Earnings Bubble, Not Valuation

Goldman Sachs, Michael Mauboussin, Mind the Gap & More

Author

The Idea Farm
August 16, 2026

“Securitization is like fertilizer. You can grow tomatoes or blow up buildings.”

— Simon Mikhailovich

Research

Whitney Baker argues that the AI boom is being financed by shrinking liquidity, leverage, and off balance sheet structures rather than durable end demand. She estimates roughly $850 billion of future compute lease commitments and only about $200 billion recognized on balance sheets.

Morningstar’s annual study finds that investors earned 1.2% less than the aggregate annual total return the funds themselves earned.

Peter Oppenheimer gives a market update and says, “Across Technology, there does not appear to be a valuation bubble, but there may be an earnings bubble.”

As of August 3, 2026

Dan Rasmussen and Richard Ennis challenge the idea that buyout funds deliver low-volatility, diversifying alpha by valuing private equity interests at observable market prices. Listed buyout vehicles showed 29% volatility, a roughly 1.6 equity beta, and no statistically meaningful alpha, suggesting smoothed NAVs may disguise ordinary leveraged-equity risk.

Deutsche Bank Research Institute examines why younger investors increasingly want more portfolio risk and AI-managed investing.

Michael Mauboussin reviews the wisdom of crowds in the context of prediction markets and the stock market, finding it is a powerful way to explain how markets capture known information, making them generally efficient (and hard to beat).

Bonus Content

A former Citadel quant who covered power & gas published a primer on power pricing & data centers. Link

Apollo published a chartbook on the Yen. Link

Simply tracking benchmark allocations embeds past market winners, while blinding investors to emerging fundamental weaknesses. Link

Evercore published their 1H26 review of the secondary market. Link 

BCG published a report on how GLP-1’s are transforming consumer behavior. Link

Schroders monthly chartbook focuses on unusually strong earnings growth expectations. Link

When portfolios get messy, change can feel impossible

Over time, portfolios can become difficult to manage. Overlapping positions, embedded gains, and tax constraints often make change feel out of reach.

A Section 351 exchange may offer a different path. It may allow investors to consolidate their qualifying holdings into a single ETF and access professional management services, all without triggering capital gains at the time of exchange, if specific rules and tests are met.

Alpha Architect has supported multiple 351 exchange launches and worked with advisors navigating these exact challenges. That experience is now available through the Alpha Architect 351 Education Center, a dedicated hub featuring short videos, visual walkthroughs, and practical resources designed to help investors stay informed on the latest 351 exchange insights.

To learn more about 351 exchanges and their various portfolio applications, visit funds.alphaarchitect.com/351educationcenter.

Investments in securities entail risks, including possible loss of principal and are not suitable for all investors.

Podcasts

7/28/2026 - 70 minutes

Citadel’s co-founder introduces the concept of Adaptability Quotient, or AQ, emphasizing the ability to revise views, respond to changing conditions, and distinguish between environments defined by risk, uncertainty, and black swans.

7/23/2026 - 92 minutes

Travis Kalanick discusses industrial AI, founder-led innovation, and his vision for transforming the physical economy through robotics and automation.

Meb’s Corner

8/14/2026 - 54 minutes

Luke Gromen walks through the macro landscape and explains why he believes investors should allocate to gold.