Coffee and a Mike Dave Collum and Ed Dowd #1377
May 10, 2026
Dave Collum, a market-savvy professor, and Ed Dowd, founder of Phinance Technologies, unpack private credit, opaque lending risks, and shaky real estate trends. They debate passive investing’s harm to price discovery and corporate discipline. They explore inflation peaking into a deflationary unwind, narrow AI-driven market leadership, and the political and macro forces that could shape 2026.
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Passive Investing Broke Price Discovery
- Passive investing has hollowed out price discovery so fundamentals no longer drive marginal trades.
- Dave Collum: fundamental investors are ~5% of volume while passives and retail (30%) dominate, creating algos and momentum-driven price swings.
Earnings Have Become Accounting Theater
- Corporate earnings and reported profits are increasingly unreliable because accounting beats are replacing real cash flow.
- Collum warns many MAG-7 firms are approaching zero free cash flow despite reported earnings, risking massive future revisions.
Use Cash As Dry Powder
- Hold cash as a strategic position rather than chasing yield during market extremes.
- Collum cites Buffett holding ~40% cash and recommends being ready to deploy when markets fall significantly.
