Daily Briefing — Sun 11 Oct 2026

Daniel Brooks

Good morning, Walter. It's Sunday, October 11th, and this is your daily briefing. One new finance episode today, so a shorter rundown.

Daniel Brooks

Excess Returns, the hundred-year thinkers series. About seventy-four minutes. Title is The Winners That Get Away, with Chris Davis of Davis Funds and Robert Hagstrom of Equity Compass, hosted by Matt Zeigler and Bogumil Baranowski. What goes wrong after you find a great business? Davis's answer: you sell it. That is his biggest recurring mistake, locking in the gain, cutting flowers and watering weeds. Both now use about a ten percent position limit. Davis moved up from five. For a forty-act mutual fund he frames it as stewardship: client timing behavior, regulation, and the risk that a fifty percent drawdown in an oversized name, Meta style, drives investors out even when the long-term thesis is right. Personally he would not need the cap. Hagstrom formalized ten percent after twenty twenty-two, after compliance pressure and after catching Nvidia early in the growth sell-off at five to six percent before Chat G P T. Davis's waiting example is Naspers putting thirty-two million into Tencent in two thousand one for forty-six percent, later worth about two hundred thirty-five billion. Charlie's line: the big money is in the waiting.

Daniel Brooks

On indexes, Davis calls passive a momentum multiplier and worries V Cs keep winners private longer so a price-insensitive index buyer can absorb fifty percent at I P O, naming future Space X, Anthropic, Open A I style additions that would lift multiples and concentration. Hagstrom on selling: value investors are lousy at exits. His spring note Right-Sizing Positions pairs the ten percent cap with shrinking margin of safety. Examples: Dell up five hundred percent, A S M L through the roof, Google and Nvidia bumping ten percent. He cut pure tech from about forty-five percent toward roughly market weight with Google and Amazon added back near thirty-five. Davis's Costco lesson: bought near twenty-eight, sold near eighty when the multiple ran from the mid-teens toward twenty-eight; Charlie warned him. Models missed denser stores, Kirkland private label, and international success. His fix is a bull-case pre-mortem: what would make selling today a mistake, including pivots you cannot model. On valuation, Hagstrom stresses return on capital beside cash-flow matrices; Davis asks what a dollar of growth costs when two identical earnings paths produce different cash returned to owners.

Daniel Brooks

On A I, Hagstrom asks whether hyperscaler capex is permanent or cyclical and cites Michael Mauboussin work pointing toward a possible peak around the second half of twenty twenty-seven, then cash-flow monsters again. Davis's three-point-five-trillion question is they versus winner-take-all: if several cloud providers and low switching costs remain, value may accrue to users, railroad style, not builders. He prefers names funding A I from existing cash where spend lifts current businesses, Google, Meta, Amazon, and users such as Capital One near nine to ten times earnings, warning that Yahoo, A O L, and Cisco looked like sure internet winners. He frets that hard monetization, Amazon ads, Nvidia pricing, can narrow the moat the way Costco's two-percent margin kept rivals out. Buffett's balance-sheet-first habit and opaque circular A I financing round it out. Verdict: listen. Deep philosophy on holding, sizing, and A I who-wins; no single trade rule.

Daniel Brooks

That's your briefing for Sunday. Have a great day, Walter.