14% for Tech. 1% for Everyone Else | The Weekly Wrap – 3/14/2026

Mar 14, 2026

Guest

Jim Paulsen

Jim Paulsen, macro strategist who maps the ‘new era’ vs old economy. Joseph Shaposhnik, portfolio manager focused on compounding businesses and defense tailwinds. Vitaliy Katsenelson, value investor who stresses humility and diversification. They discuss AI disruption and its deflationary effects. They debate software’s vulnerability, defense spending as a long-term tailwind, and how policy shifts can reshape markets.

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INSIGHT

Humility Expands Your Portfolio

Humility matters because rapid change widens the range of possible outcomes for investments.
Vitaliy increased holdings from ~20 to ~30 stocks and focused on what won’t change, like commodities and defense, to hedge unknowns.

ADVICE

Sell Software If Management Can't Adapt

Reduce exposure to software where management isn't a learning organization in the face of AI disruption.
Joseph sold software last year and favors firms like Constellation that reorient capital allocation and study AI actively.

INSIGHT

Small New Era Sector Now Wags GDP

A small new-era segment (11%) can now drive overall GDP because its growth far outpaces the rest.
Jim shows new-era real spending up 14% versus 1% for the remaining 89%, letting the 11% 'wag the GDP dog.'

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In this episode, we break down the most important insights from the week on Excess Returns,, with insights from Vitaliy Katsenelson, Jim Paulsen, and Joseph Shaposhnik. Markets today are being shaped by powerful crosscurrents including AI disruption, defense spending, macro policy shifts, and historically high valuations. In this episode, we highlight the biggest ideas from our conversations and explore what they mean for investors trying to navigate an uncertain world. Topics include the importance of humility in investing, the potential disruption of software by AI, the growing divergence within the economy, and why long-term structural trends like defense spending may create new opportunities.

Topics Covered

• Why humility may be the most important trait for investors in a rapidly changing world
• How uncertainty around AI, geopolitics, and macro policy is widening the range of possible market outcomes
• Why some investors are reducing exposure to software businesses amid AI disruption
• The importance of management teams that can adapt and evolve in periods of technological change
• Jim Paulsen’s framework for understanding the “new era” economy versus the rest of the economy
• Why a small portion of the economy may now be driving overall GDP growth
• The idea that successful investing may be about being “least wrong” rather than perfectly right
• How long-term structural trends like defense spending could create a multi-year investment tailwind
• Why experienced investors focus on analyzing businesses rather than reacting to headlines
• The potential deflationary impact of AI and how lower prices could shift spending across the economy
• Why high market valuations may act as a headwind for future returns
• The importance of deep research and preparation when unexpected events hit markets
• Jim Paulsen’s concept of “policy juice” and how fiscal and monetary policy drive bull markets
• Whether a new wave of policy support could broaden the current market rally beyond mega-cap tech

Timestamps

00:00 Introduction
02:00 Why humility matters more than ever in investing
08:50 AI disruption and the future of software businesses
18:07 The growing gap between the “new era” economy and the rest of the economy
25:00 Surviving first and being the least wrong as an investor
31:43 The potential defense spending supercycle
37:44 AI’s deflationary impact and how innovation reshapes economies
44:42 Why valuations act as a long-term headwind for stocks
50:56 How investors should respond to geopolitical events
56:49 Jim Paulsen on policy juice and the future of the bull market