Excess Returns

How much of your portfolio does a good investment idea deserve? Kris Abdelmessih of Moontower joins Matt Zeigler to explain why having an edge is only part of the decision: position size can determine whether favorable odds translate into long-term growth or damaging losses.
Through a coin-flipping experiment and everyday examples, Kris makes the Kelly Criterion accessible without a complicated derivation. The conversation explores the difference between expected returns and compounded wealth, why growth-maximizing bets can still be uncomfortable, and how uncertain probabilities make a case for betting less. From portfolio decisions to insurance and extended warranties, the goal is to build better intuition about how much risk to take.
Topics covered:
How a favorable coin-flipping game exposed costly mistakes in bet sizing
Why maximizing the expected payoff of one bet differs from maximizing long-term compounded growth
How oversized bets can undermine an otherwise profitable opportunity
The Kelly Criterion's three inputs: probability of winning, probability of losing, and payoff
Why a constant percentage of your bankroll means changing the dollar amount after wins and losses
How different payoffs change the appropriate size of a bet
Applying the framework to hypothetical self-insurance and extended-warranty decisions
Why full Kelly can involve substantial drawdowns, and the tradeoffs of fractional Kelly
Working backward from a position size to the odds needed to justify it
Allowing for uncertainty in your estimates and preserving capital for future opportunities
The essay behind this conversation:
After this post you will be sizing bets in your head
https://www.panoptica.com/after-this-post-you-will-be-sizing-bets-in-your-head/
Research discussed:
Rational Decision-Making Under Uncertainty: Observed Betting Patterns on a Biased Coin
https://arxiv.org/abs/1701.01427
Kris Abdelmessih's Moontower newsletter:
https://moontower.substack.com/
Moontower:
https://moontower.ai/
Kris Abdelmessih on X:
https://x.com/KrisAbdelmessih
Chapters:
00:00 Position sizing and the favorable coin-flip experiment
04:45 Why a good bet can produce bad outcomes
13:49 The Kelly Criterion formula explained
18:10 Adjusting your bankroll and accounting for the payoff
23:03 Applying Kelly to a self-insurance decision
30:25 Full Kelly, drawdowns, and reasons to bet less
34:59 Working backward from bet size and evaluating warranties
41:09 Volatility drag, uncertain odds, and the experiment's results
46:09 How much capital does your edge deserve?
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

What are headline jobs and inflation numbers missing about the economy investors actually face? Eric Pachman of Data 4 The People joins Matt Zeigler to examine how a changing workforce, rising fuel costs, and differences in household spending could affect inflation, consumer demand, and corporate margins.
Using interactive data tools, Eric looks beneath monthly payroll reports, maps changes in America's labor force, and traces how diesel prices can work their way into retail prices. He also shares a grocery-price study that challenged his own assumptions about CPI and explains how he is using AI to make rigorous data journalism more accessible.
Topics covered:
Why monthly jobs reports need context, including survey uncertainty and revisions
How to spot unusual industry-level payroll changes and assess the quality of jobs added
What county-level labor force trends reveal about aging and rural America
Eric Pachman's research on foreign-born workers and the limits of replacement assumptions
How a shrinking supply of workers could create pressure on service prices
How diesel costs flow through freight surcharges, retailer margins, and consumer prices
What to watch for in retailer earnings calls as companies weigh price increases
Why household income, driving habits, and spending patterns change the experience of inflation
What Eric Pachman's Kroger study found about CPI, the Thrifty Food Plan, and store brands
Using AI to test assumptions and expand access to data journalism
Explore Eric Pachman's research and interactive tools:
https://www.data4thepeople.com/
The Men Who Vanished: Testing Labor Market Displacement
https://www.data4thepeople.com/p/the-men-who-vanished
How do the government's grocery prices stack up against the real ones?
https://www.data4thepeople.com/p/kroger-shelf-vs-cpi-thrifty-food-plan/
Chapters:
00:00 Introduction and Data 4 The People's mission
09:20 Spotting unusual changes in the jobs data
18:27 Mapping America's changing labor force
27:00 Foreign-born workers, aging, and labor supply
34:51 Energy costs and the path to consumer inflation
47:49 Why your inflation experience differs from CPI
56:12 Personal inflation tools and testing grocery prices
1:02:36 AI, data journalism, and challenging your own bias
1:11:17 Where to find Eric Pachman's work and tools
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Jack Raines turned $6,000 into roughly $400,000 trading SPACs, then lost $157,000 in three minutes after taking a very different bet. The author of Young Money joins Matt Zeigler to discuss what that experience taught him about investing risk, the urge to chase more, and the time a growing portfolio can cost you.
The conversation follows Jack Raines from SPAC warrants and market narratives to a broader question: how do you allocate money, time, and risk to build a life you actually want? They explore the limits of a trading edge, why cheap stocks can get cheaper, and how debt, career choices, and status shape the decisions investors make beyond their portfolios.
Young Money: A Field Guide to Wealth and Purpose in Your Twenties
https://amzn.to/4AtUsDoJack Raines' Young Money newsletter
https://www.youngmoney.co/
Jack Raines on X
https://twitter.com/Jack_Raines
Topics covered:
How Jack Raines grew his Roth IRA through SPAC warrants and pre-merger common shares, and why those positions carried different risks.
Why an edge in one corner of the market did not translate into a successful concentrated earnings bet.
How a million-dollar target and constant account checking changed Jack Raines' relationship with money and time.
What SEC filings, Discord research, and market narratives contributed to his trading process.
Why Jack Raines bought Figma after questioning the market's AI narrative and speaking with designers.
Applying portfolio thinking to careers, creative projects, and opportunities that change with each stage of life.
Weighing retirement saving against other opportunities, and why Jack Raines treats expensive debt as a constraint on taking risks.
Escaping the "someday" trap while giving long-term venture investments time to develop.
Combining steady income and index funds with independent bets, while treating status as a tool rather than a goal.
Why Jack Raines believes investors learn about risk through experience, with stakes they can afford to recover from.
Timestamps:
00:00 Jack Raines on the lessons of losing money
04:57 Inside the SPAC trades and the $157,000 loss
15:16 Separating market hype from downside math
22:18 Building a life with portfolio principles
29:45 Retirement saving, trading obsession, and the cost of time
36:56 Debt, freedom, and the trap of waiting for someday
44:33 Venture investing: acting quickly and waiting patiently
51:03 Using status without making it the goal
56:08 The investing lesson experience has to teach
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

Jason Hsu, founder and CIO of Rayliant Global Advisors and co-founder of Research Affiliates, joins Excess Returns to discuss the US-China AI race, the economics of AI spending, and what market concentration means for investors. We explore China's energy and open source advantages, opportunities in Chinese stocks, and how factor investing and machine learning can help build more diversified portfolios.
Rayliant Global Advisors
https://rayliant.com
Rayliant on X
https://twitter.com/rayliant
Topics covered:
Why Jason believes AI safety requires cooperation between the US and China

How Chinese AI models are closing the gap with US developers

China's electricity infrastructure and the competitive threat from open source AI

Where AI profits could accrue across hardware, energy, models and applications

How chip restrictions are encouraging China to develop domestic capabilities

Why retail trading creates opportunities and challenges for factor investors in China

Chinese technology companies, dividend-paying state enterprises and US-China trade

The AI spending arms race and the concentration risk facing S&P 500 investors

Momentum crashes, value cycles and how Rayliant uses machine learning to combine factors

Why advisors' greatest contribution may be helping clients find meaning in their wealth

Timestamps:
00:00 Jason Hsu on AI competition and safety
04:00 How close are Chinese AI models to the US?
08:25 China's energy advantage and open source economics
14:12 Who captures AI profits, and can China catch up in chips?
18:41 Chinese stocks, retail trading and speculation
24:01 China's overlooked opportunities and dividend stocks
28:05 US-China interdependence and the AI spending arms race
33:24 The AI concentration hiding in the S&P 500
37:25 Momentum crashes, value cycles and factor performance
41:54 Machine learning and building multifactor portfolios
48:46 Financial advisors, Jack Bogle and having enough
53:23 Why inefficient markets do not make alpha easy
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.

David Rosenberg returns to Excess Returns to explain his bullish case for Treasury bonds, why he expects inflation and economic growth to slow, and the risks he sees in an AI-driven stock market. The Rosenberg Research founder joins Matt Zeigler to discuss consumer spending, Federal Reserve policy, gold, international stocks, and how he translates his economic outlook into a diversified portfolio.
Recorded September 16, 2026, before the Federal Reserve's policy announcement.
David Rosenberg on Twitter
https://twitter.com/EconguyRosie
Rosenberg Research
https://www.rosenbergresearch.com/
Topics covered:
Why Rosenberg believes markets have priced in too much Fed tightening and Treasury bonds offer an opportunity

Why he views higher oil prices as a tax on consumers rather than evidence of sustained, broad-based inflation

How slowing wage growth, falling savings, and the stock market wealth effect shape consumer spending

How Treasury issuance changes and potential post-election fiscal gridlock could support bonds

Why AI exposure extends beyond technology stocks into utilities, industrials, and other sectors

Where he sees opportunities in healthcare, consumer staples, pipelines, European stocks, and Asia

His model portfolio's allocation to equities, bonds, cash, and commodities

How gold, central bank buying, and a bearish dollar outlook fit his investment thesis

Why he is positioning for slower growth without making recession his base case

What working with portfolio managers taught him about cutting losses and separating conviction from stubbornness

Timestamps:
00:00 Rosenberg's portfolio approach and the Treasury opportunity
05:58 Why an oil shock can weaken consumer spending
10:52 Jobs, wages, and the stock market wealth effect
17:35 Fiscal stimulus, Treasury issuance, and the bond outlook
22:53 AI concentration risk beyond technology stocks
27:10 Why he owns European and Asian equities
31:16 Inside his 50% stocks, 30% bonds model portfolio
36:43 Betting against the inflation consensus
42:41 Gold, central bank reserves, and a weaker dollar
48:56 Recession watch and bear market risks for 2027
53:10 AI correlations and the risks of being fully invested
58:27 Cutting losses and knowing when conviction becomes stubbornness
Learn more about the Excess Returns podcast network:
https://excessreturns.co
No information discussed in this podcast should be construed as investment advice. Securities discussed may be held by the hosts and guests, their firms or their clients.