Excess Returns

"There is no universal playbook for investing." "Whatever you have to do to get to the place that you can stick to the strategy through thick and thin." Michael Batnick on the one lesson he would teach the average investor.

"One of the real hallmarks to me of a great management team is the willingness to admit mistakes." Tom Maher looks for clear goals, realistic expectations and evidence that managers recognized what went wrong and changed course.

"When you're firing the hose at a blaze, you don't know how much water you're gonna put on." Michael Howell on why fighting a debt crisis can fuel the next asset boom: central banks add liquidity to prevent defaults from spreading, then struggle to control how much they've added.

Inflation can make a healthy-looking profit less impressive than it seems. Yesterday's CPI report showed consumer prices rose 0.4% in October. "You want businesses that can adapt to it." In this earlier conversation, Joel Tillinghast looks for pricing power, cost flexibility and returns that hold up after inflation.

A low P/E tells you only part of what you're buying. "What am I paying for that future growth path?" Mike Hunstad compares valuations among companies with similar growth expectations, rather than simply ranking the whole market from cheap to expensive.

"All of my winners basically only outperform the market fifty percent of the time." Robert Hagstrom looked back at stocks he'd held for 10–12 years. Even his biggest successes had drawdowns and stretches of underperformance. Their revenue and earnings growth made the wait worthwhile.

"You don't want to just say, 'I only buy the lowest PEs,' because that might not make sense." "If you could pay up a little bit for a great business, that's what you want to do." Scott McBride on the one lesson he would teach the average investor.

Brian Portnoy kept his kids' college savings in stocks, even through college. "I've over-saved by, like, a ridiculous amount because of luck, not skill." He also had a fallback if stocks fell: taxable assets elsewhere.

"Who would rather sell ketchup and cream cheese than high-bandwidth memory?" "I raised my hand because we own Kraft Heinz." Peter Boockvar looks for ideas on the 52-week-low list. But he wants a business that can improve, not a "melting ice cube."

Mike Green thinks passive investing helps explain why cheap stocks stay cheap. "The aggregate marginal flow is against it." His argument: value investors buy based on price versus worth. Passive funds allocate by market value.

AI can automate your Excel spreadsheet. That isn't where Mike Hunstad sees the big productivity gains. "You have to change technology, processes, mentality around how you do things."

Would you buy your existing positions at today's prices? After last week's selloff, a lesson Jack Schwager took from Paul Tudor Jones: don't get comfortable just because you're still sitting on a gain. "Would I want this position at this price with my risk point today?"

What happens to consumer spending when stocks stop paying the difference? "The problem is that de-savings-driven expansion is really reliant on asset prices continuing to rise." Bob Elliott on the gap being filled by savings and asset wealth rather than growth in paychecks.

The S&P 500 holds roughly 500 stocks. In Kai Wu's snapshot, its unequal weights give it about 50 effective holdings. "It's a lot less than you might think."

In calm markets, the Fed isn't the whole liquidity story. "The private sector is really in control of credit creation." Michael Howell on how banks and collateral expand liquidity, and why the Fed takes center stage in a crisis.

"We've turned the indices into monetization vehicles for large-scale IPOs." Mike Green argues that automatic index buying helps explain why giant IPOs can succeed while smaller deals struggle. "I could be just as wrong."

AI spending can keep rising while AI stocks fall. "The stocks are gonna price in peak CapEx well before we actually see peak CapEx." Peter Boockvar on why the growth rate of AI investment matters, and why new semiconductor supply could compound a slowdown.

"For most investors, it's better to be Rip Van Winkle than Nostradamus." "Coming up with a portfolio, particularly with public markets, I want that sucker to be on autopilot." Meb Faber on the one lesson he would teach the average investor.

Holding cash can help you avoid selling everything else. "We knew there would be days like this, and we allocated a portion of your assets to ride out this storm." Daniel Crosby on the behavioral value of a cash cushion during a bear market.

A rising stock market can make Berkshire's profits look huge without the same jump in its underlying businesses. "In a big stock market up year, earnings look huge." Adam Mead on why Buffett separates investment gains and losses from Berkshire's operating earnings.