Copper Runs Short

GMO, PIMCO, AQR, BCG & More

Author

The Idea Farm
September 20, 2026

“There are two hedges I know: cash and knowledge.”

— Bruce Berkowitz

Research

Goldman Sachs examines how rising AI investment and government borrowing are intensifying competition for capital, lifting yields and pressuring equity valuations. Despite higher rates, earnings remain strong and broadening globally, while AI capex increasingly consumes hyperscaler cash flow and pushes financing into credit, equity, and convertible markets.

AQR - Inflation Redux? Real Solutions for Real Returns (25 pages)

AQR examines how investors can protect portfolios from renewed inflation without betting on its direction. Their 1972–2026 analysis favors commodities and trend following.

CRR examines why U.S. public pensions shifted from public equities toward alternatives. Alternatives rose from 14% to 39% of risky assets between 2001 and 2021, while evidence points more to changing beliefs about alternative-asset alpha, shaped by consultants, peers, and prior experience, than to greater risk appetite.

PIMCO argues higher bond yields have restored fixed income’s role in balanced portfolios after the low-yield 2010–2022 regime. The Bloomberg US Aggregate yielded 5.03% in early September, while 10-year Treasury real yields reached roughly 2.4%, improving both income potential and diversification against equity risk.

GMO reflects on 25 years of benchmark-free investing, arguing that absolute risk and return matter more than tracking traditional allocations.

The authors examine whether quantitative investing has evolved enough to avoid another “Quant Winter.” They argue past drawdowns stemmed from macro sensitivity and crowding, while newer approaches use alternative data, machine learning, and dynamic factor selection; during stress.

Meketa examines risk parity, a portfolio framework that balances risk across asset classes rather than allocating capital conventionally. They show how leverage can raise expected returns but magnify rate sensitivity, liquidity needs, and tracking error, with 2022–23 highlighting the strategy’s vulnerability to rising yields.

Bonus Content

Citadel's Scott Rubner highlights how quickly sentiment around AI has turned negative. Link

Peter Levin, founder of venture firm Griffin Gaming Partners, discusses Hollywood's forays into the trading card business and how he curates his own 500,000-plus card collection. Link

BCG Chief Economist Philipp Carlsson-Szlezak looks at the questions you should be asking about the AI bubble. Link

Bain’s latest gaming industry report. Link

How much of the internet is written with AI? Link

Kyla Scanlon touches wealth vs labor and ownership vs effort. Link

Private-market investors often pull back when uncertainty rises. Research suggests that uncertain times may be precisely when the best vintages are formed. Link

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Podcasts

9/12/2026 - 70 minutes

Ivanhoe Mines’ Robert Friedland covers the copper shortage, rising demand from data centers and reindustrialization, and the economics of building new mines.

9/14/2026 - 23 minutes

Petajisto discusses concentration drag, why individual stocks underperform diversified portfolios, and how a small group of winners drives market returns.

Meb’s Corner

9/18/2026 - 42 minutes

Roger Ibbotson discusses century-long market returns, the risks of market timing, and how popularity and liquidity shape expected returns.