Excess Returns

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In this episode, we sit down with Rob Arnott for a wide-ranging discussion on bubbles, valuations, AI spending, market history, index construction, and long-term return expectations. Rob explains how to think about bubbles in real time, why today’s market echoes the late 1990s, and what investors can practically do to improve future returns. He also digs into Research Affiliates’ latest work on fundamental indexing, growth investing, and the opportunities in international and emerging markets.

Topics covered:
• How Rob defines a bubble and why narrative drives market pricing
• Lessons from the dot-com era that apply to today’s AI-driven market
• Why disruptors eventually get disrupted
• Practical portfolio steps for investors concerned about concentration
• Why value stocks remain historically cheap
• CapEx vs R and D and what history says about future returns
• The role of AI spending and why many companies struggle to monetize it
• How AI may reshape industries and who the real long-term winners could be
• Index construction flaws and how RA’s RAFI and RACWI approaches differ
• A new way to build growth indexes using actual business growth
• Why expensive companies with slow growth are the worst quadrant to own
• Insights on emerging markets, international value, and forward return expectations
• How Rob invests personally and what he sees as the best long-term opportunities

Timestamps:
00:00 Defining bubbles and why narrative matters
02:00 Are we in a bubble today
06:20 Lessons from the dot-com boom
12:00 What investors can practically do now
14:00 Value, RAFI, and rebalancing alpha
17:00 AI CapEx and its historical parallels
20:30 Who benefits most from AI
23:00 Disruption, technology cycles, and productivity
35:00 Reinventing index construction
40:00 A new way to define and weight growth stocks
43:30 The problem with expensive slow-growth companies
46:00 Magnificent Seven through the growth lens
52:00 Rob’s outlook on emerging markets
55:00 Why the US is priced for perfection
57:00 Averaging out and trimming expensive winners
58:00 New research and future product ideas from RA
59:00 Rob’s personal portfolio approach and long-short ideas
01:00:20 Closing thoughts and outlook

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In this episode, we sit down with Bob Elliott for a wide-ranging conversation about the late-cycle economic backdrop, the Fed’s dilemma, AI’s real economic impact, the cracks forming beneath the surface of private credit and private markets, and the growth of hedge-fund-style strategies inside ETFs. Bob walks through what he is seeing in the labor market, inflation, tariffs, and risk assets, and then breaks down how Unlimited is building replication-based ETF strategies to capture hedge fund returns at low cost.

Topics covered:• The late-cycle economy and the disconnect between markets and weakening real-world data• Why labor markets look softer than headlines suggest• How tariffs are affecting inflation, growth, and consumer spending• The Fed’s policy bind and why reasonable cases exist for both cutting and holding• The slowdown in household income growth and the idea of a “slow-cession”• AI spending, productivity claims, and why the economic benefits are not yet showing up• The self-referential nature of Big Tech AI spending and poor return on AI CapEx• Why real-economy companies may not see meaningful profit uplift from AI• The private credit and private equity concerns Bob sees building• Hidden risks and information asymmetry in private-market products• New hedge-fund-style ETF strategies built using replication technology• Equity long-short, global macro, and managed futures as standalone ETF exposures• Why fee reduction is the most durable source of hedge-fund alpha• How advisors are shifting from 60/40 toward 50/30/20 allocations with alternatives

Timestamps:00:00 Macro conditions and weakening labor market02:00 Disconnect between markets and the real economy04:00 Working without government data during the shutdown06:00 Inflation trends and tariff impacts10:00 Fed policy, cuts, and late-cycle dynamics12:30 Income-driven vs debt-driven cycles15:00 Slow-cession and household spending power18:30 Fed uncertainty and prediction challenges21:00 Why the Fed paused quantitative tightening25:00 Liquidity, reserves, and bank system mechanics28:00 Equity markets, expectations, and AI mania31:00 AI spending, productivity doubts, and return on investment37:00 Business models, layoffs, and macro implications40:00 Private credit, private equity, and hidden risks45:00 How some private-market ETFs may disadvantage retail investors47:00 New Unlimited ETF strategies and how replication works52:00 Equity long-short, macro, and managed futures inside an ETF55:00 Late-cycle benefits of tactical positioning57:00 Future strategies and expanding the replication lineup59:00 Fee advantages and democratizing hedge-fund-style returns

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In this episode of The 100 Year Thinkers, Chris Mayer, Robert Hagstrom, Bogumil Baranowski, and Matt Zeigler dive deep into what truly makes a great business and how long-term investors can develop the conviction to hold through volatility, dead-money periods, and inevitable mistakes. They break down the characteristics of the perfect business, the behavioral challenges of long-term investing, the pain of errors of omission, how to evaluate management, and why returns on capital and cash generation matter so much over decades.

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Bill Bengen, the creator of the 4% rule, joins us to revisit one of the most important ideas in financial planning and retirement research. In this conversation, he explains the origins of the 4% rule, how his thinking has evolved over 30 years, and why he now believes retirees can safely withdraw closer to 4.7% — or even more — under certain conditions. We explore the data behind his findings, how to think about inflation, valuations, longevity, and sequence of returns risk, and the philosophy of living well in retirement.

Topics covered:

• ​The origins and evolution of the 4% rule
• ​How Bill discovered the worst-case retirement scenario (1968)
• ​The role of inflation and market valuations in withdrawal rates
• ​Why he now recommends 65% equities instead of 55%
• ​How diversification increases sustainable withdrawals
• ​The logic behind a U-shaped equity glide path
• ​Sequence of returns risk and how to mitigate it
• ​Thoughts on the permanent portfolio and gold
• ​Bucket strategies and cash reserves
• ​Dynamic vs. fixed withdrawal methods
• ​How longevity and FIRE affect planning horizons
• ​Why retirees should spend and enjoy more
• ​The philosophy behind “A Richer Retirement”

Timestamps:00:00 The origins of the 4% rule03:00 The 1968 retirement “buzz saw” scenario07:00 Common misconceptions about the 4% rule10:00 Inflation and valuation adjustments13:00 Diversification and higher withdrawal rates15:00 Longevity, FIRE, and extended retirements16:00 The U-shaped equity glide path18:00 Rebalancing and allocation timing19:00 The permanent portfolio and gold20:00 Sequence of returns risk explained22:00 Cash reserves and bucket strategies23:00 Dynamic withdrawal approaches24:00 Why the rule is now closer to 4.7%27:00 The changing market environment29:00 Key charts and frameworks from the book31:00 The eight essential elements of planning33:00 Withdrawal strategies and asset allocation34:00 Required minimum distributions36:00 Reflections on creating the 4% rule38:00 Bill’s philosophy on life and retirement40:00 Closing thoughts and where to find his book

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In this episode, we kick off our book project, The Most Important Investing Lesson: What the World’s Best Investors Would Teach You, with a deep dive into the ideas of Michael Mauboussin. We explore his most enduring lessons—concepts that have reshaped how we think about investing, decision making, and life. From base rates to expectations investing, we unpack how Mauboussin’s frameworks can help investors build better models of the world and make more rational, probabilistic decisions.

Main topics covered:

• ​Why base rates are the most underused yet powerful tool in investing and life
• ​How to apply expectations investing and reverse engineer stock prices
• ​Why multiples are not valuation and how to earn the right to use shortcuts
• ​Understanding the paradox of skill and why luck matters more when everyone is good
• ​Lessons investors can apply across fields like business, sports, and personal decision making
• ​How humility, reference classes, and feedback loops improve judgment
• ​Reflections on learning, writing, and how AI tools are changing the creative process

Rupert Mitchell of Blind Squirrel Macro joins Matt Zeigler to talk global markets, China’s resurgence, the AI CapEx boom, and where investors can still find value in a concentrated, overvalued U.S. market. Rupert shares insights from his recent trip to China, his evolving macro framework, and how he’s positioning across equities, credit, and real assets in what he believes could be the start of a long cycle shift away from U.S. dominance.

Topics covered:

• China’s accelerating industrial and market recovery

• Why he sees the start of an 8–10 year bull market in China

• The “CapEx time bomb” under the Mag 7

• U.S. vs. international equity performance and valuations

• The rise of fallen angels and how private credit changed high yield

• Why he may soon flip from short to long credit

• The end of the stock-bond correlation era

• His “Bushy” portfolio and defensive positioning

• Trend following, precious metals, and EM local debt

• Emerging opportunities in Africa and Uzbekistan

• The global energy complex and long-dated crude exposure

• Short ideas in fast casual restaurants and the “forgotten 493”

• How investor sentiment extremes create opportunity

Timestamps:
00:00 China’s transformation and why Rupert’s bullish
05:00 The Made in China 2025 plan and global dominance
07:00 U.S. vs. international equity rotation
10:00 The Mag 7’s CapEx problem
14:00 The “forgotten 493” and passive flow dynamics
18:00 Bonds, credit spreads, and what the yield curve says
21:00 Private credit, fallen angels, and the next credit setup
25:00 The end of risk parity and correlation breakdown
27:00 Inside the Bushy portfolio and alternatives
30:00 Gold, miners, and precious metals strategy
33:00 Frontier and EM opportunities – Africa and Uzbekistan
39:00 The Acorns portfolio and global positioning
44:00 Energy stocks, refiners, and long-dated crude
49:00 The restaurant short thesis and U.S. consumer trends
53:00 Where to follow Rupert and Blind Squirrel Macro

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In this episode, we are joined by Richard Bernstein, CIO and CEO of Richard Bernstein Advisors. We discuss why this is one of the most speculative market environments he has seen in his 40-year career, why he still believes it may also be one of the best eras for patient long-term investors, and how to think about the real opportunities hiding beneath the market's current narrow leadership. Richard breaks down his profit cycle framework, shares why investors are confusing economic stories for investment stories, and explains why non-US quality stocks and dividend strategies may be primed for a comeback.Topics covered• Speculation across asset classes and why it matters• Why fundamentals still offer big opportunities• The profit cycle vs the economic cycle• Divergence between the market leaders and the broader market• Inflation, pricing power, and corporate margins• Parallels between the AI boom and the dot-com bubble• Misallocation of capital and risks to the market• The case for non-US quality stocks• Where value investing could shine again• Dividend compounding and long-term wealth building• How RBA approaches macro-driven ETF investing• What investors are getting wrong about diversification• Deglobalization, reindustrialization, and long-term themes

Timestamps00:00 Intro and speculative environment01:46 Best opportunities for patient investors03:52 Profit cycle framework explained06:00 Where we are in the profit cycle07:32 What investors are missing on inflation09:12 Lessons from the dot-com era and AI comparisons13:46 What could trigger the speculative unwind17:18 Valuations, CAPE, and return expectations20:23 AI’s impact on margins and productivity22:39 Can value outperform again25:41 International opportunities and quality stocks34:31 Market breadth and narrow leadership36:00 The Fed, inflation targeting, and policy risks40:11 RBA’s investment process and ETF selection47:13 Diversification vs speculation behavior49:26 Misallocation of capital and market risks52:00 Deglobalization and manufacturing opportunities54:13 Closing question: Stock market vs horse race57:40 The business Richard would start today58:29 Where to follow Richard Bernstein

In this episode, we sit down with Victor Haghani, founder of Elm Wealth and one of the original partners at LTCM, to explore his journey from running complex hedge fund strategies to adopting a simplified, evidence-based investment approach. We discuss how investors should think about expected returns, portfolio construction, dynamic asset allocation, valuation signals, buybacks, managed futures, and the dangers of extrapolating past returns into the future.

Topics covered:
• Victor’s journey from LTCM to simple, systematic investing
• Why position sizing is as important as what you own
• How to think about expected returns and valuation frameworks like CAPE and P-CAPE
• The role of risk, risk premia, and personal utility in portfolio decisions
• Why 60/40 and the permanent portfolio ignore expected returns
• Buybacks, market elasticity, and capital flows
• Indexing misconceptions and asset allocation discipline
• The ETF structure and tax efficiency in asset allocation strategies
• Concentration in large tech stocks and long-term equity returns
• The importance of dynamic asset allocation vs static allocation
• Key lessons for individual investors and avoiding “too good to be true” opportunities

Timestamps:
00:00 Intro and Victor’s investing journey
03:00 Lessons from LTCM and shift to simplicity
09:00 Position sizing vs asset selection
13:00 Risk as a cost and thinking in expected returns
18:00 CAPE and the P-CAPE framework
26:00 How to use expected return estimates
34:00 The impact of buybacks on equity markets
39:00 Indexing vs poor asset allocation habits
43:00 Portfolio construction and global diversification
46:00 Why the permanent portfolio falls short
47:00 Managed futures and factors beyond stocks and bonds
50:00 Inside Elm’s dynamic allocation ETF
55:00 Market concentration and equity issuance risks
01:01:00 The case for dynamic allocation
01:02:50 Victor’s one investing lesson