In the latest episode of Lead-Lag Live, Derek Yan, Senior Investment Strategist at KraneShares, joined us to discuss why emerging markets — and EM technology in particular — may represent the most compelling diversification opportunity of this cycle. The conversation covered dollar dynamics, the global AI supply chain, and why advisors who remain purely U.S.-centric may be missing a structural shift already underway.

The core question: If the AI trade is truly global, why are most portfolios still acting like it’s a purely American story?

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The Concentration Problem

Derek opened with a striking observation: anyone holding the S&P 500 or NASDAQ 100 today has 35–40% of their equity allocation concentrated in just 10 names. That level of concentration is historically unprecedented over the past decade.

The deeper issue is that earnings contributions from those mega-cap names are lagging their market cap weight. In other words, the market is pricing in future earnings growth that must materialize — or valuations become unsustainable.

That creates a natural impetus for broadening — both within U.S. equities and, more importantly, internationally. Emerging markets offer lower relative valuations and lower correlation to U.S. equities, making them a genuine diversification lever rather than just a return-chasing rotation.

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The Dollar as Quiet Killer — and Potential Tailwind

Currency has been the silent drag on EM returns for the better part of a decade. A persistently strong U.S. dollar eroded foreign equity returns for dollar-based investors, making EM allocations feel like dead weight.

Derek argued that the policy setup is now shifting. The Trump administration has signaled a preference for a weaker dollar to support domestic manufacturing and trade competitiveness. The Federal Reserve appears increasingly willing to cut rates. Both monetary and fiscal policy are aligning toward dollar weakness.

Historically, EM equities have meaningfully outperformed during periods of dollar weakness. If the dollar enters a sustained multi-year decline, the currency tailwind alone could meaningfully enhance EM returns — before even factoring in improving fundamentals.

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Still Early in the Cycle

Emerging markets outperformed the U.S. in 2025 — something that hasn’t happened often over the past decade. Many investors dismissed it as a one-off. But Derek pushed back on that framing.

Even after last year’s rally, forward P/E ratios for many EM indexes remain in the low double digits, compared to 20–30x for U.S. benchmarks. Earnings revisions are improving, particularly on the technology side. And the structural catalysts — AI buildout, critical materials demand, China’s domestic AI ecosystem — are multi-year in nature.

He drew a parallel to the 2000–2008 EM bull market, when cheap valuations combined with improving fundamentals produced a sustained multi-year outperformance cycle. The setup today, he argued, looks remarkably similar — but with technology replacing the commodity supercycle as the primary driver.

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The Emerging Market Role in the AI Value Chain

When investors think AI, they think U.S. hyperscalers. Derek made the case that this view is incomplete — and potentially costly.

The U.S. dominates chip design. But the physical manufacturing, packaging, and memory infrastructure that makes AI possible is overwhelmingly concentrated in emerging markets:

• TSMC holds a near-monopoly on advanced chip manufacturing, with packaging technologies like CoWoS that give it a structural edge no competitor has matched.

• SK Hynix dominates high-bandwidth memory (HBM) production — the critical bottleneck for AI data centers — and is Nvidia’s most important memory supplier.

• China is building its own parallel AI ecosystem, from chip manufacturing to large language models, creating a second pole of innovation outside U.S. control.

• Critical materials and grid infrastructure needed to power AI buildout are disproportionately sourced from and built in EM economies.

Focusing only on U.S. equities means missing a significant portion of the AI picks-and-shovels opportunity. The supply chain is global. The investment allocation should reflect that.

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Technology and Commodities Are Converging

One of the more nuanced points in the conversation was Derek’s framing of EM investment cycles. In the 2000s, emerging markets were driven by China’s infrastructure buildout — railroads, highways, airports — which created a broad commodity boom. From 2015 to 2020, the driver shifted to domestic technology platforms in China, Southeast Asia, and South Korea.

Today, we’re seeing a convergence of both cycles. The AI buildout requires not just chips and software, but electricity, grid upgrades, and critical materials that face structural bottlenecks. Commodities are becoming technology-relevant. What looks like a traditional commodity play may actually be an AI infrastructure play in disguise.

That convergence is what makes this EM cycle potentially more durable than prior ones. It isn’t reliant on a single driver — it’s feeding off both structural technology demand and commodity supply constraints simultaneously.

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Portfolio Construction: Where KEMQ Fits

For advisors looking to act on this thesis, Derek highlighted the KraneShares Emerging Markets Consumer Technology ETF (KEMQ) as a direct vehicle for capturing EM technology and growth exposure.

KEMQ holds names like TSMC and SK Hynix alongside digital platforms and internet companies across China and Southeast Asia. It provides concentrated but differentiated exposure to the EM broadening trade — particularly around EM growth and EM tech.

Derek’s framing was straightforward: if you believe diversifying away from mega-cap-centric U.S. equity makes sense, your EM allocation should tilt toward where the structural growth is. And right now, that growth is in technology.

The tailwinds are multiple: improving fundamentals, cheap valuations relative to the U.S., a weakening dollar, and a global central bank easing cycle that favors growth equities with long-duration cash flows.

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Key Takeaways

• U.S. equity concentration is at historic highs, with the top 10 S&P 500 holdings accounting for 35–40% of the index — and earnings contributions lagging market cap weight.

• The U.S. dollar’s structural weakening, driven by both administration policy and Fed easing expectations, could be a powerful tailwind for EM equities over the next two to three years.

• EM valuations remain compelling at low-double-digit forward P/E ratios, even after outperforming the U.S. in 2025.

• The AI value chain is global — TSMC, SK Hynix, and China’s domestic AI ecosystem are critical links that purely U.S.-focused portfolios miss entirely.

• Commodities and technology are converging in EM, creating a potentially more durable cycle than prior single-driver booms.

• KEMQ offers direct, concentrated access to EM technology themes for advisors building global equity allocations.

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Why This Matters Now

Most Western investors remain overwhelmingly U.S.-centric. For 10 years, that has been the right call. But the conditions that supported U.S. dominance — a strong dollar, widening interest rate differentials, and contained EM growth — are shifting.

If AI buildout is genuinely global, if the dollar is entering a sustained weakening phase, and if EM earnings revisions continue to improve, then the diversification trade isn’t a one-off. It’s a regime rotation.

The question for advisors is not whether emerging markets deserve attention. It’s whether portfolios are structured to participate in what could be a multi-year outperformance cycle — or whether U.S. concentration risk remains the bigger, quieter danger.

Watch or listen to the full Lead-Lag Live episode for the complete discussion with Derek Yan.

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DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of KraneShares and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

That may no longer be the right lens.

In this episode of Lead-Lag Live, Kai Wu, Founder and CIO of Sparkline Capital, argues that the AI trade is shifting from infrastructure to adoption. History suggests that is where the more durable winners emerge.

The market may not be positioned for that transition.

From Buildout to Adoption

Wu frames AI through Everett Rogers’ diffusion model, the classic S-curve that describes how technologies spread from innovators to early adopters and eventually into the mainstream.

The first phase of any technological revolution is infrastructure. During the railroad boom, it was track. During the internet era, it was fiber optic cable. Today, it is GPUs, hyperscalers, and data centers.

That is where investor attention has been concentrated. AI infrastructure firms have revised CapEx higher and higher, with spending expected to roughly double versus last year.

The question now shifts from “Can we build it?” to “Will they use it?”

Enterprise adoption remains early. Wu notes that only about 10 percent of businesses are using AI in production today. That figure aligns with the early adopter phase in the diffusion model. Consumer usage has grown rapidly, yet only a small fraction of users are paying subscribers.

The infrastructure exists. The monetization and ROI phase is just beginning.

The Dot-Com Parallel

Wu highlights a historical cautionary tale that should resonate with investors.

During the dot-com boom, telecom companies built massive fiber networks. When demand failed to meet expectations, 85 percent of fiber capacity went dark. Bandwidth prices collapsed by 90 percent. Several firms, including Global Crossing, ultimately failed.

The internet did not fail. Infrastructure investors did.

That distinction matters.

The risk today is twofold:

1. Execution risk: Infrastructure providers are spending enormous sums upfront. If demand growth disappoints or arrives later than expected, the return profile compresses.

2. Valuation risk: AI infrastructure names now trade at multiples far above historical norms, roughly double the broader market in some cases. Even if AI succeeds structurally, paying too high a price can lead to poor outcomes.

This is not an argument that AI fails. It is an argument that price matters.

Separating Signal from Hype

One of the more compelling parts of our discussion centered on how to measure real AI adoption.

Corporate earnings calls are filled with AI references. That alone is not informative. Wu and his team instead look for numerical evidence of ROI.

They classify mentions into three buckets:

• General qualitative references.

• Quantified cost savings, revenue gains, or efficiency improvements.

• Explicit return-on-investment calculations relative to spending.

That distinction matters. A CEO saying “AI is transforming our business” is not the same as reporting measurable margin expansion tied directly to implementation.

We discussed examples across industries: retailers improving warehouse picking efficiency, biotech firms accelerating R&D processes, workforce management systems reducing labor costs, and advertising platforms improving conversion rates.

The key takeaway is diffusion. AI is beginning to seep into industrials, healthcare, financials, and consumer businesses. It is not confined to Silicon Valley.

That is where dispersion begins.

Where the Market May Be Mispricing Risk

Wu’s central thesis is that investors face a false binary choice.

Option one: overweight AI infrastructure through passive indices. The S&P 500 now carries enormous implicit exposure to the Magnificent Seven and related infrastructure names, approaching half the index when expanded beyond the headline seven.

Option two: avoid AI entirely through value, small-cap, or international allocations, risking structural underexposure if AI continues bending the productivity curve.

There is a third path.

Wu calls it the “early adopters” basket. These are companies outside the infrastructure layer that are aggressively implementing AI into operations.

Here is the intriguing part: valuations between early adopters and laggards remain similar. The market appears to be pricing disruption indiscriminately rather than rewarding differentiated adoption.

Historically, long-term winners in infrastructure booms have often been the adopters, not the builders. Retailers leveraged railroads. Internet platforms leveraged cheap bandwidth after telecom overbuild.

Infrastructure often becomes commoditized. Adoption drives margin expansion.

Macro Context: Concentration Risk

The macro overlay is impossible to ignore.

Index concentration has rarely been this extreme. Many investors believe they own diversified market exposure. In reality, they own a concentrated bet on continued AI infrastructure spending.

If adoption accelerates and revenue materializes, that concentration may prove justified.

If adoption lags expectations, the adjustment could be nonlinear.

Wu’s argument is not bearish on AI. It is a portfolio construction critique. The most crowded trade in the market may not offer the best risk-adjusted exposure to the theme.

The Highlight

One moment stood out.

The internet succeeded. Telecom investors did not.

That encapsulates the distinction between technological inevitability and investor outcome.

AI can reshape productivity, compress costs, and expand margins across the economy. That does not guarantee infrastructure multiples remain elevated.

What This Means for Investors

Investors should be asking three questions:

1. Where is AI showing up in measurable ROI today?

2. How concentrated is my exposure to infrastructure names through passive allocations?

3. Am I being compensated for valuation risk?

The opportunity may lie in identifying companies that are early, disciplined adopters of AI across industrials, healthcare, financials, and consumer sectors, rather than reflexively adding to the most obvious beneficiaries.

Dispersion is likely to increase. Adoption will not be uniform. Winners and laggards will diverge.

That is where active thinking matters.

If you want to hear the full conversation with Kai Wu and dive deeper into his framework, including how he screens for early adopters and avoids laggards, watch or listen to the complete Lead-Lag Live episode.

The AI trade is not ending. It is evolving.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Sparkline and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

Hatfield’s view is unambiguous: three rate cuts this year, growth holding near 3%, and small caps finally reclaiming leadership.

If he’s right, asset allocation decisions made today will look very different by year-end.

The Inflation Mirage — and Why Three Cuts Matter

Hatfield’s bullishness hinges on one variable: inflation measurement. He argues that shelter inflation remains materially overstated due to lagged calculations and renewal rent data. Strip that distortion out, and core inflation is already near 2% by his models.

More importantly, money supply growth is negative year-over-year — a deeply deflationary signal historically.

That combination leads him to expect three rate cuts this year, versus a market currently pricing in materially less easing.

This isn’t just a Fed call. It’s a regime call.

Because if terminal rate expectations fall toward the low-3% range, the 10-year yield should follow — Hatfield highlights how closely Treasuries track expected Fed policy.

Lower long rates mean tighter mortgage spreads, improved housing affordability, and stabilization in investment spending — the real recession trigger historically.

And that leads directly to equities.

Small Caps: From Dead Money to Risk-On Signal

For years, small caps have underperformed large-cap growth. The Russell 2000-to-S&P 500 ratio compressed to extreme lows in 2023 before bottoming late last year.

Hatfield’s argument is simple and historically grounded:

• Fed tightening cycles crush small caps.

• Fed easing cycles revive them.

• Valuations now favor small caps dramatically.

He points to depressed PEG ratios relative to large caps, arguing that underperformance has created an asymmetric opportunity.

Importantly, he favors profitable small caps over passive exposure. Roughly 40% of the Russell 2000 remains unprofitable, which dilutes the earnings compounding mechanism that makes small caps powerful over time.

In his framework, owning profitable dividend-paying small caps during an easing cycle is not speculation — it’s cyclical positioning aligned with monetary dynamics.

That’s a subtle but critical distinction.

Income Without Illusion: Public Credit vs. Private Hype

On the fixed income side, the conversation turned to private credit — an area that’s quietly showing stress. Recent markdowns in private vehicles have reignited concerns about opacity and leverage.

Hatfield’s view: public high yield and preferreds offer superior transparency, liquidity, and historically lower default risk.

He cited preferred securities with roughly 9% yields and public high yield strategies in the ~8% range, combined with materially lower volatility than equities.

Key nuance: these are not recession hedges. They carry equity beta (roughly 0.3–0.5 by his estimate).

But in a soft-landing or easing environment, spreads compress and income compounds.

That is a very different setup than chasing private credit at premium valuations with limited liquidity.

Covered Calls Done Right — or Not at All

We also discussed income generation through options.

Hatfield has strong views here: writing calls indiscriminately caps upside and structurally underperforms.

Instead, he advocates selective, short-duration call writing on individual securities near target prices — allowing capital recycling into undervalued names when positions are called away.

The difference between active call overlay and systematic index call writing is not trivial — it’s often the difference between participating in bull markets and missing them.

In a regime shift year, that matters.

Key Takeaways

• Hatfield expects three Fed rate cuts this year, driven by contained inflation and negative money supply growth.

• Treasury yields are tightly linked to expected terminal Fed policy — not deficit narratives.

• Small caps are historically positioned to outperform during easing cycles, particularly profitable dividend-paying names.

• Public high yield and preferred securities offer attractive yields with lower volatility than equities, and more transparency than private credit.

• Covered call strategies require active management to avoid structural underperformance.

• Housing and investment spending — not consumer weakness — determine recession risk.

Why This Matters Now

Markets remain fixated on geopolitical noise, private credit headlines, and “higher for longer” narratives.

The more important question is whether inflation data is structurally overstated and whether easing has already begun beneath the surface.

If rates fall, housing stabilizes, and investment spending turns positive, small caps and income strategies could move from afterthought to leadership.

That’s not a tactical trade. That’s a regime rotation.

Watch or listen to the full Lead-Lag Live episode for the complete discussion — especially if you’re recalibrating allocations for the second half of the year.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Infrastructure Capital Advisors and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

In this episode of Lead-Lag Live, I sat down with Will Rhind, Founder and CEO of GraniteShares, for a timely conversation on precious metals, commodities, ETF structure, and what may be unfolding beneath the surface of today’s market narrative.

We covered platinum’s surge, gold’s breakout, structural supply deficits, China’s role in the commodity complex, and how advisors are thinking about portfolio construction in a world where hard assets are back in focus.

Below are the key takeaways.

Platinum: From ESG Casualty to Structural Deficit

Platinum has quietly become one of the most compelling stories in the commodity complex.

The fundamental backdrop is straightforward: demand is exceeding supply.

Unlike many other commodities, platinum is operating in a structural deficit. Years of underinvestment in mining capacity, coupled with supply concentration in South Africa and Russia, have created a fragile production base.

Why the underinvestment?

Peak ESG policy assumptions.

Following Dieselgate and aggressive electric vehicle mandates, the narrative became that internal combustion engines were headed toward extinction. Platinum — heavily used in catalytic converters — was viewed as collateral damage in the “all EV” transition.

That thesis has since moderated.

EV adoption has not eliminated ICE demand. Government subsidies have shifted. Reindustrialization is underway. The timeline for phasing out combustion engines has stretched.

Meanwhile, the mines were never built.

Lower prices discouraged capital investment. Production constraints compounded supply fragility. Power disruptions and labor issues in South Africa further tightened the market.

Now demand exceeds available supply — and price is adjusting.

Gold at Highs — Yet Still Underowned?

Gold has pushed to fresh highs, reinforcing the global bid for hard assets.

Yet, as Rhind pointed out, gold still is not embedded in the standard 60/40 allocation framework.

That matters.

If gold were structurally embedded alongside equities and bonds, ownership levels would look materially different. Instead, it remains underrepresented in traditional portfolios.

Historically, gold was dismissed as “dead money” because it does not produce yield.

Now we have yield — and demand for gold remains strong.

The drivers are familiar:

• Rising global debt burdens

• Currency debasement concerns

• Geopolitical fragmentation

• Central bank accumulation

Gold is not just a trade. It is monetary insurance.

Platinum, while not held by central banks, shares several attributes with gold — scarcity, store-of-value characteristics, jewelry demand — with the added dimension of industrial utility.

The Platinum–Gold Ratio: A Useful Framework

For decades, platinum traded at a premium to gold — so entrenched that “platinum” became synonymous with superior value.

Over the past decade, that relationship inverted.

Today, platinum trades at a discount to gold. The historical gold-to-platinum ratio has swung widely across cycles, suggesting that relative valuation remains a meaningful lens for long-term investors.

Normalization is not guaranteed.

But the setup is structurally different than it was during the peak ESG narrative.

China and the Demand for Hard Assets

China plays a central role.

At the macro level, China competes for access to strategic resources. At the micro level, Chinese investors face capital controls and a limited domestic investment menu.

When real estate weakens and currency pressures rise, the incentive to hold tangible assets increases.

In periods of uncertainty, gold — and increasingly other precious metals — becomes a store-of-value alternative.

Demand often accelerates precisely when economic confidence fades.

Physical Exposure vs. Mining Equities

We also discussed structure.

Owning physical-backed ETFs such as GraniteShares Platinum Trust (PLTM) provides direct exposure to the spot price of platinum, backed by vaulted physical holdings.

That is a precision investment.

Mining equities introduce operational risk, cost inflation, management execution risk, and energy exposure.

In theory, miners provide leverage to rising metal prices. In practice, input cost inflation — particularly energy and labor — can compress margins during commodity bull cycles.

Exposure choice depends on the objective.

Broad Commodities Without K-1s

For diversified exposure, we discussed GraniteShares Bloomberg Commodity Broad Strategy No K-1 ETF (COMB).

COMB tracks the Bloomberg Commodity Index, offering diversified exposure across energy, agriculture, industrial metals, and precious metals.

Importantly, it avoids K-1 tax reporting — historically a deterrent for many investors in commodity partnerships.

In an environment defined by reindustrialization and resource competition, broad commodity exposure may warrant reconsideration.

Managing Volatility

Commodities are volatile. Precious metals are no exception.

For many advisors, metals represent a modest allocation designed to hedge systemic risk rather than generate income.

Gold’s long-term negative correlation to equities supports its diversification role.

Some overlay options strategies — covered calls for yield enhancement or protective puts for downside mitigation — particularly within liquid ETF structures.

Allocation size and portfolio context matter.

Bottom Line

Platinum’s resurgence reflects more than momentum.

It reflects:

• Structural supply deficits

• Reversal of peak ESG assumptions

• Reindustrialization

• Dollar and rate dynamics

• Global demand for hard assets

Gold is making headlines. Silver is participating. Platinum is re-entering the conversation.

Hard assets are no longer fringe.

They are part of the macro discussion again.

If you missed the live session, the replay is available above.

Lead-Lag Live remains focused on exploring macro inflection points, market structure shifts, and investment vehicles that deserve attention before consensus catches up.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of GraniteShares and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

In the latest episode of Lead-Lag Live, Derek Yan, Senior Investment Strategist at KraneShares, joined us to discuss the commercialization of humanoid robots, the global competitive landscape, and how the KOID ETF is positioned within what could become one of the largest industrial transformations of the next several decades.

The conversation centered on a core question advisors are rightly asking: Is humanoid robotics just another overhyped theme — or are we at the beginning of something structurally different?

From Narrative to Deployment

Advisors have reason to be cautious. Clean energy peaked in 2021. The metaverse narrative surged in 2022 before fading. Thematic ETFs often arrive at moments of peak enthusiasm.

Derek made the case that humanoids are different — because deployment is already underway.

Major enterprises are actively testing and integrating humanoid robots into real-world operations. Automotive factories, logistics hubs, and industrial facilities are experimenting with embodied AI systems capable of performing repetitive physical tasks.

Unlike the metaverse — which required consumer behavioral change — humanoids address a structural problem: labor shortages.

Factories and enterprises have faced persistent workforce constraints for decades. If humanoids can operate at 98% efficiency today, businesses are simply waiting for incremental performance gains before mass rollout.

The key shift is this:

This is no longer theoretical AI. It’s physical AI.

When AI moves from screens into machines that perceive, decide, and act in the real world, the economic impact becomes tangible.

The Ecosystem Matters More Than the Brand

One of the most important distinctions Derek emphasized was ecosystem exposure.

Many portfolios already hold Nvidia and Tesla. Those companies participate in the humanoid theme — Nvidia on the “brain” side (AI models, semiconductors) and Tesla through Optimus development.

However, humanoid robotics is far broader than two mega-cap names.

The ecosystem includes:

• AI and semiconductor companies (the “brain”)

• Sensors and actuators (the “body”)

• Precision gears such as harmonic drives

• Rare earth materials

• Systems integrators assembling and deploying robots

• Global manufacturers driving cost efficiency

In a market-cap-weighted approach, trillion-dollar AI names dominate exposure. An equal-weight methodology instead spreads allocation across the entire value chain.

That matters because:

1. The eventual winners among humanoid brands are uncertain.

2. Pick-and-shovel suppliers may prove more durable than headline robot manufacturers.

3. Global supply chains are fragmented across regions.

Owning only Nvidia or Tesla captures part of the story. Owning the ecosystem captures the structural shift.

The China Question

No discussion of robotics is complete without addressing China.

Humanoid robotics is shaping up to be a dual-pole race between the U.S. and China. The U.S. leads in AI models and advanced semiconductors. China leads in cost-efficient manufacturing and robotics production scale.

Derek argued that ignoring China may actually be the greater risk.

China represents one of the largest potential deployment markets globally. Several humanoid-focused companies are listing in Hong Kong or mainland exchanges rather than as U.S. ADRs, reducing certain delisting risks.

He compared the situation to clean tech years ago. Investors who excluded China missed a significant portion of the supply chain expansion.

For advisors concerned about geopolitical volatility, sizing matters. A 3–5% thematic allocation within a diversified portfolio keeps exposure manageable while capturing participation in what could be a multi-decade structural shift.

Are the Forecasts Realistic?

Projections from major institutions estimate trillions in potential revenue and even the possibility of billions of humanoid units by 2050.

Derek encouraged viewing those projections directionally rather than literally.

The critical takeaway is not whether the industry becomes $3 trillion or $8 trillion. The takeaway is that the market effectively does not exist today.

An industry growing from zero to even a fraction of those estimates would rival the size of major global industrial sectors.

The real question is not “Will it hit exactly $5 trillion?”

The real question is:

What happens to companies positioned across the value chain if even a conservative version of this thesis materializes?

Portfolio Construction: Core or Satellite?

Derek framed KOID as flexible in portfolio construction depending on conviction.

For exploratory investors, a 1–2% satellite allocation provides exposure without material portfolio impact.

For advisors already holding robotics or industrial automation ETFs focused on traditional robotic arms and factory automation, KOID could serve as a 3–5% allocation — potentially replacing legacy robotics exposure with embodied AI exposure.

The argument is that traditional industrial automation is mature. Humanoids represent the next growth leg in physical automation.

This is not simply robotics 2.0. It is robotics combined with foundation models and real-time AI decision-making.

Milestones to Watch

What tells us the thesis is accelerating versus stalling?

Derek highlighted several concrete markers:

Bullish Milestones

• Thousands or tens of thousands of units delivered annually

• Public announcements of mass deployment in factories or logistics

• Clear ROI metrics from enterprise users

• Expansion from pilot testing to scaled production

If companies begin delivering in volume, it signals economics are working — not just engineering demos.

Warning Signs

• Regulatory setbacks following safety incidents

• Deployment delays due to liability or insurance challenges

• Slower-than-expected enterprise adoption

Derek compared this to autonomous driving: technology may be ready, but regulatory frameworks take time to catch up.

The path will not be linear. There will likely be volatility, pauses, and setbacks.

That does not negate the structural trend.

Hype vs. Reality

The defining distinction in this conversation was simple:

The hype cycle focuses on headlines.
Deployment focuses on unit deliveries.

Right now, humanoid robotics is crossing that line from narrative to operational testing.

Once businesses begin ordering in scale, the conversation changes from “Can this work?” to “How fast can we deploy?”

That is when industries transform.

Final Thought

Investing in humanoids today resembles investing in early-stage AI infrastructure before widespread enterprise adoption.

The timing question remains valid. Adoption curves are difficult to forecast. Regulatory friction is inevitable. Competition is intense.

However, the economic incentive is powerful:

• Structural labor shortages

• Manufacturing cost pressure

• AI models improving rapidly

• Governments supporting industrial competitiveness

Humanoid robotics sits at the intersection of all four.

For advisors, the question is not whether humanoids will exist.

The question is whether portfolios are positioned for the physical deployment of AI — not just the digital version.

If the next phase of AI is embodied, then the allocation conversation changes.

And that is where this theme moves from hype to deployment.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

On this episode of Lead-Lag Live, Melanie Schaffer sat down with John Love, President and CEO of , to unpack what’s driving the resurgence in natural gas, crude oil, gold, silver, and beyond — and what it means for portfolio construction in a world defined by geopolitical risk and macro uncertainty.

Below are the key takeaways.

Natural Gas: When “Ample Supply” Isn’t Enough

Natural gas prices surged sharply following a severe winter storm that swept across much of the U.S. While weather-related spikes are common during the winter months, this move stood out for its magnitude and persistence.

Love explained that although the U.S. entered the storm with relatively healthy storage levels, the severity, duration, and infrastructure strain altered the supply picture in real time. In past episodes, markets would spike on forecast uncertainty and then retrace once the storm passed. This time, the market recognized the scale of the disruption and continued repricing higher.

The broader message is straightforward. Even in a country that produces and exports significant volumes of natural gas, supply can tighten quickly when infrastructure meets extreme weather. Scarcity, even if temporary, drives price.

Oil: The Geopolitical Risk Premium Has Returned

Crude oil has also been climbing, with Brent moving higher amid renewed geopolitical tensions, including developments involving Iran and broader Middle East uncertainty.

Love noted that underlying supply-demand balances have fluctuated, particularly as OPEC+ has adjusted production policy in recent years. However, geopolitics introduces an unpredictable and asymmetric layer of risk. Roughly one-fifth of global oil flows through the Strait of Hormuz. Any credible threat to that chokepoint injects a risk premium into prices.

Not every geopolitical development carries the same weight. Venezuela’s political shifts, for example, have had limited immediate impact due to structural production challenges and the long timeline required to restore meaningful output.

The takeaway is that even in markets that appear balanced on paper, geopolitical uncertainty can sustain an elevated risk premium longer than many expect.

Gold, Silver, and the “Perfect Storm” for Precious Metals

Precious metals have been one of the strongest performing segments of the commodity complex.

Gold’s multi-year rally has been supported by steady central bank accumulation, investor diversification flows, currency concerns, and heightened geopolitical uncertainty. What began as institutional demand has broadened as more investors look for portfolio ballast.

Silver and platinum, which lagged gold earlier in the cycle, have recently accelerated. Historically, when the gold-silver ratio becomes stretched, the adjustment often comes through silver catching up. That dynamic has started to unfold.

With equity valuations elevated, policy uncertainty lingering, and macro risks still in play, precious metals have benefited from a convergence of supportive forces. Pullbacks are always part of commodity cycles, yet structurally the environment has favored safe-haven assets.

Broad Indexes vs. Selective Exposure

One of the most important parts of the conversation centered on how investors access commodities.

Traditional broad commodity indexes are typically weighted by production or liquidity. That structure naturally skews portfolios toward energy and gold. There is no market capitalization framework in commodities, so methodology matters.

Love emphasized that while broad exposure offers a useful macro snapshot, it may not be the most precise way to capture opportunity. Commodities are inherently idiosyncratic. Cocoa, cattle, natural gas, oil, and gold each respond to distinct supply disruptions, weather patterns, and geopolitical catalysts.

USCF’s SDCI ETF, for example, applies a rules-based process designed to emphasize commodities that appear relatively scarce while avoiding those in abundant supply. Rather than owning everything proportionally, the strategy aims to tilt toward tighter markets and rebalance monthly.

The objective is not to eliminate exposure to core commodities, but to avoid overconcentration and potentially capture less obvious winners when scarcity shifts across sectors.

The Role of Income in Commodity Strategies

For income-focused investors, commodity futures-based ETFs are not direct substitutes for fixed income. However, because futures require margin rather than full capital deployment, remaining collateral is typically invested in short-term Treasury instruments. That collateral component can generate income tied to prevailing T-bill rates.

USCF also offers option-overlay approaches on gold through USG, seeking to generate additional income through options strategies while maintaining gold exposure.

Commodities remain primarily a diversification and inflation-sensitive tool within portfolios rather than a traditional yield solution.

The Bigger Picture

From natural gas shocks to oil’s geopolitical premium to precious metals’ resurgence, the common thread is scarcity.

Commodities are not a single trade. They are individual markets, each influenced by its own supply constraints and demand shifts. In an environment defined by tariffs, geopolitical tension, central bank repositioning, and climate-driven disruptions, scarcity cycles may become more frequent and more pronounced.

For investors who have largely ignored commodities in recent years, the message is clear. When global stability is questioned and macro uncertainty rises, real assets often reassert their relevance.

To learn more about USCF’s research and lineup, visit USCF Investments’ website and explore their published commentary.

Stay tuned for more episodes of Lead-Lag Live.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

Below are the key takeaways from the conversation.

Inflation: Stuck, Not Solved

Oakley sees inflation as “stuck” in the near term rather than meaningfully breaking lower. After recent CPI data showed only modest progress, he expects the next several months to reflect a similar pattern — not collapsing, but not accelerating sharply either.

He notes that housing remains a major swing factor within CPI, but even there, disinflation has not been decisive enough to shift the broader trend meaningfully. Producer prices, in his view, offer a more useful signal because they capture input costs before they filter into consumer data.

The larger issue, however, is structural. Oakley does not believe low inflation will persist long term. Short-term relief is possible, but he remains skeptical that price pressures have been fully extinguished.

The Fed: Credibility in Question

Oakley is blunt about monetary policy. He does not rely on Federal Reserve guidance when constructing portfolios, arguing that central bankers have historically been late and reactive in crisis periods.

He believes the Fed’s flexibility is limited. While policymakers can influence short-term rates, long-term yields — especially the 30-year Treasury — are driven by market forces. Attempting yield curve control through aggressive bond buying would, in his view, create new distortions and longer-term problems.

The broader takeaway: investors should not build portfolios around forward guidance. Policy credibility, in Oakley’s framework, is not a reliable anchor.

The Real Risk: Mega-Cap Concentration

Oakley identifies the “Big 10” stocks within the S&P 500 as the primary source of equity market risk today. He believes those names have already had their run and have begun underperforming since late last year.

His concern is not simply valuation, but debt levels and aggressive capital spending, particularly tied to artificial intelligence initiatives. The payoff from those investments remains uncertain.

Rather than broad sector bets or ETFs, Oakley focuses on individual companies. His firm screens hundreds of names but owns roughly 50 that meet strict criteria: strong balance sheets, reliable cash flow, and a multi-year discount to intrinsic value.

He prefers holding companies five to ten years when fundamentals justify it.

Why Energy Looks Cheap

When asked what the market may be underpricing, Oakley is clear: energy. He argues it is currently the cheapest major area of the market and believes investors with a 18–24 month horizon could be well rewarded.

Unlike many high-growth technology names, energy companies generate significant free cash flow and often return capital to shareholders. That income component allows investors to “get paid while they wait,” a key distinction in a volatile environment.

He contrasts this with mega-cap growth companies that have accumulated substantial debt and are spending heavily on AI initiatives with uncertain long-term return profiles.

Gold, Silver, and Risk Management

Oakley has maintained long-term allocations to gold and added silver exposure over the past year and a half. After strong gains in silver, he trimmed positions to manage portfolio risk — emphasizing discipline after large commodity moves.

Long term, he believes precious metals are not finished, but he expects volatility and consolidation phases before any sustained next leg higher.

Base Capital vs. Investment Capital

Perhaps the most important framework Oakley outlines is his “base capital” philosophy.

He advises investors to divide assets into two categories:

• Base Capital: Stable, liquid assets designed for preservation and peace of mind.

• Investment Capital: Risk-oriented capital deployed into undervalued opportunities.

This separation allows investors to act decisively during market dislocations rather than being forced sellers. Oakley points to prior market crises as periods when liquidity created opportunity.

Final Thoughts

Oakley’s message is consistent: inflation is not defeated, the Fed’s credibility is fragile, mega-cap concentration risk is rising, and energy may offer asymmetric value.

In a market driven by narrative and policy speculation, discipline, cash flow, and valuation still matter.

For more insights, watch the full episode of Lead-Lag Live and subscribe to The Lead-Lag Report for future conversations.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

On this episode of Lead-Lag Live, Melanie Schaffer sat down with entrepreneur and investor Grant Cardone, CEO of Cardone Capital, to discuss Bitcoin, real estate, interest rates, scaling businesses, and what it truly means to build long-term wealth.

The conversation wasn’t about trading headlines. It was about playing offense.

“The Only Thing Riskier Than Bitcoin Is Not Owning It”

Cardone’s central thesis is simple: the most dangerous financial position today is not volatility — it’s inactivity.

In his view, saving money in cash is not preservation; it’s slow destruction. Whether the vehicle is Bitcoin, real estate, equities, or operating businesses, capital must be deployed into assets tied to the future.

For Cardone, Bitcoin represents technological evolution in money. Real estate represents permanence. One is volatile and asymmetric. The other is slow, cash-flowing, and tangible. Rather than debating which is superior, he argues investors should consider how to combine them.

This hybrid mindset reflects his broader philosophy: don’t choose between growth and income if you can architect exposure to both.

Conviction Isn’t a Tweet — It’s a Cost Basis

When Bitcoin sold off sharply, Cardone continued buying. He openly admitted the volatility isn’t comfortable — even for him. The difference, he argues, is not emotional detachment. It’s long-term perspective.

He challenged long-time Bitcoin holders who boast about early entries but haven’t added to positions in years. In his framework, conviction is not simply holding an early low-cost position. True conviction means continuing to allocate meaningful capital at higher prices.

That distinction highlights a broader investing principle:
Wealth builders focus on units owned, not just price appreciation.

The most important number in investing, according to Cardone, is not price per unit — it’s total units accumulated.

Real Estate: A Quiet Correction Few Are Discussing

While public markets dominate financial headlines, Cardone argues the most compelling opportunity today may be in U.S. commercial real estate.

He believes the market is currently in a major correction — particularly at the institutional level — as large debt maturities force asset sales. According to him, significant properties are trading at steep discounts to replacement cost, creating asymmetric entry points for well-capitalized buyers.

His macro view is equally clear: if interest rates decline meaningfully, capital could rush back into real estate quickly, closing that window of opportunity.

Whether one agrees or disagrees with the rate outlook, the point is strategic positioning — offense, not defense.

The Middle-Class Mindset vs. the Giant Mindset

When asked about his biggest mistake, Cardone didn’t point to a deal gone wrong.

He pointed to thinking too small.

Growing up in Lake Charles, Louisiana shaped his psychology around money. In his view, the greatest wealth constraint isn’t markets — it’s mindset. Playing small. Scaling slowly. Protecting profits instead of compounding aggressively.

He encouraged studying “giants” — individuals and families who compounded wealth across generations. The common thread: concentrated bets, long holding periods, and borrowing against assets rather than liquidating them.

His wealth philosophy is blunt:

• Don’t trade in and out.

• Don’t diversify out of fear.

• Don’t sell compounding assets prematurely.

• Scale aggressively when conviction is high.

Offense in an Uncertain World

The broader takeaway from this episode isn’t about Bitcoin versus real estate.

It’s about posture.

In uncertain environments, many retreat into defensive positioning. Cardone’s view is the opposite: volatility creates pricing dislocations. Dislocations create opportunity. Opportunity rewards those willing to act with size and conviction.

Whether discussing digital assets, trophy real estate, or business expansion, his framework is consistent:

Accumulate units. Think long-term. Scale bigger.

🎥 Watch the full episode of Lead-Lag Live to hear Grant Cardone break down his strategy in detail — including his views on Bitcoin cycles, institutional real estate discounts, and how entrepreneurs can think bigger when building wealth.

Be sure to subscribe for more conversations at the intersection of markets, macro, and long-term strategy.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

A Market Cycle Stretched Too Far

Cogswell’s central argument is that the market cycle has been stretched well beyond historical norms. Years of monetary intervention and policy support have delayed the normal process of economic reset, leaving excesses unresolved. Rather than periodic corrections clearing out inefficiencies, distortions have accumulated.

Nowhere is this more visible than in market concentration. A small group of mega-cap stocks dominates index performance to a degree that surpasses even the peak of the late-1990s technology bubble. Valuations among these leaders are materially higher, while their collective weight within the market has grown meaningfully larger.

That combination, high valuation paired with extreme concentration, creates fragility. When leadership narrows, markets become less resilient to disappointment, even if the broader economy appears stable.

AI Optimism and the Fragility of Expectations

Artificial intelligence has become the primary justification for elevated valuations and aggressive capital spending. Cogswell is careful to distinguish between long-term technological promise and short-term market pricing. His concern is not that AI will fail, but that expectations embedded in today’s prices allow little room for error.

Massive capital investment is underway before clear evidence of sustainable profitability or returns on invested capital has emerged. Much of the current enthusiasm depends on continued exponential growth assumptions. If those assumptions falter, even modestly, the consequences for market leaders could be outsized.

History suggests that when a single narrative becomes the cornerstone of market confidence, risk is no longer incremental. It becomes binary.

Investors All In, Risk Left Out

One of the most striking observations from the conversation is the extent to which households are exposed to equities. Equity ownership as a share of household net worth now exceeds levels seen at the height of the tech bubble. This marks only the second time in history that equities have overtaken real estate in household balance sheets.

At the same time, risk has largely disappeared from mainstream investing conversations. Passive strategies and index-based exposure have delivered strong results for years, fostering the belief that drawdowns are temporary inconveniences rather than structural features of markets.

Cogswell emphasizes that returns and risk cannot be separated. Ignoring risk does not eliminate it. It simply delays its recognition.

Discipline as the Portfolio’s “Designated Driver”

Rather than advocating dramatic exits or bearish positioning, Cogswell argues for balance. Investors can still participate in innovation and growth, but portfolios should also be designed to withstand disappointment.

He likens disciplined, valuation-aware strategies to a designated driver at a party that has grown increasingly reckless. Participation continues, but with an emphasis on capital preservation when conditions change. Historically, this approach has meant smaller drawdowns and greater durability during market stress.

The goal is not to predict when excess unwinds, but to ensure portfolios are positioned to endure when it does.

Why Critical Thinking Matters Now

Beyond portfolio construction, the discussion turns to a broader concern: the erosion of critical thinking in markets. Social media, narrative-driven investing, and passive capital flows have made it easier than ever to follow consensus without questioning assumptions.

Cogswell argues that investor education and engagement are essential defenses against complacency. Investors who understand why they own what they own are more likely to remain disciplined when volatility returns and narratives shift.

The Bottom Line

Markets can remain detached from fundamentals longer than expected, but excess rarely resolves itself gently. Concentration risk, speculative capital spending, and widespread complacency have created conditions that call for humility rather than confidence.

As this episode of Lead-Lag Live makes clear, discipline is not about forecasting a downturn. It is about preparing portfolios so that whatever comes next does not derail long-term financial goals.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Running Oak and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

On a recent episode of Lead-Lag Live, Melanie Schaffer sat down with equity-compensation specialist Kaitlyn Walsh to break down what employees actually receive when they are granted incentive stock options, where the key decision points arise, and why timing, taxes, and record-keeping matter far more than most people realize.

Equity Is a Right, Not Ownership

One of the most important clarifications Walsh makes is that incentive stock options do not represent ownership in a company. Instead, they provide the right to purchase shares at a predetermined price in the future. Every vesting event creates a choice, not a reward, and the responsibility for that decision rests entirely with the employee.

This distinction is often overlooked, especially at early-stage or high-growth firms where equity is framed as a substitute for cash compensation. The intent is alignment. Employees are granted the opportunity to participate in future value creation if the company grows and if they act deliberately along the way.

Understanding Fair Market Value and Strike Prices

Because companies issuing incentive stock options are typically private, their shares do not trade on public markets. Walsh explains that fair market value is determined through periodic valuations, often updated annually or after material business changes.

The strike price employees pay to exercise their options is tied to this valuation at the time of the grant. Knowing when the valuation was last updated and how close the company may be to a new one can meaningfully affect decision-making, particularly around exercise timing.

Vesting Creates Decisions, Not Guarantees

Vesting schedules are commonly misunderstood as automatic benefits. Walsh outlines a typical structure, such as a four-year vesting period with a one-year cliff, and emphasizes that vesting merely unlocks the ability to act.

The most critical moment often occurs when an employee leaves a company. At that point, any unvested options are forfeited, and vested options typically come with a short window to exercise or lose them. That window can force a real investment decision without the benefit of liquidity.

Taxes and the Alternative Minimum Tax

Incentive stock options are frequently described as tax-advantaged, but only when specific holding requirements are met. Walsh walks through how taxes are generally triggered at the point of sale and why meeting long-term capital gains criteria matters.

She also explains how the alternative minimum tax can apply at exercise, potentially creating a tax obligation before any shares can be sold. This surprise is one of the most common and costly issues employees face when equity planning is left too late.

The Most Expensive Mistake: Poor Documentation

Among the errors Walsh sees most often is inadequate record-keeping. Missing exercise dates or cost-basis information can lead to overpayment of taxes years later. Because equity transactions often span long periods and multiple platforms, employees must maintain their own clear records to avoid unnecessary losses.

Why This Matters Now

As equity compensation becomes more prevalent across industries, understanding how these instruments function is no longer optional. Equity grants are not passive assets. They require awareness, planning, and timely decisions.

This Lead-Lag Live conversation offers a practical framework for thinking about stock options as financial instruments rather than assumptions about future wealth.

Watch the full episode to hear Kaitlyn Walsh explain how employees can avoid common pitfalls and make more informed decisions about their equity compensation.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

The conversation underscored a central theme: capital is increasingly following long-duration structural shifts, not short-term narratives.

Japan’s Market Revival Is Policy-Driven—and Structural

Japan’s equity market continues to make headlines as the Nikkei pushes to record highs, but Van Caloen emphasized that this move is not sudden or speculative. Its foundation dates back to reforms initiated more than a decade ago, beginning with aggressive monetary and fiscal measures, followed by sweeping changes to corporate governance.

Those policies are now accelerating. Japan’s renewed commitment to growth, export competitiveness, and domestic investment is drawing sustained global capital—particularly into industrials, technology, and infrastructure-linked sectors.

Semiconductors: Oligopolies, Not Commodities

A major focus of the discussion was the global semiconductor ecosystem. Van Caloen highlighted why the industry remains dominated by a small group of highly specialized firms—both in chip manufacturing and in the equipment required to produce advanced semiconductors.

These companies operate in what are effectively technological oligopolies, with massive barriers to entry, long development cycles, and deeply embedded expertise. While the semiconductor cycle can be volatile, the underlying businesses remain structurally profitable.

Japan’s push to rebuild domestic semiconductor capacity is a key part of this story. Public-private partnerships and long-term capital commitments signal a strategic effort to regain relevance in an industry that is now central to national security, AI, and global supply chains.

Beyond Japan: Latin America, Space, and Defense

The conversation expanded well beyond Asia.

In Latin America, Van Caloen pointed to the combination of improving political backdrops and underpenetrated digital economies. Structural growth in e-commerce and financial technology continues to reshape the region, offering long-term opportunities independent of U.S. market cycles.

In space, commercial launch activity is no longer confined to a single dominant player. The rapid growth of satellite deployment, launch cadence, and private innovation reflects how space has shifted from exploration to infrastructure.

Defense spending also emerged as a defining theme. With geopolitical tensions rising and NATO members increasing budgets, investment is flowing toward advanced technologies—from robotics and sensors to energy systems and autonomous platforms. This is not a short-term cycle, but a multi-year reallocation of capital driven by national priorities.

AI, Energy, and Infrastructure: The Next Decade’s Build-Out

Artificial intelligence sits at the center of many of these trends, but Van Caloen stressed that AI’s impact extends far beyond software. The surge in computing power requires massive upgrades to electric grids, energy generation, and industrial infrastructure.

Companies tied to power management, grid modernization, and electrification stand to benefit for years—not quarters—as AI adoption drives sustained demand for electricity and physical assets worldwide.

A Broader Takeaway: Global Diversification Is Back

The overarching message was clear: investors may be underestimating the breadth of opportunity outside U.S. mega-caps. Japan’s resurgence, Europe’s defense awakening, and growth across emerging markets suggest that global diversification is becoming less optional—and more strategic.

As valuations diverge and capital reallocates, markets that lagged for years are beginning to assert leadership again.

🎥 Watch the full Lead-Lag Live episode to hear Hervé Van Caloen’s complete global perspective and how these structural shifts may shape the next investment cycle.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Mercator Investment Management and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

Lloyd framed today’s environment as a “bailout economy,” where policy responses, deficit spending, and technological investment work together to suppress downside risk while amplifying upside speculation. In that context, traditional frameworks around retirement, asset allocation, and even capitalism itself are being quietly rewritten.

Retirement Is Not a Number, It’s a Reinvention

One of the most resonant parts of the conversation focused on retirement. Lloyd challenged the long-standing idea that retirement is defined by a specific age or portfolio value. Instead, he described it as a psychological and emotional transition that many people underestimate.

After working with countless clients, Lloyd argued that retirement without purpose often leads to dissatisfaction and even depression. Many individuals derive identity from their work, and removing that structure without replacing it with meaningful engagement creates a void. True retirement planning, he suggested, requires thinking about reinvention, not just income replacement.

Liquidity, AI, and the Illusion of Stability

From a market perspective, Lloyd emphasized three variables he tracks daily: inflation, growth, and liquidity. While inflation has moderated from prior extremes, liquidity remains abundant. Massive government deficits, corporate spending on artificial intelligence, and trillions sitting in money market funds continue to fuel risk appetite.

AI, in Lloyd’s view, is inherently disinflationary over the long run but inflationary for asset prices in the short run. It boosts margins, replaces labor, and concentrates wealth. That concentration reinforces a familiar historical pattern: those who own productive assets benefit disproportionately, while those who do not fall further behind.

The implication is uncomfortable but clear. In a system where downturns are repeatedly met with intervention, avoiding asset ownership may be riskier than embracing volatility.

Banking, Private Credit, and Global Capital Flows

Lloyd also highlighted a structural shift happening beneath the surface. Traditional banks are increasingly losing deal flow to private credit and private equity. Capital is moving away from legacy institutions toward more flexible, globally oriented financing channels.

This shift is not confined to the United States. Lloyd pointed to opportunities in international and emerging-market financials, arguing that liquidity is becoming more global rather than purely domestic. The same dynamics powering U.S. markets are spilling into Latin America and beyond.

Investing in a Government-Backstopped System

The conversation ultimately returned to a sobering conclusion: markets no longer operate in a purely free-market framework. Policy decisions, bailouts, and political priorities now play a decisive role in determining winners and losers.

Lloyd’s takeaway was pragmatic rather than ideological. Investors must recognize the system as it exists, not as they wish it to be. In a bailout economy, owning assets, adapting quickly, and understanding policy signals matter more than clinging to outdated models of risk and return.

The Lead-Lag Report is provided by Lead-Lag Publishing, LLC. All opinions and views mentioned in this report constitute our judgments as of the date of writing and are subject to change at any time. Information within this material is not intended to be used as a primary basis for investment decisions and should also not be construed as advice meeting the particular investment needs of any individual investor. Trading signals produced by the Lead-Lag Report are independent of other services provided by Lead-Lag Publishing, LLC or its affiliates, and positioning of accounts under their management may differ. Please remember that investing involves risk, including loss of principal, and past performance may not be indicative of future results. Lead-Lag Publishing, LLC, its members, officers, directors and employees expressly disclaim all liability in respect to actions taken based on any or all of the information on this writing.

Trade tensions, technology rivalry, supply-chain security, and national defense priorities have become central forces shaping capital allocation. In the latest episode of Lead-Lag Live, host Melanie Schaffer sat down with Aram Babikian, Head of Xtrackers Wealth at DWS, to explore how geopolitics and national security are changing the way investors should think about technology exposure.

The conversation highlights a critical shift underway in markets: the future of technology investing is increasingly tied to national security priorities rather than globalization alone.

From Globalization to Geostrategic Risk

For decades, globalization rewarded companies that built expansive international supply chains and tapped global consumer markets. That framework is now under pressure.

The relationship between the United States and China has evolved from cooperation to strategic competition, particularly in advanced technologies. What once appeared to be efficient global integration now carries hidden risks tied to revenue concentration, supply-chain dependence, and political alignment.

Babikian offered a compelling analogy. Globalization built a bridge between the U.S. and China. As the two sides move further apart, the middle of that bridge begins to collapse. That collapse represents collateral damage for investors holding companies deeply entangled with geopolitical adversaries.

This shift forces investors to ask new questions. It is no longer enough to know what a company produces. Investors must also understand where it operates, how its supply chains are structured, and how exposed it may be to geopolitical fracture lines.

What Are “Critical Technologies” and Why They Matter

At the center of this new framework is the concept of critical technologies.

In response to rising strategic competition, the U.S. Department of Defense identified a set of technologies considered essential to future economic strength and national security. These areas include artificial intelligence, advanced computing, quantum science, cybersecurity, advanced materials, energy resilience, space systems, and human-machine interfaces.

These technologies are no longer niche themes. They are becoming the backbone of long-term government investment, defense planning, and industrial policy. As a result, they are also attracting sustained private capital alongside public funding.

For investors, the implication is significant. Capital flows are increasingly guided by national security priorities rather than short-term growth narratives alone.

Why This Approach Differs From Traditional Tech Exposure

A key insight from the discussion is how this approach differs from conventional technology-heavy strategies.

Many widely held technology companies dominate major indices, yet some are excluded from national-security-focused portfolios due to elevated geopolitical entanglement. Factors such as revenue dependence on China, supply-chain concentration, foreign ownership structures, and strategic alliances can create risks that traditional financial metrics often overlook.

By contrast, companies included under a national security lens must meet two criteria. They must align with critical technologies deemed essential to U.S. and allied interests, and they must demonstrate a favorable geostrategic risk profile. That profile evaluates exposure to adversarial nations versus alignment with allied intelligence and defense networks.

This explains why some familiar mega-cap names are absent while others remain core holdings despite overlap with broader technology benchmarks.

De-Risking for Geopolitics Without Abandoning Innovation

Importantly, this framework is not about avoiding innovation or growth. It is about reframing risk.

The goal is to participate in the technologies shaping the future while reducing exposure to geopolitical vulnerabilities that could disrupt revenue streams, supply chains, or long-term valuations. In this sense, national-security-aligned technology investing blends offense and defense.

Government spending, defense modernization, and strategic technology development create durable sources of demand. Filtering out companies with high geopolitical vulnerability seeks to mitigate downside risk as global tensions continue to rise.

In an environment where geopolitical volatility is difficult to quantify yet increasingly impactful, this approach offers a different way to think about portfolio construction.

A New Lens for the Next Market Cycle

One of the most forward-looking ideas from the conversation is that national-security-focused technology exposure may represent the next evolution of core technology allocations.

Traditional benchmarks emerged during an era defined by globalization, consumer internet growth, and supply-chain efficiency. The next era appears shaped by strategic competition, technological sovereignty, and defense-driven innovation.

For investors and advisors, the takeaway is not to trade headlines, but to recognize that geopolitics has become a structural driver of markets. Ignoring it may carry more risk than acknowledging it.

That shift may ultimately redefine what “core” technology exposure looks like in portfolios in the years ahead.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Xtrackers By DWS and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

On a recent episode of Lead-Lag Live, host Melanie Schaffer sat down with Stephen Sikes, Chief Operating Officer at Public.com, to discuss how AI-driven tools are reshaping investing from the ground up. The conversation centered on what Sikes describes as the rise of the agentic brokerage—a model where AI serves as an intelligent layer between investors and the full capabilities of a modern brokerage platform.

From AI Research to Institutional-Grade Insight

At the foundation of Public’s approach is AI-powered research that combines large language models with real-time market data, fundamentals, and alternative datasets. Rather than forcing investors into rigid dashboards or predefined screens, the platform enables users to interact with data conversationally.

This structure allows investors to explore company fundamentals, market narratives, and cross-asset relationships in a way that more closely resembles working with an analyst than navigating traditional retail tools. The goal is to bring institutional-style insight within reach of serious individual investors.

Generated Assets and the Shift Toward Custom Indexing

One of the most compelling innovations discussed was Public’s “Generated Assets” feature. This tool allows investors to translate a simple idea or thesis into a diversified, investable portfolio. A user can describe a qualitative theme, such as founder-led companies, or apply more quantitative constraints based on financial characteristics.

The AI then defines the relevant universe of securities, evaluates each name against the stated criteria, and determines position weightings based on user preferences or relevance. The result is a custom index that can be implemented and managed as a single portfolio, bringing direct indexing-style customization to a broader audience.

Why Human Judgment Still Matters

Sikes was clear that AI is not positioned as a fully autonomous decision-maker. Generated portfolios are designed to be iterative and collaborative. Investors can refine prompts, remove unwanted holdings, or adjust weightings before putting capital to work.

This human-in-the-loop approach reflects a broader truth about AI in markets. The technology can accelerate research and portfolio construction, but thoughtful review and investor intent remain essential parts of the process.

The Agentic Brokerage Vision

Looking ahead, Public’s longer-term vision is an end-to-end agentic brokerage, where AI can manage research, portfolio construction, performance reporting, and complex transaction logic through natural language instructions.

Rather than relying on static menus and pre-built workflows, investors could instruct the platform directly on how they want portfolios analyzed, monitored, or adjusted. In this framework, AI becomes the connective layer between investor intent and execution, unlocking flexibility that traditional interfaces struggle to deliver.

Who Stands to Benefit

One of the central takeaways from the conversation is the breadth of potential users. Long-term investors may benefit from greater customization and portfolio clarity. Active traders can access advanced order logic and automation. More sophisticated investors gain tools that scale personalization without scaling complexity.

In that sense, the AI brokerage era is less about replacing human decision-making and more about expanding what individual investors can realistically do on their own.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Public.com and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

From Euphoria to Scrutiny

Wu noted that much of 2024 and early 2025 was defined by near-automatic enthusiasm around AI capital spending. Announcements of large data-center builds or AI infrastructure commitments were routinely rewarded with sharp stock price gains. Over time, however, that enthusiasm has become more selective.

High-profile examples highlight the shift. Some companies that once rallied aggressively on AI headlines have since retraced much of those gains, while credit markets have begun to price in greater uncertainty around the durability of AI-driven spending plans. Recent pullbacks in AI-linked infrastructure names suggest investors are no longer willing to underwrite unlimited capital expenditures without clearer visibility into eventual returns.

The result is a market that is no longer uniformly bullish on AI spending, but increasingly discerning about who is deploying capital effectively and who may be overextending.

Concentration Risk Beneath the Surface

A major theme of the discussion was concentration risk. Even before the AI boom, a small group of mega-cap technology firms dominated equity benchmarks. Today, those same firms also represent the largest investors in AI infrastructure.

Wu emphasized that this creates a double layer of risk for investors, including those who believe they are diversified through passive index exposure. A significant share of capital is effectively riding on the judgment of a handful of CEOs making long-duration, capital-intensive bets on AI platforms. If those bets deliver strong productivity gains, the payoff could be substantial. If not, the downside risk is more systemic than many investors appreciate.

The ROI Question Still Looms

Despite rapid growth in AI usage, Wu argued that the central question remains unresolved: will AI generate enough revenue to justify the scale of investment underway?

Current AI application revenues remain small relative to the trillions of dollars being deployed into data centers, chips, and cloud infrastructure. While usage metrics continue to rise, monetization is far less certain. Consumer adoption has outpaced enterprise adoption, and even among large user bases, only a fraction are paying customers.

Wu stressed that enterprise adoption cycles are typically slow, which means it may simply be too early to draw firm conclusions. Still, as markets look ahead, the burden of proof is shifting. Investors are increasingly focused on whether AI meaningfully improves productivity and whether corporations are willing to pay for those gains at scale.

Why Intangible Assets Matter More Than Ever

One area where Wu’s conviction has only strengthened is the growing importance of intangible assets. Traditional valuation frameworks tend to emphasize physical capital and underweight assets such as data, intellectual property, and proprietary algorithms.

The rise of generative AI, in Wu’s view, reinforces the idea that a larger share of corporate value now resides in these intangible inputs. Companies with durable data advantages and scalable models may ultimately prove more valuable than those simply spending the most on hardware and infrastructure.

Learning From the Dot-Com Cycle

To frame where markets may be headed next, Wu drew parallels to the dot-com era. Early in that cycle, infrastructure providers and “picks-and-shovels” firms delivered outsized returns. Over time, valuations became stretched, and leadership shifted away from the most capital-intensive players.

Wu suggested AI may now be entering a similar phase. After strong gains in infrastructure-focused and high-beta AI names, the next opportunity could lie with AI adopters. These are companies using AI to enhance efficiency, margins, or competitiveness without bearing the full burden of massive capital investment.

Importantly, many of these firms trade at little to no premium relative to the broader market, offering what Wu described as “free AI exposure.” They also span multiple sectors and geographies, potentially offering diversification benefits alongside AI-driven upside.

Positioning for the Next Chapter

The takeaway from the conversation was not that AI’s promise has faded, but that the easy phase of the trade may be over. As expectations rise, markets are likely to reward demonstrable outcomes rather than ambition alone.

For investors, that means thinking beyond headline spending figures and focusing instead on where AI adoption translates into measurable business improvements. The next phase of AI investing, Wu argued, is likely to be defined less by who builds the biggest data center and more by who uses AI most effectively.

For more insights like this, subscribe to Lead-Lag Live and share the episode with colleagues navigating the evolving AI investment landscape.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Sparkline Capital and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

On this episode of Lead-Lag Live, hosted by Melanie Schaffer, the conversation focused on how portfolios can be constructed to adapt rather than predict through regime changes. The guest was Greg Babij, Co-Founder and Chief Investment Officer of Sundial, a multifamily office known for its deliberate, risk-aware approach to portfolio construction.

Why the Old Playbook Is Breaking Down

A central theme of the discussion was that portfolio management is fundamentally a probability game, not a prediction game. Traditional valuation metrics may matter over long horizons, but they are unreliable timing tools. With equity valuations elevated and forward returns likely to be more muted than in the past decade, the probability of consistently strong buy-and-hold outcomes has declined.

Compounding this challenge is a shift in market microstructure. The options market has grown larger than the equity market itself, with a significant share of volume now concentrated in very short-dated contracts. This has increased the likelihood of sharper, faster market moves, making static portfolios more vulnerable to volatility shocks and drawdowns.

The implication is clear: investors may need to rely less on passive exposure alone and more on tactical, non-correlated, and defensive strategies that can respond dynamically to changing conditions.

A Two-Lens Framework for Portfolio Construction

Sundial approaches portfolio construction through what Babij describes as a two-lens framework.

The first lens recognizes that there are only four macroeconomic regimes: growth, recession, inflation, and deflation. Rather than attempting to forecast which regime is coming next, portfolios are constructed to include exposures that can function across all four environments.

The second lens divides investments into stability-seeking and instability-seeking categories. Stability-seeking assets include familiar exposures such as equities, bonds, and traditional real assets, which tend to move together during crises. Instability-seeking strategies are designed to benefit from volatility, dislocation, or persistent trends.

By pairing the two, portfolios can remain resilient without requiring accurate macro forecasts. The emphasis is on diversification not just by asset class, but by how investments behave under stress.

Tactical Equity Exposure: Adjusting Risk With Conditions

Within equities, Sundial complements passive exposure with systematic, rules-based strategies designed to adjust risk over time. Babij framed this with a simple analogy: drivers slow down when conditions become dangerous and accelerate when conditions improve. Portfolios, he argues, should behave the same way.

One strategy focuses on concentrated exposure to stocks with strong price and earnings momentum, while another seeks to outperform major indices by truncating large drawdowns and selectively increasing exposure when market internals are healthy. Measures such as market breadth, advances versus declines, and new highs versus lows are treated as “vital signs” used to assess overall market health.

Defense, rather than offense, is treated as the priority. Avoiding major losses is viewed as more important than capturing every upside move.

The Role of Alternatives and Convexity

A distinguishing feature of Sundial’s framework is its heavy use of alternatives and niche strategies, particularly those with convex or asymmetric return profiles. Tail-risk hedging strategies may perform best during sudden crises, while systematic trend-following strategies can thrive during prolonged market declines.

These instability-seeking strategies are not intended to be permanent return engines. Instead, they serve as tools that can generate gains during periods of stress and then be rebalanced into other parts of the portfolio. This creates a disciplined risk-management loop that does not rely on market timing.

Preparing for the Next Market Cycle

The conversation underscored a broader message: the next market cycle may not resemble the last. Structural changes in volatility, market plumbing, and investor behavior suggest that portfolios designed solely for calm, growth-driven environments may struggle.

By focusing on adaptability, regime diversification, and a deliberate balance between stability and instability, portfolios can be positioned to navigate uncertainty rather than be surprised by it.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Sundial and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

Hatfield’s core message was straightforward: when the Fed turns dovish, leadership almost always shifts. The mistake many investors make is assuming the same winners will keep winning. Historically, that has rarely been the case.

Two Economies, One Market Turning Point

Hatfield framed the current environment as a “two-economy” setup. Housing and construction have already slipped into recessionary territory, reflecting the delayed impact of higher rates. At the same time, technology and intellectual-property-heavy sectors have continued to thrive, masking broader softness.

This divergence matters because shelter inflation lags actual economic activity by a wide margin. As that lag resolves, Hatfield expects inflation to move closer to target levels, giving the Fed room to continue easing. In his view, lower policy rates and a declining inflation trend create a historically favorable backdrop for risk assets, even if volatility remains along the way.

Why Mega-Cap Tech May No Longer Lead

One of the more contrarian takeaways from the discussion was Hatfield’s caution on mega-cap technology. His models suggest that the so-called “Mag Eight” are now offering relatively limited upside compared to the broader market. That does not mean tech is poised to collapse, but rather that it is increasingly fully valued.

In contrast, non-tech sectors and income-oriented equities are still priced for skepticism. When the Fed shifts from tightening to easing, those overlooked areas often see both multiple expansion and improving fundamentals. That combination can matter more than squeezing out incremental gains from already-crowded trades.

Preferreds and Credit: Income With Optionality

Hatfield highlighted preferred stocks and high-yield credit as areas that have quietly delivered income while waiting for clearer policy signals. In a typical rate-cutting cycle, these assets tend to benefit not only from their coupons but also from price appreciation as yields compress.

This cycle has been unusual, with uncertainty around the Fed muting those gains so far. Hatfield argued that clarity is the missing ingredient. Once policy rates settle decisively lower, investors are likely to rotate out of cash and money markets and back into higher-yielding income assets. Even without price gains, steady income can play an important role in total returns and portfolio stability.

Small Caps as a Risk-On Expression

Small caps featured prominently in the discussion, not because of balance-sheet leverage myths, but because of sector composition. Small-cap indexes are far less dominated by mega-cap technology and far more exposed to cyclical, domestic, and value-oriented businesses.

Hatfield emphasized that small caps tend to outperform when the Fed becomes more accommodative, largely because they represent a cleaner expression of risk-on sentiment outside of tech. Since the Fed signaled a more dovish stance, small caps have already begun to outperform, a trend he expects to continue into 2026 if easing persists.

Portfolio Construction Heading Into 2026

For income-focused investors, Hatfield suggested balancing higher-risk fixed income with equity income strategies rather than relying solely on traditional low-yield bonds. Higher-quality risk assets, in his view, can deliver income while still participating in upside during favorable cycles.

The broader takeaway was not about chasing any single asset class, but about recognizing where the cycle is shifting. When the Fed cuts, diversification away from yesterday’s winners and toward underappreciated sources of income and value has historically paid off.

Bottom line: As rate cuts take hold, leadership may move away from mega-cap growth and toward income-producing assets, credit, and small-cap value. For investors positioning into 2026, the next phase of the cycle may be less about owning what worked last year and more about rotating into what the Fed’s pivot tends to favor.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Infrastructure Capital Advisors and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

On a recent episode of Lead-Lag Live, Melanie Schaffer sat down with Alex Shahidi, Co-Chief Investment Officer at Evoke Advisors and one of the architects behind the RPAR risk parity framework, to revisit a deceptively simple question: What does a truly balanced portfolio actually look like?

The answer, as Shahidi explains, challenges some of the most deeply ingrained assumptions in modern portfolio construction.

Why 60/40 Isn’t Really Balanced

The traditional 60/40 stock-bond portfolio is often described as “diversified,” but Shahidi argues that label doesn’t hold up under scrutiny. A typical 60/40 portfolio remains overwhelmingly driven by equity risk, with returns that are highly correlated to stocks. When equities struggle, the portfolio struggles with them.

History offers several reminders of how costly that concentration can be. Extended periods such as the 1930s-40s, the inflationary 1970s, and the 2000s all saw stocks underperform cash for years at a time. In those environments, relying solely on stocks and nominal bonds proved insufficient.

A portfolio that moves almost lockstep with equities is not diversified in any meaningful sense.

Growth, Inflation, and the Missing Dimensions of Risk

At the heart of Shahidi’s framework is the idea that asset returns are driven primarily by growth and inflation surprises, not just time in the market. Stocks tend to perform best when growth exceeds expectations and inflation remains contained. When inflation runs hot or growth disappoints, other assets take the lead.

That insight leads to a broader opportunity set. Beyond equities, Shahidi highlights the role of:

• High-quality sovereign bonds for growth shocks

• Inflation-linked bonds for rising price regimes

• Commodities and gold as inflation-sensitive assets

Each of these behaves differently across economic environments. The challenge is not simply owning them, but owning them in the right proportions.

Equal Risk, Not Equal Dollars

Risk parity shifts the focus from capital weights to risk contribution. More volatile assets require smaller allocations, while less volatile assets play a larger role. The goal is a portfolio where no single asset class dominates outcomes.

This approach, Shahidi notes, is often misunderstood as “levering bonds.” In reality, risk parity can be implemented without leverage at all. Leverage, when used, is applied to the entire balanced portfolio, not a single asset class, allowing investors to scale return targets without sacrificing diversification.

Importantly, Shahidi challenges the belief that diversification necessarily lowers long-term returns. A well-constructed, risk-balanced portfolio can remain competitive over full market cycles while reducing reliance on any one macro outcome.

Why This Matters Now

Today’s portfolios are more concentrated than they were a decade ago, with heavier exposure to U.S. equities and an increasing dependence on a small group of mega-cap stocks. At the same time, inflation has remained above target for years, and the next growth shock is unlikely to arrive with advance warning.

Against that backdrop, Shahidi argues that the case for broader diversification is stronger than ever, even if it feels uncomfortable during equity-led bull markets.

Diversification rarely looks necessary at market highs. It becomes essential when expectations break.

Watch the full Lead-Lag Live episode for a deeper discussion on risk parity, inflation protection, and what it really means to build a resilient portfolio across cycles.

New episodes of Lead-Lag Live are available on YouTube and across major podcast platforms.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Evoke Advisors and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

• Emerging markets are no longer just banks, materials, and energy. Internet platforms, cloud adoption, and tech-enabled consumer services are quietly reshaping the opportunity set.

• Traditional EM indices may underrepresent growth, which helps explain long-term underperformance versus U.S. equities.

• Targeted ETFs focused on EM internet and growth stocks offer a different exposure profile than broad benchmarks.

• Single-stock leveraged ETFs introduce daily compounding and path dependency, making them tools for aggressive, volatility-aware investors.

• Position sizing and volatility management matter far more in EM and single-stock strategies than in traditional developed-market allocations.

Emerging markets have spent years wearing the label of “old economy” investing. Heavy exposure to banks, materials, and energy has caused broad EM benchmarks to lag U.S. equity indices that became increasingly dominated by growth and technology stocks. According to Brendan Ahern, Chief Investment Officer at KraneShares, that structural imbalance has masked a major shift already underway inside emerging markets.

In a recent episode of Lead-Lag Live, Ahern joined host Melanie Schaffer to discuss how internet platforms, AI adoption, and e-commerce are changing the EM growth narrative, and how investors can think about accessing that opportunity without relying solely on traditional benchmarks.

The Growth Gap Inside Emerging Markets

Ahern explained that broad EM indices historically allocated significant weight to slower-growth sectors, which partly explains why emerging markets have trailed U.S. equities for more than a decade. Over that same period, U.S. indices increasingly reflected technology and growth-oriented business models.

To address this mismatch, KraneShares developed ETFs designed to isolate the growth factor inside emerging markets, rather than replicating the full index structure. By focusing on internet platforms and tech-enabled consumer businesses, these strategies aim to capture areas of EM that more closely resemble the drivers behind U.S. equity leadership.

Why Internet Platforms Matter

Many of the most dynamic EM companies operate digital platforms that benefit from expanding middle classes, rising smartphone penetration, and rapid adoption of online services. Ahern highlighted companies such as Alibaba, JD.com, Pinduoduo, and MercadoLibre as examples of businesses that may be underrepresented in traditional allocations, despite playing a central role in EM consumer growth.

From his perspective, these companies represent a “tip of the spear” approach to emerging markets, emphasizing secular growth trends rather than legacy sector exposure.

Understanding Single-Stock Levered ETFs

The conversation also addressed the mechanics and risks of single-stock leveraged ETFs. Ahern stressed that these products are designed to deliver a multiple of a stock’s daily performance, not its long-term return. That daily reset creates path dependency, meaning the sequence of returns can significantly affect outcomes over time.

Because of this structure, single-stock leveraged ETFs require a different mindset than traditional long-only investments. They are tools for investors who understand volatility, monitor positions actively, and size exposure appropriately.

Volatility, Risk, and Portfolio Fit

Ahern was clear that emerging markets and single-stock strategies carry higher volatility than developed-market indices. Regulatory risk, geopolitics, currency movements, and macro uncertainty all play a role. As a result, he emphasized the importance of volatility-adjusted position sizing and using these strategies as smaller components within a diversified portfolio.

These products are not designed to replace core holdings, but rather to complement them for investors with higher risk tolerance and a clear understanding of drawdowns.

The Bigger Picture

After years of U.S. equity dominance, Ahern noted that valuation differences, sector composition, and currency dynamics may be shifting the relative opportunity set. His view is not about abandoning U.S. equities, but about recognizing that growth is increasingly global and that emerging markets now offer more targeted ways to access it.

For investors willing to look beyond traditional benchmarks, the evolution inside emerging markets may be far more advanced than headline performance suggests.

As always, this discussion is for educational purposes and not investment advice.

Lead-Lag Live is part of The Lead-Lag Report, where we spotlight conversations that cut through the noise — separating market fantasy from fundamental truth.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of KraneShares and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

• Cash is no longer a passive holding. In a higher-rate, more volatile environment, liquidity itself has become a strategic asset.

• TRSY is designed as a modern cash-management tool, offering exposure to U.S. Treasury bills with maturities of zero to one year.

• Unlike CDs, TRSY trades intraday and avoids early-withdrawal penalties, making it easier to redeploy capital when opportunities arise.

• The fund sticks strictly to Treasuries, avoiding the credit risk often embedded in ultra-short bond funds.

• Low costs and potential state tax advantages make TRSY a compelling alternative to traditional cash vehicles for some investors.

One of the most common questions investors and advisors are grappling with right now is deceptively simple: What should I do with cash?

For years, the answer barely mattered. Yields were negligible, opportunity cost was low, and “cash” was just a placeholder. That’s no longer the case. With rates higher, volatility elevated, and liquidity suddenly valuable again, cash has become an active portfolio decision.

In a recent Lead-Lag Live Deep Dive, host Melanie Schaffer sat down with Aram Babikian of Xtrackers to unpack how investors are rethinking short-term capital and where the Xtrackers U.S. Treasury 0–1 Year ETF (TRSY) fits into today’s yield landscape.

What Problem Is TRSY Designed to Solve?

At its core, TRSY is built to function as a modern cash-management tool. It provides exposure to U.S. Treasury bills with maturities between zero and one year, wrapped in an ETF structure that trades intraday like a stock.

That matters because many traditional cash vehicles come with trade-offs. Certificates of deposit can lock up capital. Money market funds may limit flexibility. Ultra-short bond funds often introduce credit exposure. TRSY is designed to sit in that gap, offering investors a way to keep capital liquid while earning income tied directly to Treasuries.

Liquidity When It Actually Matters

One of the standout advantages discussed in the conversation was liquidity. Unlike CDs, which often penalize early withdrawals, TRSY can be bought or sold throughout the trading day. More importantly, the underlying instruments—U.S. Treasuries—are among the most liquid securities in the world.

In periods of market stress or sudden opportunity, that flexibility can be meaningful. Investors who want to redeploy cash quickly do not have to wait for maturities or accept withdrawal penalties to do so.

Cost, Structure, and Risk Considerations

TRSY also stands out for its low expense ratio, particularly when compared with many money market funds and ultra-short bond ETFs that have become more expensive as yields have risen.

Structurally, the fund sticks strictly to Treasuries. That means no corporate bonds, no asset-backed securities, and no embedded credit risk. Duration is intentionally short, which helps mute interest-rate sensitivity relative to longer-dated bond funds.

Unlike money market funds with stable net asset values, TRSY’s price can fluctuate. That introduces the potential for modest appreciation or depreciation, but the short maturity profile helps limit volatility over time.

A Note on Taxes

Another important point raised in the discussion is taxation. Because TRSY holds U.S. Treasuries, the income generated may be exempt from state and local income taxes, which can be especially relevant for investors in high-tax states. As always, investors should consult a tax professional to understand how this applies to their specific situation.

Where TRSY Fits

TRSY is not designed to replace every cash or income vehicle. Instead, it offers an alternative for investors who want:

• Daily liquidity

• Exposure limited to Treasuries

• Competitive pricing

• A transparent, ETF-based structure

In that sense, it can serve as a bridge between traditional cash holdings and riskier income strategies, particularly in a market environment where flexibility matters.

As always, this discussion is for educational purposes and not investment advice.

Lead-Lag Live is part of The Lead-Lag Report, where we spotlight conversations that cut through the noise — separating market fantasy from fundamental truth.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Xtrackers By DWS and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.