Tech Has Led for 20 Years. Bonds Yield Over 5%. What If Your Biggest Risk Is What You Don’t Own?

AI financing, tech-stock complacency, and the return of bonds to the portfolio conversation take center stage in this week’s Excess Returns Weekly Wrap. The question connecting them: how much pain could investors face before rate cuts or government support arrive?

Jack Forehand and Matt Zeigler revisit conversations with Barry Ritholtz, Jim Paulsen, and Ben Hunt to explore the risks and opportunities surrounding the AI boom. They discuss whether massive investment can translate into lasting returns, who bears the cost of rising electricity demand, and why confidence in an eventual rescue can leave investors overlooking the losses that come first.

Topics covered:

• Barry Ritholtz on AI financing, IPO valuations, and data-center obsolescence risk
• Why real demand for AI does not settle the question of investment returns
• Jim Paulsen on two decades of tech outperformance and investor complacency
• The difference between relative outperformance and recovering from a major drawdown
• Ben Hunt on competition for electricity and the potential cost to consumers
• Barry Ritholtz on the renewed case for high-quality bonds without calling a market bottom
• Jim Paulsen on why rate cuts can coincide with falling stock prices
• Ben Hunt on government backstops, alternative asset managers, and the limits of “too big to fail”
• The potential long-term consequences of repeated rescues for inflation and inequality

Timestamps:

00:00 Introduction and the AI financing question
09:24 Jim Paulsen on tech outperformance and complacency
18:11 Ben Hunt on who pays for AI’s power demands
24:02 Barry Ritholtz on the case for bonds
30:13 Jim Paulsen on rate cuts and falling stocks
36:19 Ben Hunt on the pain before an AI backstop
40:38 The long-term costs of repeated rescues

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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.