Finding a good investment and knowing how much to put into it are different problems. This week's Excess Returns Weekly Wrap connects overlooked AI opportunities, the risks of concentrated portfolios, and the position-sizing mistakes that can turn favorable odds into losses.

Jack Forehand and Matt Zeigler revisit conversations with Michael Baron, Eric Pachman and Kris Abdelmessih. Michael Baron explains why some apparent AI losers may have valuable data advantages and how his firm manages investments as they become large positions. Eric Pachman traces diesel costs into consumer inflation and shares a grocery-price study that challenged his own assumptions. Kris Abdelmessih explains why surviving long enough to benefit from an edge depends on how much you bet.

Topics covered:

  • Michael Baron on AI opportunities beyond the Magnificent Seven
  • Why proprietary data may protect software companies from disruption
  • Eric Pachman on diesel prices, freight surcharges and the path into CPI
  • Why refinery constraints and crude-oil differences matter for fuel supply
  • Kris Abdelmessih on how favorable odds can still lead to ruin
  • Michael Baron on letting winners run while managing leverage and portfolio correlations
  • Eric Pachman's comparison of Kroger prices with the government's food basket
  • Why national averages can differ from your household's inflation experience
  • Kris Abdelmessih on fractional Kelly and uncertainty about your true edge
  • Applying position-sizing lessons to investing, gambling and insurance decisions

Watch the full interviews:

Michael Baron: AI beneficiaries, Tesla, SpaceX and managing concentrated growth portfolios
https://www.youtube.com/watch?v=KVCgmorfy50

Eric Pachman: What headline economic data misses about jobs, diesel costs and grocery prices
https://www.youtube.com/watch?v=5bXUBAPRvr0

Kris Abdelmessih: The Kelly Criterion, bet sizing and staying in the game
https://www.youtube.com/watch?v=YlTPdaT-X6U

Chapters:
00:00 Introduction and Michael Baron on overlooked AI winners
09:24 Eric Pachman on diesel costs and inflation
17:28 Kris Abdelmessih on good odds and bad bet sizing
22:44 Michael Baron on concentration and letting winners run
28:35 Eric Pachman tests grocery prices against CPI
33:33 Your household's inflation versus the headline number
37:41 Kris Abdelmessih on why investors use fractional Kelly
43:39 Being honest about your edge and applying Kelly in real life

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.


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