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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.

Latest Episodes:

Evidence Based Factor Investing | Matt Zenz Oct 04, 2025

Show notes

In this episode of Excess Returns, we sit down with Matt Zenz of Longview Research Partners to explore factor investing, evidence-based strategies, and the challenges and opportunities in today’s markets. Matt shares insights from his engineering background, his time at DFA, and his current work running the Longview Advantage ETF (EBI). We cover the nuances of value, momentum, size, implementation, and how investors can think more effectively about long-term returns.

Topics covered:

Matt’s journey from engineering to investing
Lessons learned at DFA and the foundation of evidence-based investing
Defining factors and what makes them credible
The role of value, momentum, quality, and size in portfolios
The challenges of intangibles and redefining value
Large cap tech dominance, mean reversion, and whether the world has changed
Factor timing, valuation spreads, and Cliff Asness’ “sin” framework
How momentum can be integrated with value tilts
Portfolio construction: combining factors vs sleeve approaches
Implementation challenges for large vs small managers
How Longview manages liquidity, turnover, and trading costs
The potential impact of AI on factor investing
Future opportunities in implementation alpha and ETF design
Matt’s biggest investing belief most peers disagree with
The key lesson he would teach the average investor

Timestamps:
00:00 Value vs returns and factor investing basics
03:00 From engineering and Boeing to investing
06:15 Time at DFA and lessons in evidence-based investing
07:30 What evidence-based investing really means
09:25 Defining factors and what makes them valid
12:00 Using value, profitability, size, and momentum
16:00 Large cap tech dominance and future returns
18:00 Mean reversion and whether the world has changed
20:00 How long does value need to struggle before it’s “dead”?
22:30 Should value be redefined for intangibles?
25:30 Intangibles, R&D, and why adjustments add noise
27:00 Value’s performance across economic cycles and migration
30:00 Interest rates, growth, and value performance
32:00 Factor timing and valuation spreads
34:15 The role of momentum in timing and implementation
35:00 How Longview applies passive-aggressive tilts
36:30 Combining factors vs sleeve approaches
39:00 How momentum is used in practice
41:30 Factor migration and average holding periods
43:00 The size premium and whether it still exists
44:30 The benefits of being nimble vs large fund families
47:30 Liquidity challenges in small cap value
52:00 The role of AI in investing
54:00 Where implementation adds the most alpha
55:30 One belief Matt holds that peers may disagree with
57:20 The one lesson for the average investor

A Volatility Masterclass | Timeless Lessons from 30 Year Options Trader Noel Smith Oct 02, 2025

Show notes

In this episode of Excess Returns, we’re joined by Noel Smith, co-founder and CIO of Convex Asset Management. Noel shares his unique journey from biochemistry and the military to market making, high-frequency trading, and running a volatility-focused hedge fund. We dig deep into volatility, regime models, income strategies, dispersion, tail hedging, and more, offering a rare look inside the world of professional options and volatility trading.

Topics covered:

Noel’s background: biochemistry, military, market making, HFT, hedge fund launch
How markets have evolved since the 1990s
Why volatility is the best source of market information
Regime shift modeling and its role in strategy selection
Using options for income and the trade-offs investors should understand
Volatility harvesting and risk-defined short vol strategies
The impact of zero DTE options on markets
Dispersion trading and correlation dynamics
Bond vol arbitrage and volatility surfaces
Opportunistic trades like GameStop and meme stocks
Tail hedging, its costs, and how to monetize hedges
Lessons on flexibility, risk, and never being married to positions

Timestamps:
00:00 Intro and Noel’s unique background
06:00 How markets have changed behind the scenes
07:00 Why volatility is the best information source
09:00 Regime shift model explained
19:00 Using options for income – benefits and risks
24:30 Volatility harvesting strategies
29:10 What the VIX does (and doesn’t) tell you
30:30 Zero DTE options and systemic risk
33:20 Dispersion trading explained
42:00 Bond vol arbitrage
45:00 Opportunistic trades: GameStop and beyond
51:30 Tail hedging and rebalancing
54:30 Lessons on flexibility and risk management

A Practical Guide to Market Valuation with Ben Carlson Sep 29, 2025

Show notes

In this episode, we sit down with Ben Carlson of Ritholtz Wealth Management and A Wealth of Common Sense to talk about market valuations, the rise of AI, investor behavior, and what history can teach us about investing today. Ben shares his perspective on why valuations are harder to use than ever, how market structure has shifted, and the lessons he’s learned as both a writer and an investor navigating major market cycles.

Topics covered in this episode:

Why market valuations are harder to use today than in the past
The impact of buybacks, margins, and technology on long-term comparisons
Market concentration and the dominance of mega-cap tech stocks
Passive investing flows, investor behavior, and government backstops
How AI compares to past technological innovations and its investment implications
Value versus growth cycles and why U.S. tech has broken historical norms
The lessons of the NASDAQ since 2000 and defining the long term for investors
Personal experiences from the 2008 financial crisis and the power of compounding
Diversification, gold’s surprising performance, and the case for international investing

Timestamps:
00:00 Introduction and market valuations
06:00 Structural changes and the role of buybacks
09:00 Margins, efficiency, and corporate dominance
12:00 Market concentration and the rise of mega-cap tech
14:00 Passive investing and household stock ownership
18:00 Government backstops and market resilience
23:00 Valuations as expectations vs. predictions
25:00 AI boom and capital allocation
29:00 Is this 1996 or 1999? Bubble comparisons
32:00 How AI may reshape investing and daily life
41:00 Investing in breakthrough technologies
43:00 Value versus growth cycles in the U.S. and abroad
46:00 Lessons from the NASDAQ and defining long-term investing
49:00 Compounding lessons from the 2008 financial crisis
53:00 Diversification, gold, and international performance

The New Valuation Regime | Jim Paulsen on Confidence, Inflation and the Coming Market Supports Sep 27, 2025

Show notes

In this episode, we sit down with Jim Paulsen to analyze the latest economic and market data through his lens of decades of market experience. Jim shares insights from his Paulsen Perspectives research, covering the job market, the Fed, inflation, valuations, investor confidence, and what they all mean for the future of the economy and markets. We explore why confidence is so low despite a bull market, how Fed policy is shaping market dynamics, and where investors might want to focus as the cycle evolves.

Topics covered in the episode:

The job market’s pivotal role in driving the economy and Fed decisions
Why recent Fed rate cuts may mark a turning point in market support systems
The narrowness of the bull market and how innovation-driven firms diverge from traditional cycles
Investor confidence, the “misery index,” and recession probability models
How easing may broaden market participation beyond large-cap growth
What “animal spirits” mean for small caps, high beta, and IPOs
The disconnect between inflation, bond yields, and growth measures
Gold, cash, crypto, and tech as “fear assets” in today’s environment
The impact of tariffs on profits, wages, and inflation expectations
Valuations in context: historical perspective and the upward bias of multiples

Timestamps:
00:00 Introduction and market overview
02:00 Fed easing, inflation, and recession risks
09:00 Bull market without normal supports
17:00 Narrow leadership and innovative companies
23:55 Confidence and the misery index
29:35 Yield curve, recession probabilities, and Fed policy
34:00 Broadening of market participation
37:00 Animal spirit stocks and small caps
38:00 Inflation, bond yields, and resource unemployment
43:20 Copper-gold ratio and yields
45:10 The role of gold in portfolios
50:00 Cash, crypto, and tech as defensive assets
54:00 Tariffs, inflation, and profit margins
59:00 Inflation persistence vs. wage growth
01:01:10 Valuations and the upward bias in multiples
01:07:00 Closing thoughts and takeaways

Finding the Next Great Tech Compounders | John Tinsman Sep 25, 2025

Show notes

In this episode of Excess Returns, we sit down with John Tinsman, portfolio manager of the AOT Growth and Innovation ETF (AOTG). John shares how his investing journey began, the lessons he learned from both successes and failures, and how those experiences shaped his current investment philosophy. We dive deep into the concepts of low marginal cost, profitable growth, digital toll booths, and the transformative impact of AI. John also discusses his approach to valuation, position sizing, and why he believes large-cap growth and technology will continue to lead in the years ahead.

Main topics covered:

John’s path from personal investing to launching an ETF
Lessons learned from early stock picks and market-making experience
The power of low marginal cost businesses and long-term compounding
How AI is reshaping software development, innovation, and profitability
The importance of revenue and earnings growth in stock selection
Digital toll booths as the future of software business models
Differences between profitable vs. unprofitable growth companies
Why technology leadership today differs from the dot-com era
The role of sectors, valuation, and position sizing in portfolio construction
John’s views on growth vs. value, large-cap vs. small-cap, and future innovation trends

Timestamps:
00:00 The riskiest thing in investing
02:00 John’s background and early investing journey
05:00 Lessons from Apple, Boeing, Visa, and Potash
10:00 Insights from agriculture and value investing
12:00 AI’s impact on software development and innovation
16:00 Sectors, classifications, and thematic approaches
18:00 Comparing AI disruption to past bubbles
21:00 Profitability in today’s tech companies
22:00 Will the top companies stay dominant?
26:00 Large-cap vs. small-cap technology investing
28:00 Growth vs. value in today’s market
30:00 Demographics, Buffett’s lessons, and sector shifts
34:00 Value vs. software companies
35:00 Digital toll booths explained
37:00 Growth sustainability and digital infrastructure
40:00 Semiconductor cycles and long-term demand
44:00 Screening for growth and low marginal cost
47:00 Sell discipline and valuation checks
49:00 Position sizing and portfolio management
51:00 ETF tax benefits and structure
53:00 Where AOTG fits in portfolios
54:00 One belief peers disagree with
56:00 One lesson for the average investor
57:00 Closing thoughts and outro

Finding Decade-Long Compounders with Joseph Shaposhnik Sep 22, 2025

Show notes

In this episode of Excess Returns, we sit down with Joseph Shaposhnik, founder of Rainwater Equity and former star portfolio manager at TCW. Joseph shares the investment philosophy that drove his track record of outperformance, why he focuses on recurring revenue businesses, and how he evaluates management quality and capital allocation. We also explore lessons from great investors like Warren Buffett, Bill Miller, and Peter Lynch, along with insights on valuation, portfolio concentration, and the role of passive investing in today’s markets.

Main topics covered:

How Joseph achieved long-term outperformance at TCW and what drove his results
Why recurring revenue and predictable cash flows are central to his approach
The importance of management quality and identifying “fanatics” vs. mercenaries
Lessons investors should and should not take from Warren Buffett
Bill Miller’s influence and backing of Rainwater Equity
Characteristics Joseph looks for in great businesses and red flags in management teams
Portfolio concentration, position sizing, and risk management
Why you don’t need to have an opinion on every sector
Selling discipline and knowing when it’s time to move on
How valuation fits into his framework and how he thinks about paying up for quality
The impact of passive investing and why active managers must take a long-term view
Stories and lessons from Peter Lynch, including his enduring influence

Timestamps:
0:00 If a stock has doubled, you haven’t missed it
1:00 Introduction and Joseph’s track record at TCW
2:00 Keys to long-term outperformance
8:00 Lessons from Warren Buffett’s wins and mistakes
11:30 Bill Miller’s influence and support for Rainwater Equity
14:00 What defines a high-quality business
20:00 Free cash flow compounding and moats
24:00 Red flags in management teams
31:00 Why active management is broken and Joseph’s solution
35:00 Portfolio concentration and risk management
42:00 Sectors to avoid and why
47:00 Joseph’s selling discipline
53:00 Exceptional leaders and the role of management quality
58:00 Valuation, future value, and the changing economy
1:04:00 Passive investing and market distortions
1:09:00 Lessons and stories from Peter Lynch
1:14:00 Closing questions and key investing lessons
1:20:00 Where to learn more about Joseph and Rainwater Equity

The Average Return That Never Comes | Sam Ro on 10 Stock Market Truths Investors Get Wrong Sep 20, 2025

Show notes

In this episode of Excess Returns, we sit down with Sam Ro to revisit his widely read post “10 Stock Market Truths” and explore how each principle holds up in today’s market. From the long game of investing to short-term risks, valuations, AI, and earnings, Sam shares a timeless framework for navigating markets and separating noise from signal.

Topics covered:
• Why the long game is undefeated
• Short-term volatility and how to prepare for it
• The myth of average returns
• Asymmetric upside in markets and stocks
• AI as both opportunity and risk
• Earnings as the ultimate driver of stock prices
• Why valuations don’t predict the next year
• The role of uncertainty and hidden risks
• Turnover and evolution within the stock market
• Why the stock market isn’t the economy

Timestamps:
00:00 Average returns are misleading
02:00 Introducing Sam Ro
02:15 Truth #1: The long game is undefeated
08:40 Truth #2: You can get smoked in the short term
14:20 Do markets have a government backstop?
18:00 Truth #3: The myth of average returns
23:00 Truth #4: Asymmetric upside
28:00 AI as macro and micro driver
33:00 Truth #5: Earnings drive stock prices
36:30 Truth #6: Valuations won’t tell you much about next year
51:40 Truth #7: There will always be something to worry about
55:20 Truth #8: The destabilizing risks are the ones people aren’t talking about
01:05:00 Truth #9: There’s a lot of turnover in markets
01:11:00 Truth #10: The stock market isn’t the economy
01:20:00 Closing thoughts

Exceptionalism Is Ending. New Winners Are Rising | Olga Bitel on the $2 Trillion Opportunity Sep 17, 2025

Show notes

In this episode, William Blair Global Strategist Olga Bitel joins us to unpack her “Perpetual Growth Machine” framework and what it means for investors navigating AI, tariffs, inflation volatility, market concentration, and a shifting global order. We dig into why growth often emerges from solving problems, how monopolies can stunt future innovation, where AI’s productivity dividends could accrue, and why she sees the next decade’s best opportunities outside the United States. Olga also walks through the risks she’s watching, why facts change faster than narratives, and practical ways to connect top-down insights with bottom-up research.

Topics covered

The Perpetual Growth Machine: why needs spark innovation and growth, and how investors can spot it early
Why monopolies look great to investors but hurt long-term growth and innovation
AI as a general purpose technology and the scale of potential productivity savings
Housing affordability, incomes, and policy bottlenecks through the PGM lens
How firms are actually adopting AI and how faster data changes research cadence
Europe’s defense build-out and the rise of national champions and small-cap innovators
Interpreting market concentration and what it signals about competition
Inflation oscillation, policy mix, and why the Fed’s tools have limits
Tariffs as a regressive tax and how costs pass through to consumers over time
US exceptionalism narrowing and why ex-US markets may lead in the coming cycle
The Draghi report and tearing down barriers inside the EU single market
Comparing late-1990s tech to today’s AI build-out and who the next leaders may be
Growth vs. value: focusing on sustained profit inflections, not cheapness alone
Using stakeholder analysis to link macro themes to bottom-up stock work
Biggest opportunities: Japan, Korea, Europe, select emerging markets, and parts of the Middle East
Biggest risk: a breakdown in the global order amid US-China tensions
Closing lessons: stay curious, stay nimble, question narratives, track the facts

Timestamps
00:00 Introduction and Olga’s role at William Blair
02:49 The Perpetual Growth Machine explained
06:24 Policy bottlenecks, incentives, and growth
09:32 AI as a general purpose technology and productivity math
11:53 Practical AI adoption inside investment firms
15:06 Where PGM points to opportunity right now
16:26 Europe’s defense spending and emerging winners
19:02 Macro setup and consumer health
20:42 Inflation today and what’s changed under the hood
22:46 The Fed’s dilemma and limits of monetary policy
25:00 Tariffs 101: who pays and how it shows up
28:55 Early evidence in goods prices
29:41 US exceptionalism vs. the rest of the world
31:00 The Draghi report and a real EU single market
33:11 Can Europe and others catch up in tech?
36:15 EU financial services barriers and capital deployment
37:07 Portfolio implications: why look ex-US
39:10 Late-1990s tech vs. today’s AI cycle
41:20 Concentration risk and competition policy
42:26 Value vs. growth through the PGM lens
44:48 Base rates, sustaining growth, and churn at the top
49:33 Marrying macro themes with bottom-up research
51:08 Firsthand observation vs. headline narratives
52:20 Biggest opportunities across regions
53:00 Middle East changes and new listings
54:48 Biggest risk: global order and US-China tensions
55:36 Parting advice for investors

Bull Market on Borrowed Time | Ned Davis Chief Strategist Tim Hayes on the Indicators That Matter Sep 15, 2025

Show notes

Ned Davis Research’s Chief Global Investment Strategist Tim Hayes joins us to break down NDR’s “360°” weight-of-the-evidence framework—how price, breadth, sentiment, macro and valuation fit together—and what those signals are saying right now. We dig into why he still classifies this as a secular bull market with rising secular-bear risks, how to separate real breadth thrusts from dead-cat bounces, the evolving bond/equity correlation, mega-cap concentration risk, the case for value/EM in a defensively rotating tape, and why gold’s secular and cyclical trends remain compelling. You’ll also hear how NDR allocates across stocks, bonds, cash (and gold), and Tim’s timeless lesson for investors: stay objective, disciplined, and flexible.

Topics Covered

NDR’s 360° process: price + sentiment + macro + valuation, combined via equal-weighted composites (“weight of the evidence”)
How to use breadth, put/call, and thrust signals without getting faked out
Secular bull vs. secular bear: what would actually trigger the secular turn
Reading the bond market: why the stock/bond correlation flipped in 2022 and what a 10-year above approximately 5.0–5.25% could mean
Concentration risk in mega-cap tech; implications for the U.S. vs. the rest of the world
Where value, small caps, and EM can shine in defensive rotations
Gold: drivers of the move, secular/cyclical setup, and role in a balanced allocation
Practical allocation: when cash was king (2022), current market-weight posture, and sizing for gold
“No Pets Allowed”: why aggregates beat single “pet” indicators
Using historical analogs carefully—and what to learn (and not learn) from them
Tim’s core lesson: you can’t forecast reliably—stay flexible and evidence-driven

Timestamps (YouTube Chapters)

00:00 Don’t fight the tape—or the Fed (opening context)
01:06 Intro and why NDR’s process beats single charts
02:58 NDR’s 360° framework and composite models
05:31 Indicators that matter: breadth, sentiment, macro/valuation
08:11 Asset-allocation model (stocks/bonds/cash) and real-time record
09:27 “Secular bull intact; secular-bear risk rising” explained
13:04 What counts as a secular bear (’66–’82, 2000–’09)
15:05 Tightening vs. easing cycles and thrust reliability
16:22 What a breadth thrust actually looks like
19:55 From sentiment extremes to 50/200-day confirmation
20:06 Bonds and stocks: the correlation flip since 2022
22:47 Duration, rate-cut hopes, and why cash led in 2022
24:02 Mega-cap concentration risk—paths from here
27:23 Valuation: tech earnings yield at extremes; U.S. most expensive
29:14 Where value/small caps/EM can win; China’s role in EM
33:25 Gold’s standout year—drivers and positioning
36:16 Gold’s secular and cyclical bull case
37:13 How much gold belongs in a balanced portfolio
40:32 “No Pets Allowed”: trust aggregates, not single signals
47:16 Bear-watch vs. rally-watch signals in 2025
49:02 Using historical analogs without overfitting
51:00 NDR culture: objectivity over narratives
53:41 Why independence matters
53:59 Two closing questions: contrarian belief and one lesson
59:03 Where to find Tim and NDR; disclaimer

Brent Donnelly on the Fed, Inflation, and Why 2% No Longer Matters Sep 12, 2025

Show notes

In this episode of Excess Returns, we sit down with Brent Donnelly, veteran trader, author, and president of Spectra Markets, to dive deep into macro markets, trading philosophy, the role of the Fed, and how AI is changing the way traders operate. Brent shares insights from his decades in FX and macro trading, his flexible approach to positioning, and the lessons he’s learned about risk management, narratives, and humility in markets.

Topics Covered:

Why the Fed is becoming more political and what that means for markets
The “re-acceleration that wasn’t” and lessons from quickly abandoning trades
How to structure trades like gold calls and TLT puts for asymmetric payoff
FX as the “exhaust valve” for tariffs and global capital flows
Canada’s housing bubble and CAD vulnerabilities
Inflation targeting, bond vigilantes, and the Fed’s credibility
Avoiding the trap of perma-bearishness and using stop-losses as forced humility
The importance of imagination in regime changes and Fed forecast errors
How Brent is using LLMs and AI to trade headlines, structure trades, and analyze patterns
Trading bubble names with options and risk-aware structures
Lessons on flexibility, humility, and embracing uncertainty in markets

Timestamps:
00:00 – Fed independence and political pressure
02:00 – The failed “re-acceleration” thesis
06:00 – Structuring gold calls and TLT puts
14:00 – FX as the exhaust valve for tariffs
20:50 – Canada’s housing market and CAD risks
26:30 – The Fed as a political institution
32:40 – Inflation targeting and 3% as the new 2%
35:20 – Avoiding perma-bear bias and using stop-losses
42:00 – The Fed dinner story and the humility of wrong forecasts
46:30 – Using LLMs and AI in trading
53:00 – Shorting bubble names with call spreads
56:00 – Cheat sheets and pattern recognition with AI
59:30 – Lessons on flexibility and humility in trading
1:02:15 – Closing thoughts and where to follow Brent

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