Dan Rasmussen of Verdad Advisers had a good discussion with the Excess Returns podcast where he pointed out that its hard to find an overvalued international market – meaning investors should diversify out of the US (especially those who are 80-90% in the USA) into these markets (but not more than 50%):
🎥 The Bubble You Can’t Exit | Dan Rasmussen on the Private Equity Trap (Excess Returns) 55:15 Minutes (Jan 29, 2026)
In this episode of Excess Returns, we’re joined again by Dan Rasmussen of Verdad Advisers for a wide-ranging conversation that challenges some of the most popular narratives in markets today. From private equity and private credit risks to AI-driven capital cycles and overlooked opportunities in biotech and international equities, Dan offers a deeply research-driven perspective on where investors may be misallocating capital and where future returns could emerge. Alongside Justin and special guest co-host Kai Wu, the discussion connects valuation, incentives, and innovation in a market environment shaped by concentration, leverage, and technological change.
Main topics covered
• Why private equity performance continues to disappoint and where the biggest structural risks are emerging
• The growing stress in private credit and what rising bankruptcies signal for lower middle-market deals
• Why democratizing private equity through 401ks, interval funds, and ETFs may create more problems than solutions
• How AI CapEx is changing the economics of Big Tech and why asset-light models may be getting worse, not better
• The case for diversifying away from U.S. concentration toward international markets and international small value
• Why bubbles are often necessary for innovation and how to think about AI through that historical lens
• How investors may be underestimating valuation and growth bankruptcy risk in the Mag 7
• Why biotech is one of the hardest sectors to model and how Verdad rebuilt its framework from scratch
• How intangible value, clinical trial data, specialist ownership, and peer momentum can improve biotech investing
• What capital starvation, M&A dynamics, and global competition mean for biotech’s future returnsTimestamps
00:00 Introduction and market narratives
02:20 Revisiting private equity risks and performance
06:58 Private credit stress and bankruptcy signals
10:58 Private equity in 401ks and interval fund risks
14:52 Private assets in ETFs and liquidity concerns
15:45 Why bubbles drive innovation and capital formation
20:13 AI CapEx, Mag 7 concentration, and valuation risk
25:24 International diversification and market leadership
29:41 Why Verdad turned to biotech research
37:13 Rebuilding biotech valuation and quality metrics
44:26 Clinical trial data and peer momentum insights
49:17 Portfolio construction and long-short biotech strategies
51:00 Capital starvation, AI, and biotech’s setup
53:58 Research culture, humility, and evolving quant models
Among the things he talked about was private equity using private credit to do “stupid things like rolling up veterinarian clinics at 22x EBTDA…” along with other “low margin crappy businesses” that are GDP growers…:
Then there is the private credit fraud bubble:
And when it comes to SPACs, Chamath of the All-in podcast comes across as a real shyster as he seems to think generating tax losses for his investors (and no doubt profits for himself…) is a win win; but got rightly mocked on Twitter:
As of the start of March, this post mostly updates the EM Fund Stock Picks & Country Commentaries (Other International Funds) page containing funds that invest in many international or emerging market stocks (our continuously updated post containing all funds is here) plus some new research starting with some interesting non-EM pieces:
🔬🇨🇳 A Turtle’s Take on China (Ariel Investments) – Christine Phillpotts, Portfolio Manager, Ariel Emerging Markets Value, recently returned from an extensive research trip to China. Her investment conclusions reflect insights gathered through more than 75 meetings with listed and private companies, industry experts and local business leaders, as well as multiple site visits across 12 cities.
🔬🇨🇳 China’s innovation revolution (FSSA Investment Managers) – For centuries, Chinese ingenuity reshaped the world. Inventions such as paper, gunpowder, silk, porcelain and the magnetic compass transformed global trade, science and culture. Today, that spirit of innovation is evident in China’s rapid progress in next-generation technologies, from autonomous vehicles to renewable energy and artificial intelligence (AI).
🇨🇳 ACM Research (NASDAQ: ACMR) – Wet processing technology & products for the semiconductor industry. Silicon Valley & China based. 🇼 🏷️
🇰🇷 SK Hynix (KRX: 000660) – Manufactures, distributes & sells semiconductor products in Korea, China, Asia, USA & Europe. DRAM, NAND storage products, SSD, MCP & CMOS image sensors for server, networking, mobile, PC, consumer & auto applications. 🇼 🏷️
🇨🇳 Tencent (HKG: 0700 / LON: 0LEA / FRA: NNND / SGX: HTCD / OTCMKTS: TCEHY) 🇰🇾 – Technology & entertainment conglomerate & holding company. 🇼 🏷️
🇨🇳 Alibaba (NYSE: BABA) 🇰🇾 – eCommerce, retail, Internet & technology. 🇼 🏷️
🇨🇳 China Mengniu Dairy Company (HKG: 2319 / FRA: EZQ0 / EZQ / OTCMKTS: CIADY / CIADF) 🇰🇾 – Dairy products to Chinese & global consumers. 🇼 🏷️
🇨🇳 Meituan (HKG: 3690 / 83690 / SGX: HMTD / FRA: 9MD / OTCMKTS: MPNGF / MPNGY) 🇰🇾 – Chinese shopping platform for locally found consumer products & retail services including entertainment, dining, delivery, travel etc. 🇼 🏷️
🇨🇳 JD.com (NASDAQ: JD / SGX: HJDD) – Supply chain-based technology & service provider. One of the 3 largest eCommerce platforms in China. 🇼 🏷️
🇨🇳 Luxshare Precision Industry (SHE: 002475) – Global designer & manufacturer of cable assembly & connector system solutions for consumer, automotive, cloud & enterprise applications. 🇼 🏷️
🇺🇸 Apple
🇹🇼 Hon Hai Precision Industry Co (TPE: 2317 / FRA: HHP2 / OTCMKTS: HNHPF) – Foxconn is the World’s largest electronics manufacturer. 🇼 🏷️
🇺🇸 Tesla
🇨🇳 BYD Company (SHE: 002594 / HKG: 1211 / SGX: HYDD / OTCMKTS: BYDDY / BYDDF) 🇨🇳 – Electronics, automobiles, new energy & rail transit. 🇼 🏷️
🇨🇳 Midea Group (SHE: 000333 / HKG: 0300 / FRA: 1520 / OTCMKTS: MGCOF) 🇨🇳 – Manufactures & sells home appliances & robotic & automation systems (Smart Home, Electro-Mechanical, Building Technologies, Robotics & Automation & Digital Innovation). 🇼 🏷️
🇨🇳 Xiaomi (HKG: 1810 / SGX: HXXD / FRA: 3CP / OTCMKTS: XIACF) 🇰🇾 – Consumer electronics & smart manufacturing company. Smartphones & smart hardware connected by an IoT platform at its core. 🇼 🏷️
🇨🇳 H World Group (NASDAQ: HTHT) – Leased & owned or franchised hotel models. Chairman was a co-founder of Trip.com (NASDAQ: TCOM). 🇼 🏷️
🇨🇳 Chery Automobile Co Ltd (HKG: 9973) – Designs, develops, manufactures & sells passenger vehicles. 🇼
