to separate durable software moats from fragile ones ☑️ Why AI adoption matters, but may not be enough ☑️How intangible assets like brand, human capital, IP and network effects can protect companies ☑️ What Blockbuster, Borders and RadioShack can teach investors today ☑️ How Walmart and The New York Times survived disruption ☑️ How investors can identify potential software survivors youtu.be/RRIRGbQvI80

“The optimal time is five and a half minutes.” Data says hockey teams should pull the goalie long before they do. So why did Cliff Asness write about it for the Journal of Portfolio Management? Because investors do the same thing all the time.

"I don't care that they're beating the market, they're doing it in all the wrong way." Robert Hagstrom on the collision between Modern Portfolio Theory and Buffett style concentrated investing.

“Doing nothing is simply the right answer eighty-five percent of the time in this business.” On our latest Excess Returns weekly wrap, @practicalquant and @CultishCreative break down our favorite clips from our interviews with Adam Parker, Robert Hagstrom and Eric Crittenden. ☑️ Why the market may still be trading on fundamentals ☑️ How modern portfolio theory made us lose track of businesses ☑️ Why hedgers willingly lose money ☑️ Why estimates may matter more than PE ratios ☑️ Buffett’s casino vs. cathedral framework ☑️ How trend following earns its risk premium ☑️ When systematic investors should change their models

Watch me go FULL MACRO for 15 minutes

Excess Returns @excessreturnpod

3 days ago

"This is one of the most challenging backdrops because you have to deal with an inflation shock. Is there gonna be demand destruction or is this transformative technology just gonna override everything that's classical macro?" "Unless oil prices tank, you're going to have the

0 4 19 5K 11

"This is one of the most challenging backdrops because you have to deal with an inflation shock. Is there gonna be demand destruction or is this transformative technology just gonna override everything that's classical macro?" "Unless oil prices tank, you're going to have the long-lasting inflation. That price pressure has increased the price level, and then importantly, it starts to make its way up the supply chain." "The consumer continues to spend. AI CapEx continues to have the largest contribution it's had to GDP growth in history. And the rest of the economy, the more cyclical parts of the economy, have been meandering, but not enough to stop those two segments." On the latest Last Call, @AahanPrometheus explained what the data is currently telling us about growth and inflation.

"You've got a market that requires the AI story to succeed and for the build-out to go, go, go. And you've got a political story that's increasingly saying, 'We ain't behind this.'" "Narratives get cashed out in politics, and politics always trumps economics and markets. Always." On the latest Last Call, @EpsilonTheory explains the divergence between markets and politics on AI, and which one always wins.

"A whole bunch of these names in the Nasdaq are at their peak implied vol, so most expensive options ever, and they're piled into calls. So what is this? This is stocks literally crashing higher." "If something is crashing up, can it just simply pause and chill? I'm not so sure." "The trigger's now set. We're gonna have a spasm, in my view, at some point. We just need a catalyst." @spotgamma on the extreme call buying in tech names on the latest Last Call

In this great conversation @chriswmayer and @iancassel discuss how they look for similar things but execute differently. @excessreturnpod microcapclub.com/chris-mayer-an…

"From a markets perspective, we have never been more bullish about the AI build-out. Never. But in politics, when we look at the political narratives, the story line around data center build-outs, the role of AI in our society, man, those negative stories, those negative narratives, they are spiking." "A whole bunch of these names in the Nasdaq that are at their peak implied vol, so most expensive options ever, and they're piled into calls. So what is this? This is stocks literally crashing higher." "This is one of the most challenging backdrops because you have to deal with an inflation shock. Is there gonna be demand destruction or is this transformative technology just gonna override everything that's classical macro?" On the latest Last Call, we are joined by Ben Hunt, Aahan Menon and Brent Kochuba. We discuss: ☑️ Why markets remain so bullish on the AI build-out ☑️ How political backlash against AI data centers is building ☑️ Why oil and inflation could still work their way through the economy ☑️ Why macro investors may need to focus on what the data is doing, not the headlines ☑️ How call buying and options positioning are creating market fragility ☑️ Why SpaceX could create major index and flow disruptions ☑️ What could finally derail the market’s biggest bet

“At 131, it was worth more than General Motors.” “It peaked, sadly for me, in December 2020. It was the first meme stock to peak, and then all the other meme stocks peaked in the first half of the year.” Jeremy Grantham on how he ended up owning QuantumScape during the meme stock boom, a battery maker with no commercial product that briefly reached a market cap greater than GM, even as he was seeing signs of a speculative top.

“Modern portfolio can’t beat the market because it doesn’t have the paramount objective of making money. It has the paramount objective of giving you an emotionally comfortable ride.” On the latest 100-Year Thinkers, Robert Hagstrom explains why modern portfolio theory helped investors lose sight of one of Buffett’s most important lessons. ☑️How investing drifted from business analysis to portfolio math ☑️The difference between the cathedral and the casino ☑️Why owner earnings and return on capital matter more than beta ☑️How business owners think differently about stocks ☑️Why benchmarks can distort how investors define success

The AI trade has carried this market through war, inflation risk, and valuation concerns. But there could be some problems on the horizon for it. On the latest Last Call, @CultishCreative may or may not drink a large glass of vodka while we break it all down. youtu.be/6K7xA6ZNX8k ☑️ @EpsilonTheory on the political backlash building against AI ☑️ @AahanPrometheus on inflation, oil and the macro data ☑️ @spotgamma on extreme call buying and options market froth ☑️ Why rising earnings estimates have kept the market moving higher ☑️ What the SpaceX IPO means for all of this

"The best opportunities present themselves when you are psychologically and socially under pressure. That's a reoccurring theme over my career, for sure." "And what can you do other than just manage your risk and accept your beatings when they come? They're gonna come from time to time. You're gonna have drawdowns. Question is: Do you manage the risk well during them, and do you do what's necessary to come out of them when they're done" Eric Crittenden on managing a portfolio through a drawdown

"We can definitely all be wrong but there is no chance we are all right." On our latest episode, we sit down with Trivariate Research Founder Adam Parker We discuss: ☑️Why the stock market leads the economy ☑️The limits of economist forecasts ☑️What today’s rally may be telling us ☑️Why AI revenue is still concentrated in a small group of companies ☑️How trillion-dollar IPOs could affect market structure ☑️Why healthcare may be the contrarian AI opportunity