Jack Forehand

Excess Returns | SignalBridge Wealth

[Jack Forehand @practicalquant]

This was so much fun.

@CliffordAsness joins @CultishCreative and me on @excessreturnpod to walk through the greatest hits of his research.

We covered:

• Bubble Logic and what investors still get wrong about bubbles
• Why volatility is a useful measure of risk
• The myth of “cash on the sidelines”
• How private markets hide volatility
• Why missing the best (and worst) 10 days is a bad argument
• The case for international diversification
• When to pull the goalie in hockey
• Machine learning, overfitting and the future of quant investing

https://t.co/8n5E006HwI

[Excess Returns @excessreturnpod]

AI didn't make semiconductor stocks stop being cyclical.

"Maybe they actually are who they always have been."

Paisley Nardini argues that treating chipmakers as AI blue chips led investors to forget how volatile this part of the market can be.

[Excess Returns @excessreturnpod]

"You have to be dumb on the way up, and you have to be smart on the way down."

Jared Dillian says bull markets can be easy if you play along. The warning sign: people making money far out of proportion to their intelligence or work ethic.

[Excess Returns @excessreturnpod]

"Well, heck, I just got my statement, and it's bad."

Jim Paulsen on why a brighter outlook can be a hard sell to an investor staring at losses.

[Excess Returns @excessreturnpod]

Buying the S&P 500 is still a bet on a particular kind of stock.

"You're basically taking a huge bet into large cap, you could argue quality, maybe growth."

Wes Gray asks how much of your portfolio you want tied to that same risk profile.

[Excess Returns @excessreturnpod]

"I keep a very detailed Excel spreadsheet that goes back years on all the mistakes I made."

Ted Mortonson feeds that history into an AI engine to flag patterns from past cycles: "You better pay attention."

[Excess Returns @excessreturnpod]

"If you look at your account every day, wait a week before you make a change."

Shannon Saccocia on the one lesson she would teach the average investor.

[Excess Returns @excessreturnpod]

"We don't have 100 stocks that are all gonna be in trouble if interest rates go up."

Colin McQueen on why he handles macro risk through portfolio construction, rather than changing his stocks with every economic forecast.

[Excess Returns @excessreturnpod]

Tech giants building AI are expected to spend about $800 billion this year. Next week's earnings put the returns under scrutiny.

Edward Chancellor's earlier China example paired "very strong growth" with "absolutely miserable returns."

"You want to look at valuation and returns on capital."

[Excess Returns @excessreturnpod]

"I shouldn't be here."

"I thought it was over."

Ted Mortonson recalls three close calls during six years deployed with the Navy.

He explains what he learned from it.

[Excess Returns @excessreturnpod]

"If I spend a million on R&D, it's treated like a bonfire."

Rob Arnott on why treating R&D as an expense can hide the value a business is building.

[Excess Returns @excessreturnpod]

"I think the industry is so full of sh*t right now."

"In 50 chapters from 50 really sharp people, it's very rare that any of them devoted much time at all to non-traditional investments."

Brian Portnoy on the quality of products being pitched to investors today.

[Excess Returns @excessreturnpod]

"JOMO, the joy of missing out."

"We're all programmed to chase. But you've just gotta sit back and just enjoy that missing out."

Rupert Mitchell on the one lesson he would teach the average investor.

[Excess Returns @excessreturnpod]

"If we knew the future, then we'd only hold one security, but we don't."

Concentration can hurt even when nothing you own blows up.

Thursday's tech selloff, while the Dow was roughly flat, put portfolio concentration back in focus.

In an earlier conversation, Joe Wiggins highlighted the other side: missing the parts of the market that lead returns.

[Excess Returns @excessreturnpod]

Losses at the bottom of a cycle can hide the value of a business.

Colin McQueen:

"What sort of margins, what sort of returns can it make in a kinda normal economy?"

"What's the downside if we're wrong? How much do we lose?"

[Excess Returns @excessreturnpod]

The same interest-rate policy can hit the old economy hard and barely touch the new one.

"We are still managing our economy with tools that worked on the old economy."

Jim Paulsen argues tech often follows its own innovation cycle. Its strength can mask weakness elsewhere when the Fed looks at the averages.

[Excess Returns @excessreturnpod]

"I hold ungodly sums of cash."

Brian Portnoy is willing to give up potential returns for a buffer his business might need when markets fall.

"When career risk and market risk are identical, you cash up."

[Excess Returns @excessreturnpod]

"I think it's very hard to extrapolate today that somehow just because a particular, or the NeoClouds in general are struggling, that the AI trade is dead."

Andy Constan on why trouble at CoreWeave doesn’t necessarily mean the AI trade is dead or a financial crisis is coming.

[Excess Returns @excessreturnpod]

"If you recognize that you are average and how hard it is to outperform, I think it leads you to two decisions."

"You either let the professionals run it or you index. Unless you really can find a niche."

Rick Schmidt on the one lesson he would teach the average investor.

[Excess Returns @excessreturnpod]

"Graham is guarding against what can go wrong. Fisher is looking at what can go right."

Gary Mishuris sees both personality and experience shaping an investor's approach. Copying the style misses a more useful lesson:

"The thing you should copy is that you should be your own person."

[Excess Returns @excessreturnpod]

This week's oil rally has revived inflation worries. Retirees face a double hit when rising living costs force bigger withdrawals from a falling portfolio.

In an earlier conversation, Bill Bengen described that combination in his historical worst-case retirement sequence:

"Multiple big bear markets, followed by high inflation, which forced 'em to increase their withdrawal, just devastated their portfolio."