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]

"If I tweet something that's bearish, I'll get ... 900 likes, and if I tweet something bullish, I'll get 200 likes."

Brent Donnelly on the incentive to sound bearish, even when you're trying to stay unbiased.

He deliberately seeks out bullish or agnostic writers to balance his reading.

"I'm never gonna run out of bearish stuff to read."

[Excess Returns @excessreturnpod]

"Why on earth are these guys paying so much for these stocks?"

That was Colin McQueen's first reaction to a Buffett-style approach after years in deep value.

Brands and technology needed a different lens from the hard assets he had learned to value.

[Excess Returns @excessreturnpod]

"You're buying a stock because it soared, after it soared."

"You're selling a stock because it tanked, after it tanked."

Rob Arnott's critique of buying stocks when they enter the ranks of the biggest companies, then selling when they fall out.

[Excess Returns @excessreturnpod]

"I'd have a lot more money."

Brian Portnoy has no mortgage, even though he thinks investing that money could have left him wealthier.

"I like having that sense of stability and security."

[Excess Returns @excessreturnpod]

"Financial media does not encourage humility on the part of investors."

"You should be really good at risk management so that you don't allow your risk posture to overwhelm the skill that you do have."

Joe Gubler on the one lesson he would teach the average investor.

[Excess Returns @excessreturnpod]

AI can help an advisor remember a client's trip to France, a child's new job or an unresolved problem from two years ago.

"It makes us better at being humans."

Matt Zeigler on the client details that build trust, but are impossible to keep in your head.

[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?"