The Real Estate Bust Was the Plan | Louis-Vincent Gave on China's Brute Force Growth Strategy

In this episode of Excess Returns, we sit down with Louis-Vincent Gave of Gavekal Research for one of the most wide-ranging and eye-opening conversations we have ever hosted. Louis breaks down how China transformed its economy over the last seven years, why Western observers consistently misunderstand the country’s growth model, and what this means for global markets, AI competition, supply chains, currencies, energy, demographics, and the next decade of investing. If you want a clearer picture of China, global macro dynamics, and the forces shaping markets today, this is essential viewing.Topics covered in this episode:• Why Western investors misread China’s economy• China’s response to the US semiconductor embargo• How China redirected all lending toward industry• The scale and speed of China’s move up the value chain• China’s EV dominance and the BYD vs. Tesla comparison• The new global deflation and reflation forces• Why China now looks like the US did in 2009• Energy, labor, and industrial competitiveness• China’s open-source AI approach vs. America’s closed systems• “Hunger Games” capitalism and the impact on investors• Where foreign investors consistently get China wrong• The RMB as the most mispriced major asset• How China’s demographics shape policy and markets• Why fears of a Taiwan conflict are overblown• How Louis is positioning for China’s next bull marketTimestamps:00:00 China’s economic shock and the US semiconductor embargo02:00 What the West gets wrong about China04:00 Competition, local governments, and industrial incentives06:10 China’s lending shift: real estate to industry08:00 China’s rapid climb up the value chain10:00 BYD vs Tesla and China’s engineering surge12:30 The global deflationary shock and US–China tensions15:00 From defense to offense: China’s policy pivot17:00 China’s reflation and emerging market implications18:20 Scarcity of energy, labor, and time21:00 China’s cost advantages vs the US24:00 Comparing AI strategies: open vs closed systems28:00 “Hunger Games” capitalism in China31:30 Investing challenges and opportunities in China34:00 China’s new high-tech niche champions37:00 Capital-light Chinese AI vs US capital intensity40:30 Rethinking US-China blocs and global alliances44:00 Why Europe will be torn apart by the next phase45:30 Will China outperform the US over the next decade?47:00 The massively undervalued RMB49:00 China’s barbell investment setup50:00 China’s demographic crisis and policy response53:00 Taiwan risk: myth vs reality58:00 How Louis could be wrong01:00:40 Louis’s contrarian investing belief01:02:00 Louis’s one lesson for investors

In this episode, we sit down with Sanctuary Wealth Chief Investment Strategist Mary Ann Bartels to break down her new 2026 outlook. We cover her long-term S&P 500 forecast, why she believes we are still early in a secular bull market, how technological innovation is fueling productivity and profitability, the risks she’s watching in 2026, and the case for international stocks, gold, and diversification. Mary Ann also explains why skepticism suggests we are not yet in a true bubble, how valuations fit into today’s market, and what investors should understand about cycles, inflation, and long-term compounding.Topics Covered• Secular bull markets and why the long-term trend still points higher• Whether today’s market is following historic bubble patterns• AI, technology cycles, and the connection between innovation, productivity, and profits• Why skepticism means we are not yet near euphoria• The 2026 “reset” and how the presidential cycle could affect markets• Valuations, earnings trends, and interest-rate dynamics• Market concentration, structural changes, and the role of mega-caps• Growth vs value and why growth leadership may persist• Why international markets may be entering their own secular bull market• Inflation outlook, tariffs, and what the data now suggests• Private credit concerns and overall financial-system stability• Gold’s surge, future targets, and its role as portfolio diversification• Portfolio construction, risk, and the importance of compounding for younger investorsTimestamps00:00 Market patterns, bubbles, and early-cycle dynamics01:00 Introduction02:00 Long-term S&P 500 outlook04:00 Historical bubble analogs and market psychology06:00 Skepticism vs optimism09:00 2026 reset and election-year dynamics13:00 Valuations and PE expansion17:00 Long-term valuation trends17:40 Innovation cycles and economic growth20:20 Productivity, AI CapEx, and profitability21:00 Technology adoption across industries22:20 Digitization and long-term tech layers22:30 Market concentration and structural changes25:00 Why corrections are more frequent27:20 Growth vs value31:00 International markets outlook36:00 Correlations, deglobalization, and opportunity38:40 Inflation short-term vs long-term40:30 Private credit and financial stability43:30 Gold outlook and targets45:40 Diversifying concentrated portfolios48:40 Crypto, private markets, and generational shifts49:20 Key risks for 202651:40 What most investors get wrong53:00 The one lesson for the average investor54:40 Closing

In this episode of Excess Returns, we talk with Carl Kaufman, Co-President and Co-CIO of Osterweis Capital Management, about navigating today’s fixed income landscape. Carl breaks down the major segments of the bond market, explains how credit and interest rate cycles interact, discusses private credit risks, and shares how he builds durable, low-volatility bond portfolios. Drawing on more than two decades managing one of the top multi-sector income funds, Carl offers clear, practical insights for investors trying to understand yields, defaults, duration, and where returns are most attractive today.Main topics covered:• Overview of investment grade, high yield, leveraged loans, and private credit• How today’s credit quality is shifting across the bond market• Why the high yield market may be higher quality than most investors realize• How levered loans and private credit have changed system dynamics• How Carl uses the interest rate cycle and credit cycle to position the portfolio• Why he avoids style boxes and instead buys bonds like a stock picker• The flaws in fixed income indexing and why active management matters more in bonds• How he evaluates companies, business models, leverage, and free cash flow• Why distributors and equipment rental companies are strong long-term bond businesses• The risks of the AI Capex boom and echoes of past bubbles• Where defaults are rising and why private credit concerns may not be systemic• Why his portfolio is short duration and how he uses cash as optionality• How he protects against large drawdowns and manages risk across cycles• His perspective on the Fed, inflation, employment data, and rate cuts• Carl’s one investing belief most peers disagree with• The one lesson he would teach every investorTimestamps:00:00 Intro and bond market quality shift01:00 Carl’s background and fund philosophy02:42 Defining investment grade, high yield, loans, and private credit08:00 Why high yield quality has improved10:07 The two-cycle approach: interest rates and credit14:31 How today’s cycle differs18:03 Why forecasting matters less than knowing where you are18:52 Buying bonds like a stock picker25:28 Index flaws in fixed income26:56 Sectors Carl prefers29:16 Thoughts on AI Capex, Nvidia, and financing trends33:10 Sector concentration in bond portfolios34:51 Position sizing and portfolio construction35:43 Cracks in private credit and default data39:45 Private credit for retail investors40:34 Why Carl is short duration today44:57 Using cash and liquidity as a strategic tool45:44 Risk management and drawdowns47:29 The Fed, inflation, employment, and policy uncertainty53:53 Closing questions: belief peers disagree with54:45 One lesson for the average investor

Follow Us on Substack:https://excessreturnspod.substack.com/In this episode, we sit down with Rob Arnott for a wide-ranging discussion on bubbles, valuations, AI spending, market history, index construction, and long-term return expectations. Rob explains how to think about bubbles in real time, why today’s market echoes the late 1990s, and what investors can practically do to improve future returns. He also digs into Research Affiliates’ latest work on fundamental indexing, growth investing, and the opportunities in international and emerging markets.Topics covered:• How Rob defines a bubble and why narrative drives market pricing• Lessons from the dot-com era that apply to today’s AI-driven market• Why disruptors eventually get disrupted• Practical portfolio steps for investors concerned about concentration• Why value stocks remain historically cheap• CapEx vs R and D and what history says about future returns• The role of AI spending and why many companies struggle to monetize it• How AI may reshape industries and who the real long-term winners could be• Index construction flaws and how RA’s RAFI and RACWI approaches differ• A new way to build growth indexes using actual business growth• Why expensive companies with slow growth are the worst quadrant to own• Insights on emerging markets, international value, and forward return expectations• How Rob invests personally and what he sees as the best long-term opportunitiesTimestamps:00:00 Defining bubbles and why narrative matters02:00 Are we in a bubble today06:20 Lessons from the dot-com boom12:00 What investors can practically do now14:00 Value, RAFI, and rebalancing alpha17:00 AI CapEx and its historical parallels20:30 Who benefits most from AI23:00 Disruption, technology cycles, and productivity35:00 Reinventing index construction40:00 A new way to define and weight growth stocks43:30 The problem with expensive slow-growth companies46:00 Magnificent Seven through the growth lens52:00 Rob’s outlook on emerging markets55:00 Why the US is priced for perfection57:00 Averaging out and trimming expensive winners58:00 New research and future product ideas from RA59:00 Rob’s personal portfolio approach and long-short ideas01:00:20 Closing thoughts and outlook

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Follow us on Substackhttps://excessreturnspod.substack.comIn this episode, we sit down with Bob Elliott for a wide-ranging conversation about the late-cycle economic backdrop, the Fed’s dilemma, AI’s real economic impact, the cracks forming beneath the surface of private credit and private markets, and the growth of hedge-fund-style strategies inside ETFs. Bob walks through what he is seeing in the labor market, inflation, tariffs, and risk assets, and then breaks down how Unlimited is building replication-based ETF strategies to capture hedge fund returns at low cost.Topics covered:• The late-cycle economy and the disconnect between markets and weakening real-world data• Why labor markets look softer than headlines suggest• How tariffs are affecting inflation, growth, and consumer spending• The Fed’s policy bind and why reasonable cases exist for both cutting and holding• The slowdown in household income growth and the idea of a “slow-cession”• AI spending, productivity claims, and why the economic benefits are not yet showing up• The self-referential nature of Big Tech AI spending and poor return on AI CapEx• Why real-economy companies may not see meaningful profit uplift from AI• The private credit and private equity concerns Bob sees building• Hidden risks and information asymmetry in private-market products• New hedge-fund-style ETF strategies built using replication technology• Equity long-short, global macro, and managed futures as standalone ETF exposures• Why fee reduction is the most durable source of hedge-fund alpha• How advisors are shifting from 60/40 toward 50/30/20 allocations with alternativesTimestamps:00:00 Macro conditions and weakening labor market02:00 Disconnect between markets and the real economy04:00 Working without government data during the shutdown06:00 Inflation trends and tariff impacts10:00 Fed policy, cuts, and late-cycle dynamics12:30 Income-driven vs debt-driven cycles15:00 Slow-cession and household spending power18:30 Fed uncertainty and prediction challenges21:00 Why the Fed paused quantitative tightening25:00 Liquidity, reserves, and bank system mechanics28:00 Equity markets, expectations, and AI mania31:00 AI spending, productivity doubts, and return on investment37:00 Business models, layoffs, and macro implications40:00 Private credit, private equity, and hidden risks45:00 How some private-market ETFs may disadvantage retail investors47:00 New Unlimited ETF strategies and how replication works52:00 Equity long-short, macro, and managed futures inside an ETF55:00 Late-cycle benefits of tactical positioning57:00 Future strategies and expanding the replication lineup59:00 Fee advantages and democratizing hedge-fund-style returns

Subscribe on Spotify⁠https://open.spotify.com/show/5IsVVM27KWP6SUW6KN2ife⁠Subscribe on Apple Podcasts⁠https://podcasts.apple.com/us/podcast/the-100-year-thinkers-long-term-compounding-in-a-short-term-world/id1845466003⁠Subscribe on YouTube⁠https://youtube.com/@excessreturnsIn this episode of The 100 Year Thinkers, Chris Mayer, Robert Hagstrom, Bogumil Baranowski, and Matt Zeigler dive deep into what truly makes a great business and how long-term investors can develop the conviction to hold through volatility, dead-money periods, and inevitable mistakes. They break down the characteristics of the perfect business, the behavioral challenges of long-term investing, the pain of errors of omission, how to evaluate management, and why returns on capital and cash generation matter so much over decades.

Follow us on Substackhttps://excessreturnspod.substack.comBill Bengen, the creator of the 4% rule, joins us to revisit one of the most important ideas in financial planning and retirement research. In this conversation, he explains the origins of the 4% rule, how his thinking has evolved over 30 years, and why he now believes retirees can safely withdraw closer to 4.7% — or even more — under certain conditions. We explore the data behind his findings, how to think about inflation, valuations, longevity, and sequence of returns risk, and the philosophy of living well in retirement.Topics covered:​The origins and evolution of the 4% rule​How Bill discovered the worst-case retirement scenario (1968)​The role of inflation and market valuations in withdrawal rates​Why he now recommends 65% equities instead of 55%​How diversification increases sustainable withdrawals​The logic behind a U-shaped equity glide path​Sequence of returns risk and how to mitigate it​Thoughts on the permanent portfolio and gold​Bucket strategies and cash reserves​Dynamic vs. fixed withdrawal methods​How longevity and FIRE affect planning horizons​Why retirees should spend and enjoy more​The philosophy behind “A Richer Retirement”Timestamps:00:00 The origins of the 4% rule03:00 The 1968 retirement “buzz saw” scenario07:00 Common misconceptions about the 4% rule10:00 Inflation and valuation adjustments13:00 Diversification and higher withdrawal rates15:00 Longevity, FIRE, and extended retirements16:00 The U-shaped equity glide path18:00 Rebalancing and allocation timing19:00 The permanent portfolio and gold20:00 Sequence of returns risk explained22:00 Cash reserves and bucket strategies23:00 Dynamic withdrawal approaches24:00 Why the rule is now closer to 4.7%27:00 The changing market environment29:00 Key charts and frameworks from the book31:00 The eight essential elements of planning33:00 Withdrawal strategies and asset allocation34:00 Required minimum distributions36:00 Reflections on creating the 4% rule38:00 Bill’s philosophy on life and retirement40:00 Closing thoughts and where to find his book

Follow us on Substackhttps://excessreturnspod.substack.comIn this episode, we kick off our book project, The Most Important Investing Lesson: What the World’s Best Investors Would Teach You, with a deep dive into the ideas of Michael Mauboussin. We explore his most enduring lessons—concepts that have reshaped how we think about investing, decision making, and life. From base rates to expectations investing, we unpack how Mauboussin’s frameworks can help investors build better models of the world and make more rational, probabilistic decisions.Main topics covered:​Why base rates are the most underused yet powerful tool in investing and life​How to apply expectations investing and reverse engineer stock prices​Why multiples are not valuation and how to earn the right to use shortcuts​Understanding the paradox of skill and why luck matters more when everyone is good​Lessons investors can apply across fields like business, sports, and personal decision making​How humility, reference classes, and feedback loops improve judgment​Reflections on learning, writing, and how AI tools are changing the creative process