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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:

Show Us Your Portfolio: Aswath Damodaran Aug 16, 2025

Show notes

How Aswath Damodaran Manages His Own Portfolio | Show Us Your Portfolio

In this episode of our Show Us Your Portfolio series, we go inside the personal investing approach of Aswath Damodaran — the “Dean of Valuation.” Known for his expertise in corporate valuation, Aswath rarely discusses how he manages his own money. We cover his philosophy, asset allocation, position sizing rules, lifecycle diversification, and the lessons he’s learned from decades of investing his own wealth.

What you’ll learn in this episode:

The core mission that drives Aswath’s investing decisions
How he thinks about risk, concentration, and position sizing
Why he avoids bonds and focuses on equity appreciation
His approach to strategic vs. tactical investing
The role of lifecycle diversification in portfolio construction
How he decides when to buy and sell individual stocks
Why luck plays such a big role in investing results
His views on international exposure, dividends, gold, crypto, and alternative assets
Personal spending habits and what he values most outside of investing

Timestamps:
00:00 – Investing’s end game: preserve and grow wealth
03:25 – How life stage changes investment approach
07:41 – Thoughts on the 60/40 portfolio
08:47 – Why he holds no bonds
10:12 – The power of compounding
12:25 – Separating portfolio from income needs
15:02 – Strategic vs. tactical investing
18:00 – Managing concentration risk and trimming winners
20:30 – Market concentration & the Mag 7
25:31 – How he buys and sells stocks
32:46 – Hit rate and lessons from decades of investing
37:26 – Lifecycle diversification
41:00 – U.S. vs. international investing
43:22 – Dividend investing
45:35 – Gold, crypto, and alternative assets
53:15 – What he drives and his ESG take
54:39 – Spending for joy
56:00 – Key investing advice for individuals
57:37 – Life outside markets & creative thinking time

64% Never Escape Level Four | Nick Maggiulli on Climbing the Wealth Ladder Aug 14, 2025

Show notes

In this episode of Excess Returns, Matt Zeigler sits down with Nick Maggiulli — author of Just Keep Buying and his new book The Wealth Ladder. Nick shares his six-level framework for building wealth, why mobility between wealth levels is rarer than most people think, and how your financial strategy should evolve as your net worth grows. From grocery freedom to travel freedom, and from the risks of ego to the realities of taxes and investing at different stages, this conversation offers a practical guide to managing and growing wealth at any level.

Topics Covered:

The six levels of wealth and how to move between them
“Grocery freedom,” “restaurant freedom,” and “travel freedom”
Why moving down wealth levels is rare — and why moving up is harder than you think
Strategies for Level 2: the role of education and income growth
Strategies for Level 3: shifting focus to investing and compounding
The importance of diversification, taxes, and risk management at higher levels
How ego can derail wealth preservation
Behavioral shifts needed when your portfolio outpaces your income
The impact of interest rates, taxes, and spending habits on mobility
Planning for unknown future liabilities

Timestamps:
00:00 – Introduction to The Wealth Ladder framework
01:40 – Grocery freedom, restaurant freedom, and travel freedom
05:26 – Why moving down wealth levels is rare
09:20 – Strategies for moving from Level 2 to Level 3
15:35 – Shifting from income growth to investing focus
24:24 – Diversification and risk management in Level 4
33:20 – Ego as the most expensive thing some people own
39:15 – Interest rates, taxes, and spending across levels
46:00 – Planning for unknown future liabilities
50:45 – Wealth mobility across generations

What Really Drove Buffett’s Success | Kai Wu on Berkshire's Intangible Edge Aug 07, 2025

Show notes

In this episode of Excess Returns, we’re joined by Kai Wu of Sparkline Capital to explore one of the most important and overlooked aspects of Warren Buffett’s investing evolution: his shift from tangible to intangible value. Based on Kai’s research paper “Buffett’s Intangible Moats,” we examine how Buffett's portfolio has evolved alongside the economy — and why the intangible drivers of brand equity, intellectual property, human capital, and network effects are central to understanding his success. Kai also shares how quantitative methods can be used to replicate Buffett’s approach and what this means for investors today.

Topics Covered:

The three eras of Buffett’s portfolio evolution: industrial, consumer, and information age
Why Buffett’s shift away from deep value investing began earlier than most realize
How Charlie Munger helped change Buffett’s approach — and why that mattered
Buffett’s preference for intangible assets like brand, IP, and network effects
How to quantify intangible value and its four key components
Surprising stats: Buffett rarely buys below book value and holds high price-to-book stocks
Kai’s framework for building an intangible value score across stocks
Factor attribution: quality and intangible value explain most of Buffett’s alpha
The impact of portfolio size, sector biases, and evolution of circle of competence
How to replicate Buffett’s approach using a systematic, factor-based strategy
Why intangible value may be the "quality of tomorrow" and a forward-looking moat

Timestamps:

00:00 – Buffett’s evolution from value to intangible investor
01:55 – Why Kai researched Buffett’s investing style now
04:00 – The three eras of Buffett: Geico, Coca-Cola, Apple
08:15 – How Buffett’s thinking changed under Munger’s influence
10:00 – The rise of intangible moats and Buffett’s definition of economic goodwill
13:10 – Four components of intangible value
15:10 – Mapping Buffett’s holdings to intangible assets over time
17:30 – Does Buffett get enough credit for evolving?
20:30 – Only 8% of his holdings were bought below book value
24:00 – Average price-to-book of Buffett's portfolio is 8
26:00 – Defining Kai’s intangible value factor
27:50 – Buffett becomes a value investor again — just using a different metric
30:00 – Circle of competence vs. expanding opportunity set
33:00 – Today’s portfolio is 75% intangible by Kai’s framework
34:45 – Decomposing Buffett’s returns into factors
38:00 – Quality and intangible value explain 90% of Buffett’s alpha
43:15 – Sector exposure vs. true value tilt
49:00 – Intangible value as a leading indicator of quality
52:00 – Building a Buffett-style quant portfolio using two key factors
54:00 – Why Buffett’s future returns may be more muted

The Seven Rules of Wall Street | Sam Stovall Aug 05, 2025

Show notes

📈 In this episode of Excess Returns, we’re joined by Sam Stovall, Chief Investment Strategist at CFRA and author of The Seven Rules of Wall Street. We explore Sam’s timeless, data-driven investing rules and connect them to today’s market environment—including sector trends, interest rates, Fed policy, investor behavior, and why market history is one of the most underrated tools for navigating uncertainty. This conversation blends historical perspective with practical insights, making it essential viewing for long-term investors and students of market behavior alike.

🔍 Topics Covered:

The power of rules-based investing and emotional discipline
Why momentum often beats mean reversion in sectors
The predictive value of January market performance
How AI hype is shaping today’s market narrative
Whether “Sell in May” still works—and what to do instead
The case for value investing and high-quality dividend stocks
A simple two-sector portfolio that beat tech (with less risk)
Whether the 60/40 portfolio is still viable
The failure of equal weight and small caps to outperform recently
How to manage fear and stay invested during volatile markets
What history teaches about Fed rate cuts and market returns
A momentum strategy for finding “bull markets somewhere”
Sam’s top lesson for the average investor

⏱️ Timestamps:
00:00 – Market performance after strong Januaries
02:00 – Let your winners ride, cut losers short
04:45 – Current sector winners and market concentration
06:30 – As goes January, so goes the year
09:00 – Why Year 3 of bull markets tends to be weak
11:00 – How AI fits into today’s bull case
12:30 – Sell in May—but rotate instead of retreat
14:30 – Why value investing has struggled
16:00 – Tech as the new consumer staple?
17:45 – A free lunch: Tech + staples portfolio
20:30 – The 60/40 portfolio and inflation hedging
22:20 – Don’t get mad, get even (equal weight vs. cap weight)
24:00 – Managing emotions and using history as Valium
26:20 – Don’t fight the Fed: Rate cuts and market returns
28:30 – CFRA’s Fed outlook for the second half
29:40 – There’s always a bull market somewhere
31:20 – Sam’s #1 lesson for the average investor

The 100 Year Pivot | Navigating a Changing Market with Grant Williams Aug 03, 2025

Show notes

In this episode of Excess Returns, Matt Zeigler sits down with Grant Williams for a wide-ranging conversation on what he calls the “Hundred Year Pivot.” Grant shares his view that we are living through a once-in-a-century inflection point — a deep, structural shift that is reshaping markets, institutions, societal values, and even individual behavior. This isn’t about predicting the next trade; it’s about understanding the tectonic changes happening beneath the surface and how investors can adapt, survive, and eventually thrive.

🔍 Topics covered in this episode:

What the “Hundred Year Pivot” really means
Why trust is the foundation of everything — and why it’s cracking
The loss of long-standing institutions and belief systems
How the freezing of Russian assets triggered a global monetary rethink
Why central banks are buying gold like never before
Why “buy the dip” might be a dangerous relic of a past era
The return of capital preservation as a core investing principle
How community, religion, and localism are resurfacing
The psychology of luck, risk, and staying rich
What gives Grant hope, despite the darkness of this turning

⏱️ Timestamps:
00:00 – The hundred-year pivot and deep structural change
04:00 – Financial nihilism and the breakdown of institutional trust
11:00 – The freezing of Russian assets and its global implications
14:00 – Central banks, gold, and the unraveling of the dollar system
23:00 – From 40 years of tailwinds to a harder investing environment
27:00 – Why “buy the dip” is getting more dangerous
33:00 – Capital preservation vs. capital accumulation
40:00 – Societal change, community assets, and the new investment mindset
54:00 – Grant’s reason for optimism

The Bubble No One Can Sell | Dan Rasmussen on the Private Equity Trap Jul 31, 2025

Show notes

In this episode of Excess Returns, Justin and special guest host Kai Wu of Sparkline Capital are joined by Verdad’s Dan Rasmussen for a deep dive into the hidden risks lurking in private equity—and why they may be more dangerous than investors realize.

Rasmussen, a long-time critic of the asset class, explains why the allure of illiquidity, stale pricing, and past outperformance has led to dangerous capital misallocations. Along the way, we explore the origins of the Yale model, the current liquidity crunch, volatility laundering, and whether small-cap value could be the better bet today. We also dig into bubbles, biotech, and whether AI will concentrate or diffuse economic power.

🔑 Topics covered:

Why private equity may not be what investors think it is
The original logic of the Yale model—and how it’s broken today
Leverage, small company risk, and the illusion of low volatility
How private equity portfolios are “money traps” in disguise
Small-cap value as public market private equity
Why biotech could be the next overlooked opportunity
How innovation bubbles spark long-term progress
AI’s capital intensity and implications for Big Tech dominance
Behavioral risks in institutional vs. retail investing

📍 Timestamps:
00:00 – Why private equity could be a money trap
03:00 – The over-allocation to small, low-margin, highly levered companies
07:25 – Why private equity’s popularity may signal poor future returns
14:30 – The Yale Model’s origin story and how it morphed
19:25 – Collapse in private equity distributions
23:34 – Volatility laundering and misleading risk metrics
27:00 – What happens when private equity goes public
31:00 – Do lockups help investor behavior—or prevent learning?
35:10 – Could small-cap value be a better alternative to private equity?
42:00 – Why biotech is the most beaten-up corner of small caps
47:00 – Bubbles, innovation, and the role of speculative excess
51:00 – AI, capital intensity, and a return to economic gravity
54:00 – Will AI empower monopolies or smaller players?

Darius Dale on the Fourth Turning, Fiscal Dominance, and the Case for a Melt-Up Jul 29, 2025

Show notes

Macro strategist Darius Dale returns to Excess Returns with a deep dive into the seismic shifts shaping markets today. From the implications of the Fourth Turning to the systemic risks of fiscal dominance, Dale shares how he’s helping investors stay on the right side of market risk using quantitative tools and macro insights from 42 Macro. This episode covers everything from inflation, tariffs, and AI to a systematic framework for navigating regime change in real time. Whether you're a retail investor or an institutional pro, this conversation is packed with insights that matter.

🔍 In This Episode:

The Fourth Turning’s impact on markets and society
Why inflation, income inequality, and geopolitical turmoil are converging
How Darius's market regime model (Dr. Mo) systematically adapts to risk
What the “KISS” model portfolio is—and how it outperforms 60/40
Why recession models failed and how Darius sees the economy now
The overlooked growth shock from policy—not just tariffs
How AI may shift the economic power structure even more dramatically
Why he believes the long-term outlook is structurally bullish (despite the chaos)

⏱️ Timestamps:
00:00 – Opening macro warning and Fourth Turning setup
02:44 – Darius on working with Neil Howe and implications of generational shifts
04:13 – How the Fourth Turning creates fiscal dominance and financial repression
08:21 – Explaining the market regime system and Dr. Mo
14:33 – What institutions get wrong and how volatility front-runs momentum
17:13 – The origin of 42 Macro and mission to democratize institutional-grade tools
18:35 – Case study: When the model turned bullish in April
21:23 – Why tariffs don’t derail the model
23:41 – Why recession signals failed & how Dale reads the cycle differently
30:13 – Why Dale is still pounding the table on U.S. resilience
35:11 – Paradigm A → B → C: the evolution of economic policy under pressure
43:49 – Will AI fuel an i-shaped economy? Or something better?
50:28 – Inside the “KISS” model portfolio and its 25% average annual return

🔗 Learn more at 42macro.com
📊 Follow Darius Dale on X: @42macroDDale

The Risks of the Rise of Passive Investing | Mike Green Jul 27, 2025

Show notes

In this episode of Excess Returns, Mike Green returns to dissect the structural transformation underway in public markets due to the rise of passive investing. He explains why “there’s no such thing as a passive investor,” how inelastic flows distort prices, and what it means for valuation, volatility, and the long-term sustainability of equity markets. From the math behind market multipliers to the policy distortions driving mega-cap dominance, Mike walks through the macro, micro, and behavioral implications of passive flows — and what investors and policymakers need to do about it.

🔍 Topics Covered:

Why passive investing isn’t truly passive
The origins and impact of the inelastic market hypothesis
How passive flows distort price discovery
The shift from mean reversion to mean expansion in markets
Multipliers and the mechanics of how flows drive prices
Why market efficiency is breaking down at scale
The hidden risks of passive-dominant market structure
Target date funds and their unintended consequences
The fragility of valuations under passive dominance
The problem with IPO scarcity and capital misallocation
Options strategies for convex tails and market drift
Why the Fed and regulators may act — and what could trigger it
Bitcoin and private markets as new flow-driven regimes
How policy and tax advantages have reshaped capitalism

⏱️ Timestamps:
00:00 – "There’s no such thing as a passive investor"
01:05 – The origins of Mike’s work on passive flows
03:00 – Bill Sharpe vs. Lasse Pedersen on passive flaws
06:00 – Index rebalancing and the illusion of passivity
07:00 – The rise of flow-based (demand-side) asset pricing
10:00 – Why EMH broke down under scale
12:00 – The human layer markets forgot
14:30 – The math behind price multipliers (5x to 25x)
17:00 – Market efficiency vs. market distortion
20:00 – Meta, index drift, and fake efficiency
23:00 – What individual investors should do
25:00 – The Mag 7 and extreme multiplier effects
27:00 – Options and convex tail risk management
29:00 – Mike’s 2016 survey on marginal buying behavior
31:00 – The shift from mean reversion to mean expansion
33:30 – When the music stops: wealth-to-income dynamics
35:00 – Theoretical crash under net withdrawals
36:00 – Why the boomer selloff thesis is flawed
39:00 – The overlooked risk: wealthy investors exiting actives
41:00 – Public vs. private equity concentration
43:00 – Why policy response is likely (and how it may look)
46:00 – Political power vs. market dominance
49:00 – Bitcoin, passive ETFs, and flow-driven pricing
52:00 – Private equity in 401(k)s — implications and risks
57:00 – The unintended outcomes of inflated valuations
59:00 – The hollowing out of the public equity bid
1:01:00 – How Vanguard’s 2015 rebalancing moved the market
1:04:00 – Valuation opacity and future withdrawals
1:07:00 – What Mike is working on now and next steps

The Case for a Broadening Bull Market | Jim Paulsen Jul 25, 2025

Show notes

Subscribe on Apple Podcsasts

https://podcasts.apple.com/us/podcast/the-jim-paulsen-show/id1828054999

Subscribe on Spotify

https://open.spotify.com/show/3QaBDVGuBZ3cZfFZ4mqPFc

Subscribe on YouTube

https://www.youtube.com/excessreturns

In the premiere episode of our new monthly series, The Jim Paulsen Show we dig into Jim's latest research and the charts that define today's economic and market landscape. Jim lays out a compelling case for why the private sector is more resilient than many believe, why a recession may not be on the horizon, and why so many parts of the market still look cheap despite record index levels. We explore the implications of tariffs, the underappreciated productivity boom, the potential for a market broadening, and the risks posed by policy uncertainty.

Whether you're a macro thinker, a data-driven investor, or just trying to make sense of this confusing market, Jim brings clarity, charts, and contrarian insight.

You’re Misreading the Rally | Liz Ann Sonders on What is Really Driving Market Returns Jul 23, 2025

Show notes

📉 What the Market Is Getting Wrong | Liz Ann Sonders on Debt, Tariffs, and the Fed

In this episode of Excess Returns, we welcome back Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, for an in-depth conversation about what's really driving markets right now. Drawing on her latest research and commentary, we dig into retail trading dynamics, the implications of rising tariffs, the debt burden, inflation pressures, market concentration, and why the Fed might be holding the line. Liz Ann delivers clear, actionable insights—cutting through the noise and helping investors understand what matters most in today’s unstable environment.

📌 Topics Covered:

Why high debt levels suppress long-term economic growth and productivity
The retail trader “fingerprint” on recent market moves
How sentiment extremes created a powerful reversal in April
The rising risks around tariffs—and why markets may be complacent
What companies are doing about margin pressure vs. passing on inflation
The Fed’s “timeout” posture and why the market may be misreading it
Liz Ann’s view on Powell’s potential ouster and Fed independence
The disconnect between contribution to index returns vs. performance (Mag 7)
Broadening market leadership and the role of quality stocks
Why utilities and industrials are surprising AI beneficiaries
How inflation is shifting from disinflationary to secularly higher
The overlooked economic effects of immigration policy
What the labor market is hiding beneath the headline numbers
Why year-end price targets are a “dumb exercise” for individual investors

⏱️ Timestamps:
00:00 – Opening clip: debt, growth, inflation & the Fed
01:00 – Welcome and introduction
02:00 – Retail trader impact on market rally since April
05:25 – Sentiment washout and pain trade dynamics
08:00 – Policy instability and tariff complacency
12:00 – What investors can do in the face of uncertainty
14:50 – Budget deficits, debt burden, and growth implications
18:00 – Inflationary risks embedded in the new spending bill
20:30 – Dissecting inflation: tariffs, goods vs. services, and inequality
23:45 – Inflation vs. margins: where the impact shows first
26:00 – Instability vs. uncertainty: the new investor reality
30:30 – Labor market risks and misleading employment metrics
35:00 – Immigration's hidden macroeconomic effects
38:00 – Fed independence, Powell’s job security, and mispriced rate expectations
42:00 – Why the Fed may not cut—and why that’s bullish
44:20 – Mag 7 myth: contribution vs. true performance
48:00 – Broadening the rally: high-quality vs. low-quality stocks
50:30 – AI's second-order effects and sector-level surprises
55:00 – Liz Ann’s contrarian take: why year-end targets are pointless

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