Podcast Summary: Excess Returns – “It’s Only a Question of When | Nir Kaissar on AI, Private Credit and the Regime Shift Investors Miss”

Date: February 9, 2026
Guests: Nir Kaissar (Bloomberg columnist, Unison Advisors), Hosts: Matt Zeigler, Justin Carbonneau

Episode Overview

This episode features Bloomberg columnist Nir Kaissar in conversation with Matt Zeigler and Justin Carbonneau. The discussion revolves around some of Kaissar’s “10 Unexpected Things for 2026,” with deep dives into the rapid adoption of AI, shifts in interest rate regimes, the evolution and risks in private credit markets, US equity market concentration, and opportunities in small caps. The hosts and guest keep an engaging, direct tone, balancing macro-level insights with tangible advice for investors.

Key Discussion Points & Insights

1. AI Disruption: The Coming Shift

• Robo-Taxis and Mass Adoption
  • Kaissar shares a personal anecdote about riding Waymo robo-taxis in San Francisco with his kids, noting how quickly they adapted and enjoyed the technology.

    “The technology is way more advanced than I think most people realize. Most people I know still haven’t ridden in a robo taxi... the technology is ready for mass adoption much sooner than people realize.” (03:05)

  • He predicts a profound societal impact, including debates on outlawing human driving due to superior robot safety records.
  • Emphasizes that AI/robots will “enhance, not replace” human work, freeing people for higher-order jobs much as the mechanization of agriculture did historically.
• AI Investment Implications
  • Current AI investment is compared to the early days of the internet.

    “If you had bought the S&P 500 at the peak of the bubble in March 2000 and hung on all this time, your investment would have grown sevenfold, including dividends...your money would have ballooned 26 times since ’95.” (18:15)

  • Kaissar believes we are roughly at the 1995-equivalent moment for AI, but not all dominant future players have even emerged yet.

    “My guess is that not all of the companies that will dominate AI have even been born yet.” (19:05)

2. Interest Rates and the Fed: What's Next?

• Neutral Rate Reality
  • Kaissar pushes back against the widespread notion that rates are coming down just because political forces want them to:

    “The majority opinion is that interest rates are coming down because that's what Trump wants... I actually don't think that's going to happen… we're close to the neutral rate, and the Fed is not going lower.” (06:34)

• Potential Fed Shift under Warsh
  • Expects incoming Fed chair Kevin Warsh to be “serious about shrinking the balance sheet” – potentially by as much as $2–4 trillion.
  • Notes this dynamic (shrinking the Fed balance sheet while possibly lowering rates) hasn’t been seen before in the US and it may have unexpected effects.

    “We haven’t seen those two things work in opposite. Warsh is going to give us a look into that for the first time.” (08:22)

3. Tariffs and Inflation

• Kaissar, drawing on his legal background, expects the Supreme Court to be permissive regarding Trump’s tariffs and foresees little real impact on markets regardless of the decision.

  “I think people made two mistakes around the tariffs... assuming the cost would be borne by consumers, but US company margins are so healthy, companies have been forced to absorb tariffs themselves.” (10:18)

4. US Market Valuation, AI, and Earnings Growth

• Role of Profitability & Valuations
  • Current high profitability in US corporate sector puts a floor under valuation levels, but future returns hinge on earnings growth.

    “High profitability is very conducive to earnings growth... The reason they're [current valuations] premium is because profitability is higher than normal. But that doesn't necessarily mean you're going to continue to see 13, 14% returns from the S&P 500.” (13:37)

  • Predicts a return to historical 7% earnings growth, lower overall future returns (~under 10%), as “insane earnings growth” from a few big tech names isn’t sustainable.
• Concentration Risk
  • Market concentration (“Mag 7” companies) is problematic—both from risk and behavioral angles.

    “If the S&P 500 stops performing, I worry that people will dump it and start chasing other things with lower expected return... So I think even if you don’t see a fundamental problem, behavioral demons are lurking.” (33:55)

5. Private Markets: Credit and Equity

• Private Credit: The Blindspot
  • Concerned by the growth of private credit, especially as its scale now matches the public market’s B-rated segments.

    “It seems not unreasonable to suspect that in a crisis, default rates in private markets should be similar to what we've seen in public... 8–10%. The problem is: we have zero visibility into them, it’s just asking for trouble.” (49:47, 54:10)

• Private Equity: Retail Shut Out & Public Policy Gaps
  • Critical of regulatory “gates” that shut retail from lucrative private markets.
  • Worries that large late-stage privates will only IPO after much of their gains accrue in the private market, dragging on future index returns.

    “Once you get to a certain size... we should require [private companies] to register, issue disclosures, and treat them as public companies for regulatory purposes.” (20:24)

6. Valuation Measures: Free Cash Flow vs. P/E

• Argues for a shift away from traditional Price/Book and P/E metrics, especially for asset-light, intangible-heavy tech businesses.

  "If you're looking at valuations, you should look at them relative to profitability... and rather than concentrate on earnings, focus on free cash flow." (25:05)

• Estimates that soon, intangible assets will dwarf tangible assets even further in public company valuations. (28:06)

7. Small Caps, Quality, and the ‘Junk Problem’

• Quality small caps are still a big opportunity, but the Russell 2000 is increasingly filled with unprofitable firms because strong private funding keeps the best companies private longer.

  "Small caps have a junk problem... if you're a quality small cap, you're going to stay private. Who goes public? The ones who can't otherwise raise money." (40:28)

• To find value:

  “You have to filter the small cap companies for quality... If you sort by quality first, you can put together a portfolio of Russell 2000 companies with ROEs in the high teens.” (40:28, 43:44)

Notable Quotes & Memorable Moments

• On Robo-Taxis and Societal Change

  “We're going to start to have real debates about outlawing people driving cars... robots are safer drivers than humans. I don't think people are ready for that.” (03:05)

• On AI's Role in Investing

  “Once everybody gets in a Waymo, I think it's going to be a different conversation... but right now, LLMs are the calling card for AI and I think that's to some extent unfortunate.” (30:18)

• On Market Indexing and Concentration

  “The reason [concentration] is problematic... if the S&P 500 stops performing, people will dump it and start chasing things that longer term have a lower expected return.” (33:55)

• On Private Credit Risks

  “To have a market that seems susceptible to crisis-level default rates, and to have zero visibility or warning... that's just asking for trouble.” (49:47, 54:10)

• On Stock-Picking

  “You have a higher probability of beating the market by stock picking than people generally acknowledge, assuming you're brave enough to take massive concentration risk. Most managers are hugging the market and have no chance.” (56:38, 62:36)

Timestamps for Major Segments

• AI & Robo-Taxi Adoption: 03:05–06:19
• Interest Rates & Neutral Rate Debate: 06:19–08:14
• Fed Policy (Warsh) & Balance Sheet: 08:14–10:04
• Tariffs, Inflation & Supreme Court: 10:04–13:05
• Profitability, Valuations, & S&P 500: 13:05–16:11
• AI Investing—Historical Parallels: 16:11–19:47
• Public vs Private Markets, Regulatory Gaps: 20:24–24:32
• Valuation Metrics—Free Cash Flow Focus: 25:05–29:41
• Concentration Risks in Large Cap Indices: 33:37–36:46
• Private Credit Market Risks: 49:47–54:10
• Small Caps & Quality Screens: 40:28–45:10
• Investment Strategies & Lessons Learned: 56:38–64:37

Closing Investment Philosophies

• Strategy:

  "One strategy, three volatility targets (7, 10, 13%). Let expected 7–10 year returns drive construction; rebalance quarterly. Stick to principles through cycles." (56:38)

• Biggest Lesson from 20 Years:

  “You have a higher probability of beating the market by stock picking than people generally acknowledge, assuming you're brave enough to take massive concentration risk... But don’t try this at home.” (62:36)

Conclusion

This episode delivers a comprehensive and sharp take on the critical issues and opportunities facing investors in 2026, from the rise of AI and private credit risk, to the evolving structure of public and private markets. Kaissar’s pragmatic optimism about AI and candid concerns about growing private market opacity make this a must-listen for serious long-term investors.