Excess Returns

In this episode of Excess Returns, Matt Zeigler sits down with investor and author Bogumil Baranowski to discuss one of investing’s most important mindset shifts: moving beyond cheap stocks to paying up for quality and exceptional opportunities. Drawing on lessons from Warren Buffett, Ben Graham, and his own journey, Bogumil explains how value investing evolves across three key phases—buying cheap, buying good, and learning to pay up. The conversation explores patience, conviction, dead money periods, family wealth stewardship, and how to think about value versus price in a noisy world.

Topics covered:
• The “cheapest dentist” analogy and why investors chase bargains
• The three phases of investor evolution: cheap, good, and exceptional
• Lessons from Buffett, Munger, and Graham on paying up for quality
• How to hold through drawdowns and dead money periods
• Why patience and conviction are the hardest investing skills
• Frugality, compounding, and lessons from his grandmother
• How long-term family investors think about wealth and stewardship
• The difference between price and value in modern markets
• How to know when cheap is too cheap and quality is worth paying for
• Why great investments are often simple to explain
• The story behind his Wall Street Journal essay “The Expensive Truth About Cheap Investments”

Timestamps:
00:00 Introduction – The cheapest dentist analogy
03:00 Why investors love cheap stocks
07:00 The evolution from bargain hunter to quality investor
09:00 Examples from Ben Graham, Buffett, and Facebook
15:30 Conviction, drawdowns, and dead money
19:00 Judging success by business progress, not stock price
27:00 Lessons from grandma on value and frugality
31:00 How Buffett evolved from cheap to quality
45:00 Investing for future generations
49:00 Invisible wealth and stewardship
52:00 The value investor dilemma
58:00 Equal-weight vs market-cap indexes
59:00 Lessons for the average investor
1:02:00 How much research you really need
1:04:30 How his WSJ essay came to life and final takeaways

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

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

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

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

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

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

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

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

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