This week’s Excess Returns Weekly Wrap breaks down the best investing insights from Adam Parker, Robert Hagstrom, and Eric Crittenden. We discuss why the market may still be trading on fundamentals, why valuation alone can fail as a stock-picking tool, how modern portfolio theory changed investing, what business-driven investors can learn from Warren Buffett, and why trend following may work by providing liquidity to hedgers.

Topics covered:

  • Why the stock market may be looking through today’s headlines to future earnings and AI-driven fundamentals

  • Adam Parker’s argument that valuation does not work well as a standalone stock-picking signal

  • Why estimate revisions, earnings beats, and gross margin changes may matter more than cheap P/E ratios

  • Robert Hagstrom on Harry Markowitz, Benjamin Graham, and the debate over whether volatility is the same thing as risk

  • How modern portfolio theory shaped active management, index funds, and the way investors think about diversification

  • Warren Buffett’s casino and cathedral metaphor for separating stock prices from business ownership

  • Eric Crittenden on why hedgers may willingly lose money on trades to reduce business risk and lower cost of capital

  • Why trend following may earn a risk premium by providing liquidity to hedgers in their moment of need

  • How systematic investors should think about tinkering with models during drawdowns

  • Robert Hagstrom’s story about Bill Ruane and the importance of finding the right clients and investors

Timestamps:

00:00 Risk, valuation, and hedging in this week’s best clips
04:06 Adam Parker on why the market may still be trading on fundamentals
08:49 Why cheap stocks are often cheap for a reason
14:37 Robert Hagstrom on Harry Markowitz and the birth of modern portfolio theory
18:50 How portfolio theory became the institutional language of investing
22:27 Eric Crittenden on hedgers, cost of capital, and who is on the other side of the trade
27:51 Adam Parker on why firm-wide market outlooks are so hard to get right
33:53 Robert Hagstrom on Buffett’s casino and cathedral metaphor
39:16 Why gross margin change may be one of the most important stock-picking signals
44:56 Eric Crittenden and Jason Buck on tinkering with systematic strategies
49:00 Why trend following may work over the long term
53:09 Robert Hagstrom on meeting Bill Ruane and learning which clients to avoid
58:38 Why firing the wrong clients can strengthen an investment business

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