Excess Returns

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.

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.

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.

Jack Raines turned $6,000 into roughly $400,000 trading SPACs, then lost $157,000 in three minutes after taking a very different bet. The author of Young Money joins Matt Zeigler to discuss what that experience taught him about investing risk, the urge to chase more, and the time a growing portfolio can cost you.

The conversation follows Jack Raines from SPAC warrants and market narratives to a broader question: how do you allocate money, time, and risk to build a life you actually want? They explore the limits of a trading edge, why cheap stocks can get cheaper, and how debt, career choices, and status shape the decisions investors make beyond their portfolios.

Young Money: A Field Guide to Wealth and Purpose in Your Twenties
https://amzn.to/4AtUsDoJack Raines' Young Money newsletter
https://www.youngmoney.co/

Jack Raines on X
https://twitter.com/Jack_Raines

Topics covered:

• How Jack Raines grew his Roth IRA through SPAC warrants and pre-merger common shares, and why those positions carried different risks.
• Why an edge in one corner of the market did not translate into a successful concentrated earnings bet.
• How a million-dollar target and constant account checking changed Jack Raines' relationship with money and time.
• What SEC filings, Discord research, and market narratives contributed to his trading process.
• Why Jack Raines bought Figma after questioning the market's AI narrative and speaking with designers.
• Applying portfolio thinking to careers, creative projects, and opportunities that change with each stage of life.
• Weighing retirement saving against other opportunities, and why Jack Raines treats expensive debt as a constraint on taking risks.
• Escaping the "someday" trap while giving long-term venture investments time to develop.
• Combining steady income and index funds with independent bets, while treating status as a tool rather than a goal.
• Why Jack Raines believes investors learn about risk through experience, with stakes they can afford to recover from.

Timestamps:
00:00 Jack Raines on the lessons of losing money
04:57 Inside the SPAC trades and the $157,000 loss
15:16 Separating market hype from downside math
22:18 Building a life with portfolio principles
29:45 Retirement saving, trading obsession, and the cost of time
36:56 Debt, freedom, and the trap of waiting for someday
44:33 Venture investing: acting quickly and waiting patiently
51:03 Using status without making it the goal
56:08 The investing lesson experience has to teach

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.

Jason Hsu, founder and CIO of Rayliant Global Advisors and co-founder of Research Affiliates, joins Excess Returns to discuss the US-China AI race, the economics of AI spending, and what market concentration means for investors. We explore China's energy and open source advantages, opportunities in Chinese stocks, and how factor investing and machine learning can help build more diversified portfolios.

Rayliant Global Advisors
https://rayliant.com

Rayliant on X
https://twitter.com/rayliant

Topics covered:

• Why Jason believes AI safety requires cooperation between the US and China

• How Chinese AI models are closing the gap with US developers

• China's electricity infrastructure and the competitive threat from open source AI

• Where AI profits could accrue across hardware, energy, models and applications

• How chip restrictions are encouraging China to develop domestic capabilities

• Why retail trading creates opportunities and challenges for factor investors in China

• Chinese technology companies, dividend-paying state enterprises and US-China trade

• The AI spending arms race and the concentration risk facing S&P 500 investors

• Momentum crashes, value cycles and how Rayliant uses machine learning to combine factors

• Why advisors' greatest contribution may be helping clients find meaning in their wealth

Timestamps:

00:00 Jason Hsu on AI competition and safety
04:00 How close are Chinese AI models to the US?
08:25 China's energy advantage and open source economics
14:12 Who captures AI profits, and can China catch up in chips?
18:41 Chinese stocks, retail trading and speculation
24:01 China's overlooked opportunities and dividend stocks
28:05 US-China interdependence and the AI spending arms race
33:24 The AI concentration hiding in the S&P 500
37:25 Momentum crashes, value cycles and factor performance
41:54 Machine learning and building multifactor portfolios
48:46 Financial advisors, Jack Bogle and having enough
53:23 Why inefficient markets do not make alpha easy

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.

David Rosenberg returns to Excess Returns to explain his bullish case for Treasury bonds, why he expects inflation and economic growth to slow, and the risks he sees in an AI-driven stock market. The Rosenberg Research founder joins Matt Zeigler to discuss consumer spending, Federal Reserve policy, gold, international stocks, and how he translates his economic outlook into a diversified portfolio.

Recorded September 16, 2026, before the Federal Reserve's policy announcement.

David Rosenberg on Twitter
https://twitter.com/EconguyRosie

Rosenberg Research
https://www.rosenbergresearch.com/

Topics covered:

• Why Rosenberg believes markets have priced in too much Fed tightening and Treasury bonds offer an opportunity

• Why he views higher oil prices as a tax on consumers rather than evidence of sustained, broad-based inflation

• How slowing wage growth, falling savings, and the stock market wealth effect shape consumer spending

• How Treasury issuance changes and potential post-election fiscal gridlock could support bonds

• Why AI exposure extends beyond technology stocks into utilities, industrials, and other sectors

• Where he sees opportunities in healthcare, consumer staples, pipelines, European stocks, and Asia

• His model portfolio's allocation to equities, bonds, cash, and commodities

• How gold, central bank buying, and a bearish dollar outlook fit his investment thesis

• Why he is positioning for slower growth without making recession his base case

• What working with portfolio managers taught him about cutting losses and separating conviction from stubbornness

Timestamps:

00:00 Rosenberg's portfolio approach and the Treasury opportunity
05:58 Why an oil shock can weaken consumer spending
10:52 Jobs, wages, and the stock market wealth effect
17:35 Fiscal stimulus, Treasury issuance, and the bond outlook
22:53 AI concentration risk beyond technology stocks
27:10 Why he owns European and Asian equities
31:16 Inside his 50% stocks, 30% bonds model portfolio
36:43 Betting against the inflation consensus
42:41 Gold, central bank reserves, and a weaker dollar
48:56 Recession watch and bear market risks for 2027
53:10 AI correlations and the risks of being fully invested
58:27 Cutting losses and knowing when conviction becomes stubbornness

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.

Franklin Templeton CEO Jenny Johnson joins Matt Zeigler to explore how AI, blockchain tokenization, and private markets are reshaping investing and asset management. They discuss what these changes mean for individual investors, from personalized portfolios and access to private companies to the concentration risks hiding in passive index funds. Jenny also shares lessons from her journey from intern to CEO, why financial advisors still matter, and why starting early remains her most important investing lesson.

Franklin Templeton
https://www.franklintempleton.com

Topics covered:

• Why AI could create new industries and why learning to use it matters for young professionals

• How Franklin Templeton uses AI agents and why investment decisions still require human judgment

• Building personalized portfolios around retirement, college savings, and other financial goals

• How blockchain, smart contracts, and instant settlement could reduce financial transaction costs

• Tokenized money market funds, digital wallets, and the obstacles to bringing ETFs on-chain

• Why companies stay private longer and what investors miss when they only own public stocks

• Private credit, illiquidity, and the trade-offs involved in expanding access to private markets

• How mega IPOs, AI spending, and changing index composition can increase portfolio concentration

• Balancing shareholders, employees, and clients while investing in a company's long-term future

• The value of financial advisors, staying invested, and giving compounding time to work

Timestamps:

00:00 Jenny Johnson's leadership lessons and path from intern to CEO
06:41 AI job disruption and lessons from earlier technology revolutions
10:42 How young analysts use AI and where personalized investing is heading
15:44 Human judgment, AI agents, and the future of asset management
20:17 How tokenization could lower costs and expand financial access
24:39 Why blockchain adoption is slow and how tokenized ETFs work
29:58 Private company growth, investor access, and liquidity trade-offs
35:20 Mega IPOs, index concentration, and the risks of AI spending
41:23 Franklin Templeton's family legacy and investing for the next generation
46:18 Why financial advisors matter and why investors should start early
51:32 Jenny's hands-on experiments with AI 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.

Jim Paulsen joins Jack Forehand and Matt Zeigler on the latest Jim Paulsen Show to explore why booming AI earnings may be masking a weakening U.S. economy, and what that means for stocks, bonds, and Federal Reserve policy. Using 27 charts, he examines stalled job creation, rising oil prices, growing reliance on debt to finance AI investment, and why he expects a sharper correction in technology than in the broader S&P 500.

⁠Subscribe to the Jim Paulsen Show on Spotify⁠⁠⁠⁠

⁠⁠⁠⁠Subscribe to the Jim Paulsen Show on Apple Podcasts

Topics covered:

• Why strong S&P 500 earnings hide a widening divide between technology, energy, and the remaining seven sectors.

• Why low unemployment claims may offer false comfort when job creation has stalled.

• Jim's job market misery index and what it suggests about the case for Fed easing.

• How business investment and employment have broken their historical relationship.

• Why weak real disposable income, low savings, and higher oil prices threaten consumer spending.

• How fading economic momentum could push Treasury yields lower despite renewed inflation fears.

• Why a shrinking wall of worry could remove an important source of support for stocks.

• What growth stock leadership, household purchasing power, and ISM services data reveal about market risk.

• How debt-funded AI spending and widening credit spreads change the risks facing technology companies.

• Why extreme stock outperformance versus bonds could matter for portfolio allocation.

• The difference between rising profits per worker and sustainable economic productivity.

• Why Jim expects a tech bear market but a more moderate correction in the broader S&P 500.

Timestamps:

00:00 Why oil, rates, and tight policy worry Jim
05:43 The three-way split hiding beneath strong earnings
09:58 Why low jobless claims may be misleading
16:18 When business investment stops creating jobs
20:48 Can consumer spending outrun real income?
26:01 How the wall of worry has supported stocks
31:44 Investor complacency and a shift toward growth fears
36:58 The disconnect between Main Street and Wall Street
41:35 AI debt financing, credit spreads, and the case for bonds
47:25 Investment per worker and the yield curve's earnings warning
51:52 Profit productivity versus real economic productivity
58:08 Why Jim expects a tech bear market and a broader correction

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.

Former Fidelity president and MFS chairman Bob Pozen joins Excess Returns to discuss retirement investing, the risks in private credit, and why he favors a 90% stock and 10% cash portfolio for investors who can cover their living expenses without selling stocks.

Drawing on decades in asset management, he shares lessons from Peter Lynch and Warren Buffett, explains why index funds are difficult to beat, and challenges conventional thinking about bonds, Social Security, and corporate earnings reporting.

Bob Pozen's website
https://www.bobpozen.com

Follow Bob Pozen on Twitter
https://x.com/Pozen

Research discussed:

Consequences of Mandatory Quarterly Reporting: The U.K. Experience
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2817120

Rating Without Market Discipline
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6859158

Giving Life to Private (Rated) Credit
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6857958

Topics covered:

• What investors misunderstand about Peter Lynch and how fund liquidity shaped his approach versus Warren Buffett's.

• Lessons from leading Fidelity and rebuilding investor trust at MFS after its trading scandal.

• Why fees, fund size, and market efficiency make large-cap index funds difficult to beat.

• Private equity in 401(k) plans, liquidity constraints, and the problem with instant valuation markups.

• How private credit ratings and affiliated investments can obscure risks on insurance company balance sheets.

• Pozen's proposals for Social Security reform and the consequences of postponing difficult decisions.

• How automatic IRA enrollment could expand retirement savings access for workers without employer plans.

• Why Pozen favors a 90/10 portfolio for certain investors and how spending needs and inheritance goals affect allocation.

• Why quarterly financial reporting and quarterly earnings guidance deserve different treatment.

• The behavioral cost of chasing rallies and selling downturns, plus Pozen's work on AI and personal productivity.

Timestamps:

00:00 Peter Lynch, Warren Buffett, and staying the course
05:27 Leading Fidelity and keeping stock funds invested
11:03 Rebuilding trust at MFS after the trading scandal
16:01 Why active managers struggle to beat index funds
20:03 Private equity in 401(k)s and valuation concerns
24:45 Private credit ratings and insurance company risks
29:33 Regulatory gaps and affiliated insurance investments
35:51 Social Security reform and the cost of waiting
40:00 Automatic IRAs for workers without retirement plans
44:09 The case for 90% stocks and 10% cash
50:05 Why quarterly financial reporting matters
55:00 The problem with precise quarterly earnings guidance
59:00 Avoiding emotional market timing and AI productivity 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.

John Kerschner and Michael Contopoulos of Janus Henderson join Matt Zeigler to explain why persistent inflation and higher interest rates call for a different approach to bond investing. They explore short-duration bonds, AAA CLOs, mortgage-backed securities and how investors can rethink the fixed income allocation in a 60/40 portfolio.

The conversation covers why traditional bond benchmarks may deliver too much interest rate risk for their yield, how ETFs expand access to securitized credit, and why the AI buildout could add to inflation rather than solve it.

High-Conviction Views: The time for short-duration bonds
https://www.janushenderson.com/en-us/advisor/article/high-conviction-views-the-time-for-short-duration-bonds/

Janus Henderson Investors
https://www.janushenderson.com/en-us/advisor/

Topics covered:

• Why deglobalization, fiscal spending and labor constraints could keep inflation and interest rates elevated

• How the Bloomberg US Aggregate Bond Index concentrates interest rate risk and leaves out large parts of the bond market

• How AAA CLOs work, why their coupons float, and why they are different from cash

• Why tight corporate credit spreads may offer insufficient compensation for the risks investors take

• The three jobs of fixed income: safety, income and insurance

• How duration determines whether rising rates can wipe out a bond portfolio's income

• Why bond ETF discounts can reflect price discovery when underlying bonds are not trading

• How Treasury borrowing and AI hyperscaler debt issuance affect bond supply and relative value

• Why AI capital spending, electricity demand, labor shortages and wealth effects can create inflation

• How to rebuild the bond allocation around securitized credit, agency mortgages and the risks in your equity portfolio

Timestamps:

00:00 Rethinking bonds after years of disappointing returns
04:28 Why the forces behind the bond bull market have changed
10:09 The hidden interest rate risk in the Aggregate Bond Index
14:53 AAA CLO ETFs: Floating income, structure and drawdown risk
20:44 Treasury fiscal risk and tight corporate credit spreads
26:16 Moving beyond set-and-forget bond funds
30:45 How duration can overwhelm your bond yield
36:27 Bond ETF liquidity and price discovery during stress
41:11 Treasury borrowing, AI debt and securitized bond supply
46:00 How hyperscaler borrowing can create credit market dislocations
50:29 Four reasons AI could increase inflation
55:56 Rebuilding the 40% bond allocation in a 60/40 portfolio
01:02:00 Municipal bonds, recession protection and balancing equity risk

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.