In this episode of Excess Returns, Graeme Forster of Orbis joins us to discuss two major research papers: Six Courageous Questions for 2026 and Sunrise on Venus. We explore how long-running global trends may be reversing, what that means for U.S. dominance, the future of international and emerging markets, the risks and opportunities created by AI and massive CapEx spending, the dollar’s shifting role, and how investors should think about valuation, humility, and navigating a world where the economic “water” is changing. This conversation is packed with global macro insight, long-term investing lessons, and practical frameworks for building more resilient portfolios. Topics Covered: • Why long-term market “water” becomes invisible to investors • Self-reinforcing global cycles and how China’s WTO entry reshaped the world • Signs the 25-year U.S. outperformance cycle may be breaking • How tariffs, political shifts, and corporate reforms change the global landscape • Why international and emerging markets may now offer better expected returns • Why U.S. large caps are not the entire story of American exceptionalism • How to think about valuation, margins, and discounted cash flow models across markets • The AI boom, bubbles, capital cycles, and asymmetric outcomes • How AI CapEx constraints influence winners and losers • The shifting role of the U.S. dollar and why market shocks may behave differently • Maslow’s hierarchy, needs vs. wants, and the return of state-driven capital investment • Deglobalization, reshoring, and the national-security lens for investing • How to evaluate China and Taiwan inside emerging markets • Why humility is an investor’s greatest edge Timestamps: 00:00 Introduction 01:02 Why Orbis wrote Six Courageous Questions for 2026 03:44 The David Foster Wallace “water” analogy and investing 06:12 How a 25-year self-reinforcing cycle powered U.S. outperformance 10:12 Signs the cycle may be breaking 12:00 Corporate reform and opportunity in Asia 13:55 Why active share, benchmarking, and incentives distort investor behavior 17:31 Decomposing S&P 500 returns: margins, valuations, fundamentals 20:20 Expected returns inside and outside the U.S. 22:34 Why international stocks offer richer opportunity sets 24:25 Currency implications and weakening dollar dynamics 26:18 American exceptionalism beyond the top 10 mega caps 28:49 Where Orbis is finding value today 30:25 Biotech, healthcare, and post-COVID dislocation 31:05 How Orbis thinks about valuation in an intangible-heavy world 32:09 Is AI a bubble or the beginning of something bigger? 34:30 Game theory of AI CapEx and right-tail outcomes 36:00 CapEx cycles, history, and who benefits 38:00 Indirect AI beneficiaries and the SK Square example 40:35 Maslow’s hierarchy and the shift from wants to needs 42:32 Deglobalization, national security, and domestic reinvestment 44:00 Capital returning to home markets and strategic industries 46:00 Can anything reverse these structural trends? 48:00 Balancing bottom-up investing with macro awareness 49:45 The deeper risk in emerging markets: owning vs. avoiding 51:00 Valuation still matters for long-term returns 52:29 Corporate behavior, dividends, and re-rating cycles 53:52 How Orbis views China vs. bottom-up opportunity 55:34 Why great investors must be right 90–95% of the time in decision quality 58:00 One lesson Graeme would teach the average investor
