Excess Returns

This episode of our new showThe 100 Year Thinkers brings together Chris Mayer and Ian Cassel for a deep discussion on long-term stock picking, microcap investing, business quality, AI disruption, management teams, and the behavioral skills that separate great investors from great analysts.
They explore why the edge in investing may increasingly come from judgment, presence, relationships, patience, and the ability to hold the right businesses through uncertainty.
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Topics Covered
Why being present with management teams may still be an investor edge in the age of AI

How microcap investing differs from small-cap, mid-cap and large-cap investing

Why talking to management can build conviction but also create bias

How Chris Mayer thinks about vertical market software, mission-critical systems and AI disruption

Why AI may become table stakes rather than a durable competitive advantage

How small companies can use AI to improve workflows, sales, inventory and productivity

Why many microcaps have short shelf lives and rarely become true long-term compounders

The role of intelligent fanatics, owner-operators and repeat winners in great investments

Why management transitions can create powerful microcap opportunities

The difference between being a great analyst and being a great investor

Why execution, position sizing, selling losers and holding winners matter more than hit rate

How Matt and Bogumil apply the lessons to AI, business quality and the limits of small business scalability

Timestamps
00:49 Introducing Chris Mayer, Ian Cassel and 100 Year Thinkers
04:59 Ian Cassel’s first management meeting and XM Satellite Radio
09:00 Why management meetings deepen understanding but can also mislead
14:32 Chris Mayer on the real edge in long-term investing
18:40 Mission-critical software, systems of record and AI disruption
22:45 How microcap companies are using AI in real businesses
27:02 AI as table stakes and when disruption creates opportunity
31:29 Why most microcaps have short shelf lives35:51 Finding Tom Brady before the market knows he is Tom Brady
40:53 Why owner-operators and intelligent fanatics matter
45:03 Second-in-command leaders, repeat winners and chips on shoulders
49:27 Analyst vs investor and the missing skills of stock picking
54:00 Using data to identify investor strengths, weaknesses and decision errors
58:14 Position sizing and letting small positions earn the right to grow
01:03:00 Peter Lynch, stocks as businesses and learning to think like an owner
01:07:00 AI, human judgment and the limits of automation
01:11:00 Why not every small business can become the next Facebook
01:15:00 Where to follow Bogumil and the 100 Year Thinkers series

This week’s Excess Returns Weekly Wrap examines what Chris Davis and Rich Bernstein can teach investors about letting winners run, inflation risk, market concentration, dividends, AI, and the difference between economic stories and investment returns. Jack Forehand and Matt Zeigler break down clips on portfolio concentration, the 1960s vs. the 1970s, investor complacency, the Fed’s inflation target, durable businesses, and where the next market opportunity may be hiding.
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Topics Covered
Why letting winners run can be so powerful, but so hard for professional investors

Chris Davis on how his mother outperformed by never selling great companies

The tradeoff between concentration, diversification and real-world portfolio risk

Why Rich Bernstein thinks today may look more like the 1960s than the 1970s

How oil prices affect consumer behavior when measured against wages

Chris Davis on why perceived risk can be very different from actual risk

What cars, insurance and investor behavior reveal about market complacency

Why the Fed’s 2% inflation target may not reflect the world investors are living in

The relationship between valuation, durability and software stocks

Why higher inflation could increase demand for dividends and near-term cash flow

Chris Davis on why exceptional people and management teams matter in investing

Why AI may be a great economic story but not necessarily a great investment story

Timestamps
00:00 Letting winners run, 1960s inflation and investor risk perception
02:18 Chris Davis on how his mother outperformed by never selling
08:32 Reinvestment risk and the limits of active management
12:45 Why oil shocks may matter less when gasoline is low relative to wages
20:25 Chris Davis on why feeling safe can make investors take more risk
29:20 Rich Bernstein on whether the Fed’s 2% inflation target is outdated
34:08 Chris Davis on durability, valuation and software stocks
39:39 Why cash flow gives durable companies room to adapt
43:16 Rich Bernstein on dividends, inflation and the need for cash today
51:55 Chris Davis on why people matter more than investors think
56:07 The risk and value of investing with exceptional leaders
1:01:30 Rich Bernstein on AI as an economic story vs. an investment story
1:05:13 Why AI productivity may not translate into obvious stock market winners

This episode of Last Call breaks down one of the most confusing market environments in recent memory: why stocks continue to rise despite war, oil shocks, and growing macro risks. Through conversations with Jim Paulsen, Ben Hunt, Kevin Muir, and Brent Kochuba, we explore the tension between strong earnings, hidden risks in private credit and global growth, and the powerful role of flows and positioning in driving markets higher.

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Topics Covered
Why markets are ignoring war, oil shocks, and geopolitical risk

The “supernova” risk in private credit and why it hasn’t hit markets yet

How supply-driven inflation differs from 1970s-style demand inflation

Why pessimistic sentiment may actually be supporting markets

The role of earnings growth and valuation resets in fueling the rally

Bull vs bear case for markets based on macro, earnings, and positioning

Why free cash flow trends may be more concerning than earnings

How options flows and dealer positioning are suppressing volatility

The AI capex boom and its impact on market leadership and breadth

The growing divide between Mag 7 earnings and the rest of the market

Timestamps
00:00 Intro and market overview
01:37 Why markets are not falling despite negative news
03:00 Buy-the-dip behavior and earnings resilience
06:11 Ben Hunt on “supernova” risks in private credit
08:00 Hidden credit crunch in middle market companies
10:24 Why private credit matters for economic growth
14:10 Oil supply shocks and global growth risks
17:00 Why markets can ignore risks before they appear
18:48 Jim Paulsen on market resilience and sentiment
20:00 Why pessimism may reduce downside risk
22:24 Inflation vs labor force growth framework
24:00 Why current inflation is supply-driven, not demand-driven
26:00 Potential shift from inflation focus to growth focus
29:11 Kevin Muir on bull vs bear market setup
31:00 War impact on rates, oil, and positioning
33:00 Fed reaction and shifting rate expectations
35:00 Why earnings remain the dominant market driver
37:00 Why geopolitics often doesn’t move markets
40:00 Bear case: weak free cash flow and employment risk
44:26 Brent Kochuba on options flows and positioning
47:00 Why markets ignore rising rates and oil
49:00 Call buying, dispersion, and tech leadership
51:00 Energy as both hedge and AI-driven opportunity
54:00 Correlation, volatility, and market structure
56:00 Dealer positioning and suppressed volatility
58:00 Earnings strength and narrow market leadership
01:01:00 Free cash flow vs earnings debate
01:01:55 AI capex and long-term market implications

This episode explores one of the most important debates in markets today: whether investors are underestimating the risk of higher inflation and overconcentrating in a narrow group of growth stocks.
Richard Bernstein of Janus Henderson Investors joins Excess Returns to explain why today’s environment may look more like the inflationary 1960s than the 1970s, what that means for portfolios, and why many investors may be disappointed with passive index returns over the next decade.
Richard walks through the implications of rising import prices, global conflict, and deglobalization, and how these forces could drive a structural shift toward higher inflation and shorter-duration investing. He also explains why market concentration, AI enthusiasm, and capital flows may be setting up a broadening opportunity across overlooked areas of the market.
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Company Website:
https://www.rbadvisors.com
Why investors in S&P 500 index funds may face disappointing long-term returns

The shift from exporting disinflation to importing inflation through global trade

How war and geopolitical conflict are influencing inflation expectations and markets

Why today’s environment resembles the 1960s “guns and butter” period more than the 1970s

The case for structurally higher inflation and a potential shift in Fed targets

Why shorter-duration assets, dividends, and cash flow matter more in inflationary regimes

The risks of overconcentration in AI and mega-cap growth stocks

How capital flows and valuation distortions create opportunities outside the Mag 7

The case for international equities and why investors are significantly underweight

Where Bernstein sees the most compelling long-term opportunities across sectors and regions

00:00 Intro and why index investors could be disappointed
00:01:13 War, inflation, and the impact of rising gasoline prices
00:02:40 Importing inflation and the role of global trade dynamics
00:03:33 1970s oil shock vs 1960s guns and butter comparison
00:05:00 Why today’s inflation environment may be less severe than the 1970s
00:06:30 Defense spending, tax cuts, and inflation expectations
00:08:54 Why Bernstein is taking the “over” on inflation and deficits
00:10:00 The case for a higher long-term inflation target
00:11:00 Why the Fed may resist changing its 2% inflation target
00:12:00 Deglobalization and the rise of global conflict
00:14:00 Global inflation dynamics and divergence across countries
00:15:21 Why cash and short-duration assets may outperform
00:17:00 Asset-liability mismatches and the endowment model stress
00:18:23 Market concentration and parallels to the dot-com bubble
00:20:00 AI as an economic story vs an investment story
00:21:00 Capital flows, valuation excess, and future return expectations
00:22:39 Why market broadening opportunities may emerge
00:24:19 Passive flows, ETFs, and market distortions
00:25:40 Where Bernstein sees sector opportunities today
00:27:34 The case for dividends in an inflationary environment
00:31:00 Why near-term cash flow matters more than long-term growth
00:33:07 Corporate behavior, capital allocation, and rising hurdle rates
00:36:02 Profit cycle strength and why the market should broaden
00:41:36 Evaluating IPOs and speculative investments
00:47:09 The risk of a lost decade for index investors
00:50:21 Gold, commodities, and portfolio diversification
00:53:48 Most attractive overlooked opportunities today
00:58:06 Biggest long-term risks and what keeps Bernstein up at night

This episode with Chris Davis of Davis Advisors explores how investors should think about risk, valuation, and opportunity in a market defined by high valuations, technological disruption, and major macro shifts. Davis lays out a framework for navigating uncertainty, explains why durability matters more than ever, and shares hard-earned lessons on selling great companies too early.
Davis Advisors
https://www.davisadvisors.com
Topics Covered
Why high valuations signal complacency even in an uncertain macro environment

The three major forces reshaping markets: higher cost of capital, deglobalization, and AI

How to identify durable and resilient businesses in a fragile world

Why growth and value are not opposites and how expectations drive opportunity

Lessons from past bubbles and why today may resemble 1999 in market structure

The hidden risks in passive investing and index concentration

Chris Davis’ five-part framework for investing in AI (winners, enablers, users, protected, disrupted)

Why most investors lose money by overpaying for growth and underestimating competition

The importance of management quality and “great people” in long-term investing success

Why the biggest investing mistakes are often the great companies you sell too early

Timestamps
00:00 Intro and key investing paradox on risk perception
02:45 Why today’s market reflects complacency despite uncertainty
05:20 Valuations, concentration, and optimism in current markets
08:52 Lessons from 1999 and how value investing can outperform in downturns
12:00 Durability, resilience, and why balance sheets matter more now
15:21 Kodak, disruption, and risks of passive investing
18:00 Perception vs reality of risk and behavioral mistakes
21:51 Market structure, moral hazard, and the “buy the dip” mindset
26:34 How investors should think about AI as a long-term technology shift
29:30 Why picking early AI winners is dangerous
33:00 The role of enablers like semiconductors, energy, and infrastructure
36:00 AI users and which companies benefit most from adoption
38:00 Businesses protected from disruption vs “walking dead” companies
42:00 The biggest investing mistake: selling great companies too early
46:00 Portfolio concentration and lessons from real-world experience
50:00 Berkshire Hathaway, long-term culture, and durable business models
54:00 Learning from mistakes: Costco case study
57:00 The importance of management and why people matter more than investors think