The Moats Are Invisible. So Is the Risk in Your Bond Fund. What Else Can't You See?

Jack Forehand and Matt Zeigler explore portfolio diversification, hidden bond-fund risks, AI inflation and the competitive advantages that help great businesses compound. Drawing on conversations with Chris Mayer, Robert Hagstrom, Jared Dillian, John Kerschner and Michael Contopoulos, this Excess Returns Weekly Wrap examines how to build a portfolio you can stick with and why your investments should account for the risks in your working life.

Topics covered:

• Chris Mayer's invisible moats: how culture and execution can sustain high returns on invested capital.

• Why Robert Hagstrom sees potential mispricing in competitive advantages that are difficult to measure.

• Jared Dillian's challenge to Charlie Munger's advice about enduring 50% drawdowns.

• The Awesome Portfolio, risk tolerance and why comparing everything with the S&P 500 can undermine diversification.

• How debt-weighted bond indexes can leave investors with more interest rate risk than they expect.

• Understanding duration and the fixed income sectors that core bond funds can overlook.

• The case that AI spending, energy demand, labor shortages and rising wealth are inflationary today.

• How to judge whether AI threatens a business by tracking its most important operating metrics.

• Why value investors hold losers too long and how a few big winners can carry a portfolio.

• Dillian's life hedge: accounting for career risk, employer stock and human capital when investing.

Timestamps:

00:00 AI backlash and this week's investing lessons
05:03 Robert Hagstrom on invisible moats and mispricing
09:05 Jared Dillian challenges Munger on 50% drawdowns
13:05 Risk-adjusted returns and the benchmarking trap
17:15 The interest rate risk hiding in core bond funds
22:04 Understanding your bond fund's duration
28:23 Why AI's inflation costs can precede its benefits
33:25 Why value investors struggle to sell
37:53 The life hedge: when your job and stocks fall together
42:47 Investing alongside clients versus managing personal risk

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.