Today at 2:30 PM ET - Anti-AI: Why Efficient Growth Is Behaving Nothing Like the S&P 500 Right Now
Live at 2:30 PM ET with Seth Cogswell of Running Oak Capital. The involuntary Anti-AI trade, the Grand Illusion of hyperscaler earnings, and why 14 months of factor nonsense may be sow time. 1 CFP CE Credit Approved.
Live today at 2:30 PM ET with Seth Cogswell, Founder and Managing Partner of Running Oak Capital.
The Anti-AI trade is not a thesis. It is what the market is already doing - quietly.
Over the last 38 trading days, 20 of them had more than 110 basis points of return differential versus the S&P 500. The correlation between Running Oak's Efficient Growth strategy and the S&P 500 Equal Weight has dropped to 0.77. Historically these move together. Right now they do not.
Over the last 14 months, the "highly questionable" factor basket - high volatility, high beta, unprofitable, low quality, meme - has beaten the "common sense" basket of profitability, quality, growth, and low volatility by nearly 3x. High Volatility beat Low Volatility 131% to 12%. Companies that lose money beat companies that make money by 2x. Reddit outperformed profitable, high-quality, low-volatility stocks.
Something is broken. Or something is opportunity.
The Grand Illusion
Seth's argument is that current hyperscaler earnings are structurally misleading:
- Revenue historically overstated by paper profits, circular financing, and tariff refunds
- Expenses historically understated as depreciation schedules extended from 3 to 5 years
- Profit margins nearly 40% higher than the software-dominated margins of the last decade - even though asset-heavy margins have always historically been lower than software
- Hyperscalers no longer hold historic cash piles
- Cash flow has turned negative
- Debt issuance is at record levels
If any one of those is right, the AI trade sits on a foundation that cannot compound the way the multiple suggests it will.
Why This Is Sow Time
Running Oak's Efficient Growth strategy has delivered 88% downside capture with 92% upside capture from September 2013 through June 2026. Audited outperformance in 2018 and 2022. Hypothetical outperformance in 2008, 2002, 2001, 2000, and 1990 - every year US equity markets were down since 1989.
Seth's framing: "There is a time to reap and a time to sow. It is sow time."
Today's 60-minute session is the case for why factor dispersion at this magnitude, this late in a cycle, with these fundamentals underneath the leaders, is not a signal to chase - it is an opportunity to reposition.
What Advisors Take Away
- How to explain factor dispersion to clients without triggering performance-chasing behavior
- Why 14 months of nonsense outperformance is sow time, not a signal
- The Efficient Growth framework: Growth + Value + Managed Volatility
- Historical downside protection across every US equity down year since 1989
- How to position benchmark-agnostic construction inside a passive-heavy book
Details
When: Wednesday, July 29, 2026 - 2:30-3:30 PM ET
Where: Live on Zoom - Replay sent to all registrants
Credit: 1 CFP CE Credit Approved - Investment Planning - Intermediate
Sponsored by: Running Oak Capital
Register: https://us06web.zoom.us/webinar/register/WN_bVsrGpoMTm-qcMAYug3IeQ
Michael A. Gayed, CFA
Publisher, The Lead-Lag Report
Founder, Lead-Lag Media
Past performance is not necessarily indicative of future results. Statements regarding the sustainability of the AI trade or forward-looking claims on hyperscalers reflect the opinion of Running Oak Capital and should not be relied upon as statements of fact. This is not investment advice.
