👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Well, the SpaceX IPO finally happened this week...

I feel like this is a seminal moment in the history of capital markets, the ramifications of which have yet to be revealed to us. But they will eventually, and I believe they will be significant.

For no particular reason (h/t Forest Gump), this week I’m vibin’ to The Joker by the Steve Miller Band from 1973. The “space cowboy” line has been stuck in my head for days.

💭 Quote of the Week‌

📈 Chart of the Week

The Quiet in the Index Is the Real Risk

This week’s Chart contains a one-line caption: Worry about individual stocks is at an all-time high. I think the caption has the story backwards.

The line in the Chart shows the spread between two fear gauges.

The VIX measures how nervous traders are about the whole market, the S&P 500, over the next month. Think of it as the price of insurance on the index.

The VIXEQ does the same thing for individual stocks and averages them weighted by market cap. Subtract one from the other and you get how much more it costs to insure a single name than the index. That gap just hit about 30, the widest in more than a decade, up from a long-run norm closer to 10.

Apollo’s Chief Economist, Torsten Slok, sees that as fear of individual companies. I mostly see it as plumbing.

Implied volatility is a major determinant of how options are priced. And prices come from supply and demand, not feelings. Two different things are happening in two different options markets, in my view.

On single stocks, there’s a flood of buying. Retail traders piling into call options on Nvidia and other tech names before earnings. Same-day options on whatever name is hot that week. Dealers forced to buy stocks on the calls they’ve written in order to keep their hedges flat.

All that demand bids up the price of single-stock options, and that shows up as high implied volatility. Some of it is worry. A lot of it is gambling.

On the index, the opposite is happening. There’s now a giant business built around selling index options for income. Covered-call ETFs, buffer products, pensions writing calls every month. All that selling pushes the price of index insurance down, and that shows up as a muted VIX.

In my opinion, the spread is so wide because one market is being bought hard and the other is being sold hard. Worry is part of it, yes. The mechanics of the options market could be most of it.

Now the part that actually matters for investors. The risk worth watching sits on the calm side of the ledger. A VIX at 15 in a market this concentrated, where a handful of stocks carry the whole thing, is not the same animal as a 15 in a broad and participative market. The steady option selling that holds the VIX down works right up until it doesn’t.

That spread will narrow at some point, perhaps significantly. It always has. There are two ways it can get there. Single-stock vol could fall, but I doubt it, because the options-market shifts driving it look structural rather than temporary.

Or... Index vol rises to meet it. That’s the path I’d bet on, and the trigger could be almost anything that wakes the index up from a risk perspective: a crack in one of the megacaps, a rate or inflation scare (or both), a credit event nobody sees coming.

A muted VIX is a sign of confidence, but when that remains the case for too long, confidence becomes complacency. The quiet you see in the volatility of the index is the thing most worthy of worry.

Sources: Apollo Chief Economist (Torsten Slok), “Worry about individual stocks is at an all-time high” (data via Bloomberg, Macrobond); Mandy Xu, Earnings Angst Drives VIXEQ-VIX Index Spread to Record High, Cboe, Oct. 13, 2025; There’s a record disconnect unfolding in the trading pits right now, CNBC, May 29, 2026

🚙 Interesting Drive-By’s 🚙

📉 The Lowest Consumer Sentiment EVER - Ben Carlson on a head-scratcher: sentiment just hit its lowest in the survey’s 75 years, below the GFC and Covid, even with stocks near highs and unemployment at 4.3%.

🤔 If You Can’t Get a Job Today, It’s Your Fault - Auren Hoffman argues the entry-level market isn’t soft (4.3% unemployment, junior hiring up 8.7% at big firms) but mismatched, and what gets you hired now is something you built, not the college brand.

🚀 It’s Hardware’s Turn to Eat the World - Stephen McBride coins “Silicon Industrials,” firms like Tesla, SpaceX, and Anduril that bolt a software brain onto real machines to claim the $93 trillion physical economy that software never touched.

🤔 The AI Boom vs. the Dot-Com Boom - A clear-eyed look at what broke the 2000 bubble and where AI rhymes.

🤔 Quantum Computing: Hype or the Real Deal? - Michael Lebowitz cuts past the 13,000x-faster Willow headlines to the number that governs the timeline: it still takes 1,000 to 10,000 physical qubits to make one reliable one, so a useful machine sits a decade out.

🤔 Venture Capital’s Fourth Turning - Kyle Harrison lands on the number every LP should be staring at: $3.2 trillion of unrealized value trapped in private markets with exits nowhere in sight, which is why 72% of LPs are already cutting allocations.

👋🏼 Parting Thought

Today we celebrate the 249th birthday of our American Flag. 🇺🇸

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

Those of you who’ve followed the Sunday Drive for a while know that I’m a sucker for mashup videos and creative covers.

There’s no particular tie to a theme this week - well maybe a VERY loose tie to the SpaceX IPO.

This week, I’m vibin’ to Dutch opera singer Maria Fiselier’s cover of Eminem’s Lose Yourself. My apologies for some NSFW language. But hey, it’s an Eminem song. 🤷🏼‍♂️

💭 Quote of the Week‌

📈 Chart of the Week

🛰️ The Biggest TAM In History (Maybe)

SpaceX filed its S-1 last month and included a chart that will make every sell-side analyst smile and every skeptic roll their eyes. The company claims a total addressable market of $28.5 trillion. Space and connectivity together: $1.97 trillion. AI: $26.5 trillion.

Yes, they put AI in their TAM. You can debate whether a rocket company belongs in that number. I think the more interesting question is whether space-based data centers are actually possible.

Start with the physical constraints. We tend to picture a data center as a massive warehouse full of servers, chillers, and utility-scale power. That image makes orbital compute sound absurd. But you don’t need to put a warehouse in orbit. SpaceX’s current V2 Mini Direct-to-Cell satellites measure about 7.4 meters by 2.7 meters. An Nvidia NVL72 rack is 2.2 meters by 1.1 meters. We’re already in the right size range. The satellite can carry the rack.

The hard problem is power. A V2 Mini uses about 25kW. An NVL72 needs 135kW, and also has to get rid of that heat. On earth, you run water through chillers. In orbit, you deploy radiator arrays, probably 200+ square meters per rack. That’s not trivial. But it’s an engineering problem, not a physics problem. There’s nothing in the laws of nature that says it can’t be solved.

The use case that makes this work isn’t training and it isn’t the fast inference you need when a human is waiting for a response. It’s agentic inference: AI running overnight jobs, executing multi-step tasks, doing work without a human in the loop. Latency barely matters. Capacity matters enormously. That workload is probably the largest AI market long-term, and it maps well to the physics of orbital compute.

The “stick” is the constraint you might not be thinking about. Terrestrial data center buildout is running into serious community opposition. Zoning fights. Power grid pushback. NIMBY dynamics that globalization never triggered because factories close quietly, but data centers require permits. If enough compute demand materializes and enough communities say no, orbit stops being exotic and starts being the only option with available land.

The risks are real and the assumptions stack up fast. Starship has to work at scale. Chip supply has to remain available and reliable. Demand for compute has to be far larger than it is today. Radiation messes with calculations and every satellite is disposable. A lot has to go right.

But the core question, whether this is physically possible, has a pretty clear answer. It is. Whether SpaceX is the one who pulls it off, and whether the $2 trillion IPO valuation makes sense, are separate questions entirely.

Sources: SpaceX S-1 Filing, SEC EDGAR; Ben Thompson, “The SpaceX IPO and Data Centers in Space”, Stratechery, May 27, 2026

🚙 Interesting Drive-By’s 🚙

🔄 The Math Doesn’t Math - a blunt teardown of the Nvidia-neocloud financing loop, mapped onto 2008. The throughline: when a vendor funds its own demand (Nvidia into CoreWeave, IREN, Nebius, Lambda, Crusoe), reported revenue stops being a clean read on real adoption, and the early-warning signals get suppressed until the correction hits all at once. Gets polemical toward the end, but the circular-financing mechanics are worth the read with the Mag 7 now a third of the S&P.

🏭 Thank God For Data Centers - from Packy McCormick, and a useful counterweight to the piece above. His argument: data centers are the new “Buyer of Capabilities,” the role NASA and the DoD played for the integrated circuit, funding nuclear, geothermal, HVDC grids and other hard tech down the learning curve years early. Even if you think it’s a bubble, he says, the buildout pulls real technology forward. (Paywalls partway in.)

💼 Is AI Going to Destroy Our Lives or Not? - Kyla Scanlon on what AI is actually doing to the labor market. The useful frame: judge a job by its “dimensionality,” the number of distinct tasks it bundles. Low-dimensional roles are exposed; high-dimensional ones threaded with judgment, accountability and taste get more productive. She also lands on the retirement angle, with the AI IPOs (SpaceX included) shaping up as a transfer of risk from insiders to the retail investors and pension funds buying in.

🚗 As Robotaxis Spread, Luxury May Soon Mean Having a Human Driver - a short, sharp companion to the Scanlon piece. As Waymo and Zoox commoditize the driverless ride, the human chauffeur becomes the status symbol, which is why Uber and Lyft are buying up white-glove services even as they add robots. Same Alex Imas insight underneath: when machines make something abundant, the dollars chase whatever still carries a human touch. The kicker: horses didn’t vanish after the car, they became a rich person’s pastime.

🧭 Anti-Aging Points You Backward. Life Design Points You Forward - from Barbara Waxman. The 30 years we’ve added to life expectancy didn’t tack on at the end; they opened up two new stages that need planning, and not just the financial kind. Her sharpest point: beliefs about aging aren’t a soft variable, they’re a biological one.

👋🏼 Parting Thought

The 3rd and final running of the Belmont Stakes in Saratoga Springs concluded this weekend. Now, it’s time for things to get back to normal. 😎

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends!

This past week, I had the privilege of being a panelist at the inaugural Basis Northwest taxable wealth conference in Seattle, WA, hosted by my friend, Brent Sullivan.

It was an wonderfully productive and informative conference, with the added bonus of making a number of new friends and re-connecting with many old ones. I can’t wait until next year!

Now, let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

The week’s theme: the story everyone’s been telling about AI and jobs seems to be wrong, and the data appears to prove it.

This week I’m vibin’ to Fatboy Slim’s Right Here, Right Now. Enjoy.

💭 Quote of the Week‌

📈 Chart of the Week

A Different Story

The narrative around AI and jobs is pretty well established at this point. AI is coming for your job. Wages will fall. Inequality gets worse. It’s a compelling story.

PwC analyzed nearly a billion job ads, thousands of company financial reports, six continents. What they found doesn’t match the story.

Start with productivity, where the conventional wisdom holds that AI hasn’t moved the needle yet. Industries most able to use AI are generating 3x higher growth in revenue per employee than industries with the least AI exposure. Since 2022, when ChatGPT arrived and the world snapped to attention, productivity growth in the most AI-exposed industries has nearly quadrupled. The least-exposed industries? Flat, maybe slightly down.

Wages follow the same pattern. Industries most exposed to AI saw wage growth of 16.7% from 2018 to 2024. Least exposed: 7.9%. Workers who’ve built actual AI skills command a 56% wage premium on average, up from 25% just a year earlier. Every industry PwC analyzed pays a wage premium for AI skills, including mining and construction.

Job numbers are growing in virtually every AI-exposed occupation, including the most highly automatable roles. Growth is slower than in less AI-exposed jobs (38% vs. 65% over five years), but it’s growth. The mass displacement story hasn’t materialized in the data. More recent 2026 academic research puts a finer point on it: industries with higher AI exposure are seeing 3.9% job growth and 4.8% wage growth per standard deviation of AI exposure, with no statistically significant employment declines.

The most surprising finding is what’s happening in automatable roles, the jobs everyone assumed were most at risk. These roles are experiencing the greatest skills disruption, yes. And also growing wages. And job counts. PwC’s read: AI isn’t eliminating these jobs, it’s upgrading them. The customer service agent who handled routine queries now handles complex ones. Automation is changing what people do, apparently making them more valuable in the process.

One caveat worth sitting with. Skills required by employers are changing 66% faster in AI-exposed occupations than in others, and that pace has more than doubled in a single year. The skills workers need are evolving faster than at any point PwC has measured. PwC’s workforce lead put it plainly: core skills used to last 4 to 6 years; in the AI era, they’re morphing every 12 to 18 months.

The gap that’s opening isn’t between jobs that exist and jobs that don’t. It’s between workers who adapt and workers who don’t.

Sources: PwC, “The Fearless Future: 2025 Global AI Jobs Barometer”; ScienceX, Industries most exposed to AI are not only seeing productivity gains but jobs and wage growth too; Dallas Fed, AI is simultaneously aiding and replacing workers, wage data suggest.

🚙 Interesting Drive-By’s 🚙

🧠 The Expertise Paradox (And Why You’re Probably Underestimating Yourself) — The more expertise you’ve accumulated, the harder it is to see its value — because once deeply internalized, it stops feeling like expertise and just feels like thinking. Brian Clark at Further calls it the curse of knowledge, and adds a sharper twist: AI doesn’t commoditize expertise, it amplifies it by handling the execution layer you used to need a team for.

🤔 The Economics of Intelligence — Citadel Securities pushes back on the AI-kills-jobs consensus with actual data: labor displacement isn’t showing up at scale, and AI exposure correlates positively with new business formation. Complement, not substitute.

👴🏼 What’s Better Than Retirement? For Some, It’s Work — One in five Americans 65+ are now employed or looking for work — about 2x the share in 1988 — and most aren’t doing it out of boredom. Denmark is eyeing a retirement age of 74 by 2060; meanwhile, a Gen Z “retirement home” in Malaysia is fully booked. The bookends of the modern work life are getting stranger by the day.

📊 Can the Market Absorb Three Trillion-Dollar IPOs? — A follow-on to last week’s SpaceX index mechanics: US IPO proceeds have exceeded $100B only once in 46 years, and SpaceX, OpenAI, and Anthropic together would clear $180B+ — competing for the same finite Nasdaq-100 passive pool, sequentially. SpaceX prices first and re-weights the index before either lab arrives. The labs don’t get a fresh pool; they get whatever’s left.

🚀 Has the Singularity begun? — Stephen McBride tracks eight exponential curves and asks whether we’re already living in Kurzweil’s whoosh. The stat that stopped me: AI task duration has gone from 36 seconds to 14.5 hours and is doubling every four months. Rational optimism, with receipts.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

The SpaceX IPO is coming. I don’t think it will take long for the stock to be included in the S&P 500 and other indexes and there it will stay. Once you’re in the index, you can check out any time you like, but you can never leave.

This week I’m vibin’ to the Eagles and Hotel California.

💭 Quote of the Week‌

📈 Chart of the Week

A Different Type of Supply Side Economics

This week’s Chart highlights something I’ve been thinking a lot about lately, the SpaceX IPO.

The numbers are pretty straightforward: somewhere between 24% (passive funds only) and 48% (passive plus benchmarked active funds) of SpaceX’s entire post-IPO float will end up in the hands of index funds.

The immediate reaction is to say: great for SpaceX’s stock price. And it probably will be. But the more interesting story, and the one getting little attention at the moment, runs in exactly the opposite direction.

The Concentration Irony

Over the couple of decades, the passive investing boom did something remarkable to the S&P 500. It concentrated it. Every dollar flowing into SPY or IVV gets allocated to every member of the index weighted by float-adjusted market cap. The biggest companies attract the most passive dollars; the more passive dollars they attract, the bigger they get; the bigger they get, the more passive dollars they attract. This is how the “Magnificent Seven” — Apple, Microsoft, NVIDIA, Alphabet, Amazon, Meta, and Tesla — came to represent roughly 32% of the entire S&P 500 heading into 2026.

The passive investing machine built the Mag-7 concentration. It is now, mechanically, about to start unwinding a piece of it, but not because anyone changed their view on Apple’s earnings power or NVIDIA’s AI dominance. It’s because SpaceX is going public and will likely be added to the S&P 500 and other indexes on an accelerated timeline.

The Mechanics

Index funds don’t hold cash. They’re fully invested, always. When SpaceX gets added to the S&P 500, a fund tracking the index must sell a pro-rata slice of every existing holding to fund the SpaceX purchase. There is no other source of capital. The Mag-7 names, being the largest holdings, bear the largest dollar amount of that selling; completely mechanical, completely indifferent to fundamentals, happening across hundreds of funds simultaneously.

Let’s consider the magnitude of this.

SpaceX’s last reported secondary transaction valued the company at approximately $350 billion in late 2024. Since then, Starlink’s subscriber base has continued growing, Starship has matured from spectacle to operational vehicle, and the AI infrastructure narrative has made orbital data centers a serious capital expenditure conversation rather than a science fiction one. A $500 billion IPO valuation is conservative relative to the bull case.

Elon Musk owns approximately 42% of SpaceX. Apply a 25% float assumption at IPO, constrained by Musk’s stake and standard lockup structures, and you get roughly $125 billion in float-adjusted market cap entering the index. Against a total S&P 500 float of approximately $45 trillion, SpaceX arrives at about 0.28% weight.

Every existing member gets diluted by that 0.28%. For the Mag-7, at their approximate current market capitalizations, that translates to roughly $9 billion in forced selling on Apple, $8 billion each on Microsoft and NVIDIA, $7 billion on Amazon, $6 billion on Alphabet, $4.5 billion on Meta, and $3 billion on Tesla — approximately $46 billion in forced, fundamentals-indifferent selling on the Mag-7 from S&P 500 index funds alone.

The Nasdaq 100 Multiplier

Now add the Nasdaq 100. If SpaceX lists on Nasdaq, which is probable, and the math compounds. The Nasdaq 100 is even more concentrated in tech than the S&P 500, so SpaceX’s inclusion weight would be larger, and the names absorbing the pro-rata selling are, again, essentially identical to the Mag-7. QQQ alone runs over $320 billion in AUM. Between S&P 500 rebalancing, Russell 1000 rebalancing, Nasdaq 100 rebalancing, and the benchmarked active funds included in the Chart’s 48% figure, total forced selling across the Mag-7 could approach $80–100 billion spread over a multi-week inclusion window.

I don’t believe this will crater the Mag-7. But it is a meaningful, durable headwind.

Float Creep: The Slow Bleed

Here’s what makes this a multi-year story rather than a one-time event. Musk’s stake doesn’t disappear at the IPO, it gets locked up and gradually freed. As the lockup tranches expire over the 12–24 months following inclusion, SpaceX’s float-adjusted market cap grows, its index weight increases, and passive funds must continue buying more SpaceX, funded by continued selling of everything else. This is a slow, structural bleed disproportionately impacting the Mag-7, one lockup expiration at a time, for years.

Tesla is perhaps the most instructive precedent.

Added to the S&P 500 on December 21, 2020 at a market cap of roughly $650 billion, Tesla triggered an estimated $70–80 billion in passive buying. The stock surged approximately 70% in the weeks leading into its inclusion as front-runners positioned early. What received far less attention was the quiet, sustained pro-rata selling across every other large-cap holding, including several names now sitting in the Mag-7, that followed in the months after.

The SpaceX dynamic isn’t identical: Tesla was already public and had years of established price discovery before index inclusion. SpaceX’s IPO and index admission will likely compress into a much shorter window, concentrating the dislocation. But the mechanics are the same.

The Takeaway: The passive investing machine spent decades concentrating the S&P 500 into seven names. It is about to spend the next several years mechanically diluting them, dollar for dollar, to make room for the next one. And the ones after that, namely OpenAI and Anthropic.

That’s not necessarily a reason to sell the Mag-7. It is a reason to think carefully about what multiple you’re paying for businesses whose largest source of structural demand will have permanent new competitors for those same passive dollars.

Sources: Bloomberg, SPGlobal, Wall Street Journal, Yahoo Finance, YCharts.

🚙 Interesting Drive-By’s 🚙

👀 Tracking the Singularity: Week of May 11th — Peter Diamandis on Anthropic’s 80x Q1 growth, Elon handing over Colossus 1, and the case that AI demand goes to infinity. “The Singularity has a revenue problem (too much demand).”

🚀 AI Data Centers in Space Are No Joke — James Pethokoukis on the SpaceX IPO, Starship V3, and the case that full reusability could make orbital data centers a real piece of AI infrastructure rather than a sci-fi sideshow.

🤔 Artificial Manipulation — Dror Poleg’s counter to the “more intelligence solves everything” narrative: we usually know what to do, we just don’t feel like doing it. The scarce resource isn’t intelligence — it’s coordination and consent — and AI’s real power may be persuading and enforcing at a scale no human institution ever could.

📊 How America Turned Against AI According to the Poll Data: A (Very Big) Compilation — Alberto Romero stitches together every major poll on AI sentiment — Gallup, Pew, Change Research, WaPo-Schar, Marquette, Morning Consult, NBC, Heatmap — and they all point the same way. 71% oppose a datacenter in their area (now more opposed than nuclear plants), 57% say AI’s risks outweigh the benefits, the partisan gap has collapsed, and Change Research clocked a 40-point net swing in a single year. $156B in disrupted projects, 188+ opposition groups, 300+ state bills. Sobering reading for anyone long the hyperscalers — or living near one.

💰 Scott Galloway had the audience. Here’s what he came for. — Two months into his Substack run, Prof G walks through the math out loud: $20M of podcast revenue trades at a 2–3x multiple, but recurring subscription ARR trades at 4–6x — and the whole company re-rates higher when subscription is growing faster than the core ad business. He’s targeting $1M ARR on Substack by year-end. Also drops a contrarian AI call worth the price of admission: “AI, from a valuation standpoint and a labor destruction standpoint, has been vastly overhyped… I think we’re going to see a similar drawdown as the dot-com implosion. I’ve been to this movie before.” A clinic on platform economics, exit multiples, and where your margin is somebody else’s opportunity.

🎓 How to Start a Career When AI Is Doing Your Entry-level Job — Katie Parrott on the squeeze hitting today’s grads: Stanford’s Digital Economy Lab clocks a 13% drop in employment for 22-to-25-year-olds in AI-exposed jobs since late 2022, even as older workers in the same roles held steady. Her four-part survival kit for the Class of 2026 — chase problems not professions, pick one craft and protect it from automation, make things before anyone asks, and stand up your own AI career coach — is the most practical thing I’ve read on entry-level reinvention. A useful counterpoint to Galloway’s view (one drive-by up) that the labor apocalypse is mostly a fundraising technique. Both can be true at once: real damage at the bottom rung, hype at the top of the cap stack.

📚 Kids should learn how to short stocks — Brent Sullivan’s read: tax-aware long/short (130/30, 200/100, etc.) has now crossed $150 billion in AUM, which means the days of advisors and end-clients waving off shorting as “too complicated for normal portfolios” are over. If you’re hiring a manager in this space — or being hired as one — you need the mechanics in your bones. Sullivan points to a free online resource that teaches the next generation how shorts actually work.

👋🏼 Parting Thought

All gave some. Some gave all. 🇺🇸

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the Internet.

🎶 Vibin’

This week the President wrapped his first state visit to China: 200 Boeing planes and a “constructive, strategic and stable” framing on one hand, Xi’s sharp Taiwan rebuke on the other, all against the smoldering Iran war backdrop. Some deals got cut, some ground got lost, which is why this week I’m vibin’ to the Stones who remind us You Can’t Always Get What You Want.

💭 Quote of the Week‌

📈 Chart of the Week

When the Rocket Launches From the Rooftop

This week’s Chart shows the S&P 500’s run from March 27 through May 8, a 16.2% gain in just six weeks, making it the 11th-biggest six-week rally going back to 1950. Rarefied air to say the least.

But the thing that makes this rally genuinely unusual is something I thought was worth discussing. Every other rally on that list, every single one, started from a market that was either bombed out, mid-crash, or with an economy crawling out of recession. 2009. 1982. 1974. 2020. Same setup, every time: panic, capitulation, violent mean-reversion bounce.

Not this one. This rocket launched from the rooftop, or at least close to it. The S&P was not very far below all-time highs when it took off.

So what happened?

I think a few forces converged, and they all served to buoy the market.

First, earnings. Q1 reporting was simply too good to fade. Strong revenue growth and operating leverage, especially in AI-adjacent names, set the stage for higher earnings expectation for the balance of 2026. Breadth was also wider than the headlines suggested.

Second, policy. Despite Kevin Warsh emerging as the next Fed Chair, it appears likely that we could see a bit of a stalemate at the Fed, and we may see them become less active. With rates leaking higher, it appears the equity markets are willing to believe that the bond market, not the Fed, is going to do the hard work of getting inflation down.

Third, tail risks faded. Iran stopped escalating. China posturing softened ahead of the state visit. Risks didn’t disappear; they just stopped getting worse.

Layer on top: a generation of investors trained to buy every dip and chase every rip. The same FOMO mechanic that powered the late-90s melt-up, except this time it’s running over an economy that isn’t even pretending to be in recession.

So what comes next?

Here’s where I’d urge some sober reflection.

The forward-return columns in this week’s Chart show 16% on average over six months, 30% over a year, 79% over five years. But those averages are flattered by the recovery rallies they’re built on.

When you bounce 17% off a generational low, the next five years are likely to look pretty great. When you run up 16% from already-elevated levels, the path forward is murkier. Valuations matter. Positioning matters. And the starting point matters most of all.

I would just say that the best six-week stretch you’ll ever live through is almost certainly the one that makes you forget what risk feels like.

Don’t forget what risk feels like.

🚙 Interesting Drive-By’s 🚙

🏠 You Can Put a Data Center at Your House — But Who Really Pays? — Span and Nvidia want to bolt $500K mini data centers to the side of your house. Untested, unpermitted, and a tell on just how desperate the AI power crunch has become.

💰 State Income Tax Rates — A handy state-by-state cheat sheet. Worth a look for anyone weighing the relocation math in retirement.

💡 AI is the New Netflix — Om Malik flips the broadband narrative: AI is driving the upstream surge the way Netflix once drove downstream. Cloud sync, IoT, and agentic AI are killing the asymmetric pipe.

🤔 Bryan Johnson’s Longevity Hacks — The Don’t Die guy’s latest health playbook. Worth a skim whether you buy the religion or not.

🤓 UrbanKaoberg.com - Part II: Revenge of the “Mullet” — Michael Kao on the trap of AI-built software: professional in front, KAOS in back. The case for why vibe coding requires more engineering, not less, and why the SaaSpocalypse narrative is overrated.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by’s, please send them along or tweet ‘em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

If you enjoy the Sunday Drive, I’d be honored if you’d share it with others.‌‌

If this was forwarded to you, please subscribe and join the other geniuses who are reading this newsletter.

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👋🏼 Hello friends!

It’s Mother’s Day, so let us celebrate her… and enjoy another Sunday Drive around the internet.

🎶 Vibin'

Another week of solid corporate earnings reports. Another week of fairly ambiguous geopolitical non-action in the Middle East. Another week of generally strong economic numbers.

…and the markets kept on Truckin’.

The vibe this week just sorta self-identified. Enjoy this run while it lasts.

💭  Quote of the Week‌

📈  Chart of the Week

There Is No “Lump of Labor”

Friday’s April employment report came in well above expectations: nonfarm payrolls rose +115,000 versus a consensus estimate of just +55,000, while the unemployment rate held steady at 4.3%. March was revised up to +185,000 — the first back-to-back monthly gains in nearly a year, and a meaningful tell that the so-called “low-hire, low-fire” labor market may finally be finding its footing again.

You wouldn’t know any of this from the discourse.

Open your media feeds and you’ll find an endless parade of AI Doomers warning that this is the calm before the storm; that white-collar work is about to be hollowed out, that entry-level roles are already disappearing, and that a “permanent underclass” is being engineered as we speak. The AI Job Apocalypse now seems to be its own sub-genre on Substack, YouTube, and other media outlets.

I’m not buying it. And frankly, neither is the data.

This week’s Chart, courtesy of Deutsche Bank, by way of Haver Analytics and the U.S. Census, does a lot to dismantle the current AI doom narrative.

It shows the composition of U.S. employment by sector going back to 1850.

In 1850, roughly two-thirds of American workers were in agriculture. By 2025, that figure was about 2%. Mining, logging, and even manufacturing followed similar arcs.

And yet through every wave of disruption: the tractor, the assembly line, electrification, the PC, the internet, the U.S. economy didn’t run out of jobs. It ran out of certain jobs, and then created entirely new categories to take their place.

This is the “lump-of-labor fallacy“, the assumption that there is a fixed amount of work to be done, and that anything (or anyone) capable of doing more of it must necessarily leave less for the rest of us.

It’s the same premise that fueled Luddite anxieties in 1811, Keynes’s failed 1930 prediction of a 15-hour workweek, and the AI panic of today. It defies everything we know about how humans, markets, and economies actually behave.

When the cost of a key input collapses, demand expands. Quality rises. New products become viable. Whole new industries get built. Jevons Paradox, in a nutshell: demand growth driven by lower cost supply of inputs.

What’s striking is that the current data is already confirming all of this.

The Yale Budget Lab’s April report concluded that AI’s impact on the labor market thus far “largely reflects stability, not major disruption.”

A recent Atlanta Fed working paper found that more than 90% of firms estimate no impact on employment from AI over the past three years.

Goldman’s analysis suggests AI augmentation effects more than offset substitution effects. On corporate earnings calls, mentions of AI-as-augmentation are outpacing AI-as-substitution by roughly 8 to 1.

Meanwhile, software engineering job postings are inflecting upward. AI-related capex has triggered the biggest run on skilled trades and data center construction labor in a generation.

New business formation is running at a pace that closely correlates with AI adoption. The scoreboard is decidedly not the one the doomers have been forecasting.

The Takeaway: The shape of the labor market always changes. That’s the whole story this week’s Chart tells, and it has been the story for 175 years running. AI will eliminate some tasks, compress some roles, and inflict real pain on workers caught in the middle of the transition; that part is genuine, and it deserves to be taken seriously, particularly with respect to retraining and displacement support.

But the leap from “some jobs will disappear” to “permanent mass unemployment” requires you to assume that human ambition, curiosity, and wants are about to suddenly stop expanding. They aren’t. They never have.

There is no fixed lump of labor. There never was. And if Friday’s jobs report is any indication, the labor market is quickly and quietly doing exactly what it has done since 1850 — remaking itself, one sector at a time.

Sources: BLS Employment Situation – April 2026; Deutsche Bank / Haver Analytics / U.S. Census (March 4, 2026); a16z News – David George, “The ‘AI Job Apocalypse’ Is a Complete Fantasy” (May 6, 2026); Yale Budget Lab (April 16, 2026); Federal Reserve Bank of Atlanta Working Paper 2026-3.

🚙 Interesting Drive-By's 🚙

💡 America’s Electricity Gap

🤔 The Longevity Revolution is Here

📈 The Marks Aren’t High Enough - Ruminations on Equity Values, Public and Private

💰 Wall Street Readies Data Center IPOs as AI-Linked Debuts Surge

💸 AI’s Looming Talent Retention Problem

👋🏼 Parting Thought

To all the mother’s out there, especially the mother of my children… Thank you. ❤️

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

This past week saw continued strong reported earnings and outlooks from many companies, including some of the largest tech and AI related names. That seemed to outweigh concerns about a divided Fed that doesn’t seem inclined to lower interest rates any time soon, continued uncertainty in the Middle East, and higher energy prices. The markets, in particular the S&P 500, continued to make new all-time highs.

So, this week, I’m vibin’ to the 5th Dimension’s 1968 hit, “Up, Up and Away.” ‘Cuz why not?

💭  Quote of the Week‌

📈  Chart of the Week

Good Things Come in Small Packages

For the better part of the past decade, the story of the U.S. equity market has been written almost exclusively by the largest companies on the planet. The Magnificent 7. The hyperscalers. The trillion-dollar club. Meanwhile, the smallest, scrappiest, most speculative names, the micro-caps, were left for dead.

The narrative was clean, simple, and seemingly bulletproof: small caps are uninvestable, micro-caps even less so. Too much floating-rate debt. Too little profitability. Too vulnerable to AI displacement. Too irrelevant in a world where capital concentrates relentlessly at the top.

The eulogies were premature.

This week’s Chart shows the relative performance of iShares Micro-Cap ETF (IWC) to Vanguard Mega-Cap ETF (MGC) going back to 2008, with the 200-week moving average overlaid. On Friday, IWC printed a new all-time high in absolute terms — and the relative ratio against mega-caps reached its highest level in more than three years.

We also see from the Chart that micro-caps have reclaimed a couple of very important technical levels: the 200-week moving average, beneath which they had been trapped since early 2020 and the pivot lows from the COVID-era washout. That’s the kind of breakout that reverses what has been a structurally negative relative trend for nearly half a decade. Five years of “small is dead” sentiment, finally may be undone.

Now consider the market structure problem.

The Magnificent 7 alone command a combined market cap measured in the tens of trillions of dollars. The entire IWC universe, every micro-cap name combined, is a rounding error by comparison.

When sentiment shifts, when allocators decide they’ve been too concentrated for too long, when active managers go hunting for differentiated returns, all of that capital has to squeeze through a doorway roughly the width of a turnstile to get to the other side.

There simply isn’t enough float to absorb the flow without moving prices, sometimes violently. The crowd is large. The doorway is narrow. Math does the rest.

This is precisely why micro-cap leadership matters out of proportion to the segment’s economic weight. Micro-caps don’t lead when investors are scared. They lead when investors are willing. Their outperformance is the financial equivalent of betting the longshot at Saratoga, it only happens when the crowd genuinely believes in the upside.

The cross-asset signals appear to confirm investors’ risk-on sentiment. Credit spreads remain fairly tight. High yield seems firm. Volatility remains generally contained. This market seems to be deliberately expanding its risk appetite outward, from the largest names to the smallest.

The Takeaway: The “small caps are uninvestable” consensus was crowded, comfortable, and now appears to be wrong (for now). Over the year or so, I’ve mentioned on several occasions of my Goldilocks scenario whereby equities overall do okay but the participation broadens out. That appears to be happening, maybe even accelerating. Combine this with a structural mismatch between the size of the trade and the size of the asset class, and you have the makings of a move that doesn’t have to be subtle to be sustained. Good things sometimes really do come in small packages.

🚙 Interesting Drive-By's 🚙

💡 Compute Is the New Cash

🤔 What Will Be Scarce?

📈 Jobs Are Dead. Long Live the $10mm Niche

💰 Long Term Money - from Morgan Housel

👀 You Are the Most Expensive Model

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends. To quote a line from the 1986 movie, Ferris Bueller’s Day Off, “Life comes at you pretty fast.”

Earlier in the evening on Saturday, this week’s edition of the Sunday Drive was complete and scheduled to go out at the usual 8am Sunday morning delivery time.

Then the happenings at the White House Correspondent’s Dinner occurred.

There will be a lot of information and discussion on this matter in the coming days, and I don’t have anything substantive to offer at the moment.

I ask that you understand that this week’s edition of the Sunday Drive was written prior to the events of Saturday night. There’ll be a time to reflect and comment, but I hope you’ll read this edition of the Sunday Drive with that in mind.

🎶 Vibin'

After all the geo-political headline driven market turmoil of the last couple of months, financial markets seem to have recently found the fortitude to look past the news and focus on corporate earnings.

Thus far, Q1 earnings season has been quite solid. The coming week will see a number of mega-tech companies report their results, and the market appears to be anticipating continued strength from that group’s earnings as well.

So with some sense of relief (for now), this week I’m vibin’ to The Rolling Stones’ 1980 hit, Emotional Rescue. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

The 99.7% Discount: AI, Aging, and the Reinvention of Work

Take a long look at this week’s Chart.

In 2005, launching even a modest business required $40,000 or more in upfront costs: legal documents, a website, marketing strategy, business plan, logo, financial model. Today, the same toolkit costs roughly $100. That’s a 99.7% drop in twenty years, with most of the collapse occurring in the last 36 months.

If you’re not a small business owner, you might shrug at this. You shouldn’t. Because the chart isn’t really about startups — it’s about the option value of leaving the system, and who is finally able to exercise that option.

The conventional story about AI and work is that it’s coming for the young. The recent college graduate, the entry-level analyst, the junior associate, those are the jobs that get hollowed out first.

There’s truth to that, and the implication is worth flagging: the traditional apprenticeship ladder is being compressed at the bottom. Where do you learn the craft if AI is doing the entry-level work? I don’t think anyone has a good answer yet.

But there’s a less-told story that’s quietly perhaps more important, and it shows up in the data.

According to Peter Diamandis, the mean age of founders behind the top 0.1% fastest-growing companies in America is 45, not 25. Americans aged 55 to 64 are one of the fastest-growing segments of new entrepreneurs, and the 70-to-80 cohort has shown the steepest acceleration since 2020.

From November 2025 through January of this year, Americans filed 1.56 million new business applications — the highest three-month total since the government began tracking the data in 2004.

That’s not a tech-bro story. That’s a demographic story.

Here’s why it matters.

For decades, the implicit deal in white-collar work was: trade your twenties and thirties for skill, your forties and fifties for compensation, and exit through a retirement door that, increasingly, nobody can comfortably walk through.

Longer life expectancies, gutted defined benefit plans, and equity markets that don’t always cooperate have made the traditional glide path more aspirational than actual.

What AI changes is the exit ramp.

Brian Clark, writing at Further, frames the shift cleanly: the most valuable workers in the AI economy are no longer “knowledge workers”, they’re outcome producers. Information is now essentially free.

What AI can’t do is own the result. It can analyze your client’s marketing problem; it can’t be held accountable for solving it. It can draft the strategy; it can’t guarantee the implementation. That accountability, backed by judgment, pattern recognition, and a network built over decades, is precisely what older professionals already have. AI is demolishing the team-of-fifteen that used to be required to translate that judgment into deliverables.

The people best positioned to thrive in the AI economy may not be the digital natives. They may be the analog veterans with AI as a force multiplier.

I’ll admit my bias here. I retired after a 22-year career at Eaton Vance at the end of 2021 and launched New Lantern Capital the following year. Shortly after that, I joined forces with Investment Research Partners, another young entrepreneurial venture and a group of kindred spirits. This week’s Chart isn’t an abstraction to us, it represents a tailwind we’re currently riding.

The economic and investing implications could be very interesting. We’re entering a period where the labor market bifurcates more sharply: the top of the experience curve and the bottom of the cost curve both win. The middle, mid-career knowledge workers who don’t own outcomes and aren’t senior enough to direct them, gets squeezed. And if a meaningful share of 55-to-75-year-olds opts into entrepreneurship rather than retirement, the second-order effects on consumer spending, healthcare demand, real estate, and Social Security claiming behavior are all non-trivial. Speculative, but certainly worth watching.

The Takeaway: The chart at the top isn’t a story about software costs. It’s a story about agency. For the first time in modern economic history, the optimal time to start a business may not be at 25 — it may be at 55, or 65, or 70. The barriers haven’t just fallen; they’ve inverted. Experience used to be expensive to monetize without a firm behind you. Now it’s the most leverageable asset you own.

If you’ve spent thirty-five years accumulating expertise and you’re wondering what’s next, the data is telling you something. You owe it yourself to listen.

Sources: Peter Diamandis, “Can Anyone Become an Entrepreneur?” (Metatrends, 04/23/2026); Brian Clark, “From Knowledge Worker to Outcome Producer in the Age of AI” (Further, 04/21/2026).

🚙 Interesting Drive-By's 🚙

🤔 Has Private Equity Become a Ponzi Scheme?

💡 From Knowledge Worker to Outcome Producer in the Age of AI

⁉️ Will Private Credit Cause the Next “Great Financial Crisis"?

👀 Playing God: How Scientists Are Reengineering the Genetic Code of Life

💸 The Incoming Fed Chairman Thinks Deflation Is A Major Risk

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

This past week, equity markets continued to recover from the March lows amid the seemingly improved situation in the Middle East (subject to change at any moment, of course).

So I thought an upbeat bouncy tune would be the right vibe for this week. I believe that The Heart of Rock & Roll by Huey Lewis & The News fits the bill quite nicely. I hope you’ll agree.

💭  Quote of the Week‌

📈  Charts of the Week

Similar Setup, Very Different Story

The S&P 500 is back at all-time highs. You’d be forgiven for assuming nothing has changed. But look at this week’s two Charts above and you’ll see something worth paying attention to: price is essentially where it was, but the forward P/E is not.

That gap is the whole story this week.

The first Chart tells it visually. It shows the S&P 500 and forward Price/Earnings ratio, both indexed to 100 for comparability. The S&P 500 peaked on January 27th, 2026. The forward P/E peaked even earlier, back on October 28th, 2025. Today, the market is at an all time high. But the forward P/E? It’s roughly 10% below the October peak. The market has recovered its price losses, but it has not recovered its valuation losses. That’s not a contradiction. It might actually be the most important sentence in this week’s piece.

The math is simple: if price is flat-to-up but the P/E multiple is down, earnings estimates must have moved higher. And they have, significantly.

Heading into Q4 2025, the forward 12-month P/E stood at 22x, above both the 5-year average of 20x and the 10-year average of 19x. Today, it sits at 19.5x, roughly splitting the difference. That’s a meaningful compression in the multiple, driven almost entirely by rising earnings expectations.

Where are those estimate revisions coming from?

Most of the upward revisions has been concentrated in two sectors: Information Technology and Energy. IT has seen the largest dollar-level increase in earnings of all eleven sectors since December 31st, with Energy a close second. Within technology, the move has been sharp, driven largely by semiconductor names like Micron and Oracle, whose AI-related earnings revisions have been nothing short of extraordinary. The semiconductor buildout underpinning AI infrastructure doesn’t seem to be slowing down, and the earnings estimates are reflecting that reality.

For Q1 2026, Information Technology is projected to report earnings growth of +45.0% year-over-year, with Materials at +24.2% and Financials at +15.1%. Those are not small numbers.

The laggard? Health Care. The sector is expected to report earnings decline of -9.8% in Q1 2026, though the bulk of that drag traces back to a Merck one-time acquisition charge — ex-Merck, the sector’s growth rate would be closer to +2.8%. Energy has been the wild card, whipsawing on geopolitical developments and oil price volatility.

Here’s the comparison that really matters.

When the S&P 500 recovered to all-time highs in late June 2025, following the spring’s tariff-driven selloff, the forward P/E sat at approximately 22.5x. The April 8th, 2025 low had carried a forward P/E of 18.0x, meaning the entire recovery was accompanied by a dramatic 24% expansion in the market’s earnings multiple.

This time around, the script is different. The market has recovered on earnings growth. That should, or at least could, prove to be a more durable foundation.

The asterisk is that forward estimates are exactly that: forward. Analysts are currently calling for full-year 2026 S&P 500 earnings growth of 17.4%. That’s an ambitious number in an environment where tariffs, geopolitical uncertainty, and slowing consumer demand could all have an impact. Guidance this earnings season — not the Q1 headline numbers — will tell us whether those estimates are grounded in reality or still anchored to a world that no longer exists.

The Takeaway: The market’s return to all-time highs is being powered by earnings revisions, not multiple expansion. Compared to the June 2025 recovery, today’s valuation setup is meaningfully more attractive, but the quality of those forward estimates is now the central question. Watch what companies say about the next six months. That’s where the real data lives.

Sources: FactSet Earnings Insight | RBC Wealth Management | Investing.com | IG International

🚙 Interesting Drive-By's 🚙

🤔 The Organizational Singularity Is Here

💡 The Trillion-Dollar Perception Gap Between Silicon Valley and Normal People

👀 Collab Holdings - A different approach to private equity

😳 Intelligence Goes Physical

😡 AI Will Be Met With Violence, and Nothing Good Will Come of It

👋🏼 Parting Thought

2026 has been a tough year for guys named Claude.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Time for another Sunday Drive around the internet.

Before we start, I want to address an omission from the 208th edition published two weeks ago. The March 29th edition marked the 4 year anniversary of the Sunday Drive. I am grateful to all of you who have come along on this journey with me. Let’s keep going…together.

🎶 Vibin'

This week’s vibe has a double meaning.

Next month, my whole family will be reunited once again in Saratoga Springs, NY. After nearly two years away, the daughter-bear is moving back home and we couldn’t be more excited.

Also, this past week, the entire team at Investment Research Partners gathered in Charleston, SC for our semi-annual get-together, days filled with business updates, strategy sessions, good food and team building. Being a largely remote organization, these events are especially meaningful and rewarding. Our team has now grown to 12 but we are a tight-knit group and feeling more and more like a family as time goes by.

So this week, I’m vibin’ to the classic 1979 hit from Sister Sledge, We Are Family. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

The Dow’s Hall of Fame Problem

I found this week’s Chart to be not just interesting, but also borderline comical.

Since August 2020, Exxon Mobil, unceremoniously dumped from the Dow Jones Industrial Average after 92 consecutive years as a member, has returned roughly +271%. Salesforce, the company brought in to replace it, is down approximately -32%. That’s a gap of more than 300%, and it’s not a fluke. It’s a pattern.

The Dow committee removed Exxon at the worst possible moment: the COVID oil crash, with shares near $42, at peak pessimism about the future of fossil fuels. They added Salesforce at peak euphoria — a software darling trading at roughly 110x earnings. The committee was, in effect, selling the unloved and buying the beloved. Classic buy high, sell low.

And they’ve done it again. In November 2024, Intel, down 54% on the year and the Dow’s worst performer, was shown the door and replaced by Nvidia, which had just completed back-to-back years of gains of 240% and 170%. Returns since? Intel +40%, Nvidia +26%. The script is writing itself.

This isn’t just anecdotal. Arora, Capp, and Smith (2005) studied all Dow changes from 1929 through 2006 and found that in 32 of 50 cases, the deleted stock outperformed its replacement, with removed stocks averaging annualized returns of 15.9% versus 11.5% for additions over the following year.

Rob Arnott at Research Affiliates documented an even starker version of this in the S&P 500: additions entered at valuation premiums averaging over four times those of the stocks they replaced. He was so convinced by the data that he launched an ETF in 2024 specifically designed to buy index deletions and hold them for five years.

The structural reason is simple. The Dow uses purely subjective criteria: “reputation, sustained growth, and interest to a large number of investors.” Translation: companies get added when their cultural moment peaks. By the time a business is iconic enough for the Dow, its best growth is usually behind it. Walgreens, added June 2018, lost 63% in 2024 alone before being taken private. AIG, added in 2004, needed a $182 billion government bailout four years later. Microsoft and Intel, both added November 1, 1999, at the peak of the dot-com bubble, spent the better part of a decade underwater from their inclusion prices.

To be clear, not every deletion is a buy. Kodak, Sears, and Bethlehem Steel were all removed before going bankrupt. The signal is strongest when the removal reflects cyclical distress rather than secular decline: Exxon during COVID, GE during restructuring, Intel after missing the AI cycle. Those are the ones where the committee is extrapolating a bad trend at precisely the moment it could be about to reverse.

The Dow has a hall of fame problem: it inducts companies after they’ve already won. That’s great for plaques. It can be terrible for returns.

Source: StockCharts.com | ZeroHedge

🚙 Interesting Drive-By's 🚙

🤔 The Age of AI May Be the Best Argument Yet for the Liberal Arts

💡 70 Is the New 53 — And Voiceover Might Be the Real Fountain of Youth

👀 AI Is Already Showing Up in the Hard Data

💣 The Hole - Private credit is the fuse. The bomb is underneath the life insurance industry

😡 Why Does Everyone Hate AI? Luddites, Maslow’s Hierarchy, and a PR Crisis

👋🏼 Parting Thought

H/T to the Dragon Slayer…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy an Easter Sunday Drive around the internet.

Before we get started, I’d like to share a professional update.

Shortly after my retirement from Eaton Vance a little over four years ago, I launched the New Lantern Hedged Equity Fund, a privately offered fund available only to accredited investors. The fund is an equity-based alternative to fixed income allocations or equity allocations in need of de-risking.

I’m happy to announce that this past week, the fund celebrated its three year anniversary, an important milestone in the life of any investment vehicle. If you’re interested in learning more about the fund’s strategy and performance, HERE is our most recent video.

I’m also excited to tell you that later this year, we plan to offer the strategy to a broader audience with the launch of our own ETF. More to come…

Now let’s start driving.

🎶 Vibin'

With all the goings on around the world, particularly in the Middle East, and the daily (hourly?) shifts in associated narratives, this week I’m vibin’ to Sheryl Crow’s Everyday is a Winding Road. Hang in there…

💭  Quote of the Week‌

📈  Chart of the Week

The Tide That Moves Everything

I found this week’s Chart very thought provoking. It tracks the Global Liquidity Cycle for advanced economies going back to 1965. Sixty years of data. The pattern is interesting and shows a near-rhythmic 65-month wave, roughly 5 1/2 years from trough to trough, pulsing through markets like a heartbeat.

Understanding this cycle, I’d argue, is one of the most underappreciated edges that long-term investors can have.

Here’s the core idea: global liquidity: the aggregate availability of money and credit across central banks, commercial banks, and cross-border capital flows, doesn’t move randomly. It oscillates. And those oscillations have historically lined up remarkably well with the broad rhythm of risk asset performance.

When liquidity expands, financial assets generally flourish. When it contracts, not so much.

Think of it like the tide. You can have a beautiful beach, perfect weather, and a great boat, but if the tide is going out, you’re going to have a harder time than you expected.

Which brings me to where we are right now.

As the Chart shows, the current cycle likely peaked somewhere in Q4 2025 or early 2026. The absolute level of global liquidity remains enormous, some estimates put it near $188 trillion. But what matters most to markets is the rate of change, not the level. And the momentum is fading.

Several forces are converging. The Fed has ended quantitative tightening, but the ECB, Bank of England, and Bank of Japan are still shrinking their balance sheets. China’s PBOC has been injecting stimulus, providing a partial offset, but the net effect across advanced economies is a decelerating liquidity environment. Layered on top of that: trillions in global debt requiring refinancing over 2026–2028, rising bond market volatility, and recently a firmer dollar, all of which tend to tighten financial conditions.

None of this means a crash is imminent. Liquidity cycles create headwinds, not cliffs. But it does argue for a more selective, risk-aware posture, particularly for portfolios that were positioned for the tailwind of an expanding cycle.

For investors approaching or already in retirement, this matters enormously. The sequence of returns risk that threatens retirement portfolios is often amplified at exactly these inflection points in the liquidity cycle.

The tide is going out. That doesn’t mean you can’t swim — it just means you need to know where the rocks are.

Source: CrossBorder Capital.

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🤔 Financialization Has Corrupted the Financial Industry

💡 Viktor is an AI Co-Worker For Your Entire Team

👀 How Japan Has Changed Over the Last 20 Years

💥 Ending the Quarter With a Bang

💰 Kevin Warsh and a New Monetary Policy Regime

👋🏼 Parting Thought

Happy Easter ✝️

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

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🎶 Vibin'

Markets are trying to process and price the uncertainties coming from the current conflict with Iran, in particular the knock-on effects of an extended closure of the Strait of Hormuz. What happens in that particular piece of geography over the coming weeks and months is a major pressure point for the global economy.

With that in mind, this week I’m vibin’ to the 1982 collaboration of Queen and David Bowie, Under Pressure, because that’s how investors, policy makers, and pretty much everyone are likely feeling these last few weeks.

💭  Quote of the Week‌

📈  Chart of the Week

Down But Not (Washed) Out

The S&P 500 closed last week at yet another year-to-date low, extending what is now its longest weekly losing streak since the 2022 bear market. If your social media feed and the financial headlines are any indication, you’d be forgiven for thinking the market is crashing.

But here’s the thing: the data isn’t confirming the panic, and to me, that’s actually the bearish part of the story this week’s Chart is telling us.

The Chart tracks NYSE New Highs minus New Lows, plotted beneath the S&P 500 going back 10 years. There’ve been four prior episodes where this breadth indicator crashed to deeply negative readings: the COVID collapse, the 2022 rate shock bear market, the 2023 growth scare, and the 2025 correction. Each of those red spikes downward corresponded with genuine, capitulation-level selling, the kind of indiscriminate, get-me-out-at-any-price washout that, historically, sets up powerful recoveries.

The S&P 500 is down 7% year-to-date.

Now look at the circled reading on the far right of the Chart. That’s where we are today: +11.

Not deeply negative. Not a washout. Not capitulation.

The distinction matters enormously. Feeling oversold and being oversold are two very different things. The market can absolutely bounce from here, and may well do so. But in my opinion, the breadth evidence is not yet consistent with a durable bottom. Prior lows that stuck were accompanied by breadth readings that looked far worse than what we’re seeing now. We haven’t seen that kind of broad-based, indiscriminate selling yet.

There’s more. Return dispersion across S&P 500 stocks has surged to more than 5 standard deviations above its long-term average, a level only seen during the Dot-Com crash, the Global Financial Crisis, and the COVID reopening. That kind of internal fragmentation is more characteristic of a market still searching for its footing than one that has found it.

Meanwhile, the Equal Weight S&P 500 and the Russell 2000 are barely clinging to their 200-day moving averages, while the S&P 500 and the Nasdaq have already slipped below theirs. The divergence between cap-weighted and equal-weighted indices is telling us something: this isn’t just a big-cap problem, but large caps are making it look worse than the average stock experience.

The macro backdrop isn’t helping. Volatility is elevated, though not extremely so, across all major asset classes simultaneously: equities, bonds, currencies, commodities. That kind of cross-asset volatility is unusual and typically signals that investors are repositioning broadly, not just rotating within equities.

The Takeaway: Sentiment is bearish. The headlines are scary. The losses are real. But the breadth data is telling us that the market hasn’t yet experienced the kind of panic-driven washout that typically marks a durable low. That doesn’t mean we can’t rally from here; markets do what they want. It means that investors looking for an “all clear” signal should probably wait for the data to confirm what the headlines are already screaming.

As I’ve said before, when you least expect it, expect it. The market has a way of delivering the most pain to the most people. Right now, it feels like many investors are positioned for a quick recovery. That alone gives me pause.

Patience, not panic. But not complacency either.

Source: YCharts | The Chart Report | Ned Davis Research

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👋🏼 Parting Thought

Umm… Tiger, it might be time to let someone else do the driving from now on.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

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👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

There’s certainly a lot of turmoil in the world these days, especially in the Middle East. It’s a confusing time, but I find it helpful to hold to my conviction that, in the end, faith and optimism always carry the day.

So this week, I’m vibin’ to Toto’s classic hit, Hold The Line.

💭  Quote of the Week‌

📈  Chart of the Week

Why Fertilizer Could Be the Real Inflation Story

This week’s Chart tells a familiar story: energy prices are surging. Heating oil up 107%. Brent crude up 56%. WTI crude up 44%. The boxes drawn around those numbers tell you what the market is focused on. But there may be a far more consequential story hiding just below the surface.

The closure of the Strait of Hormuz, now entering its fourth week following U.S.-Israeli strikes on Iran, isn’t just an oil shock. It’s a fertilizer shock. The agricultural reckoning that follows could potentially dwarf the energy price spike in both duration and breadth.

Nearly 50% of global urea exports originate from countries west of the Strait and transit through that critical waterway. Urea is the world’s most widely used solid fertilizer, the input that makes large-scale corn, wheat, and soybean production economically viable. Prices for urea have already surged more than 30% since the war began, and at least 21 ships carrying nearly a million metric tons of fertilizer cargo are physically stranded in the Gulf.

The timing couldn’t be worse. This disruption falls in the middle of spring planting season, which generally runs from mid-February to early May in the Northern Hemisphere. Even if the Strait reopens soon, restarting production and transport for fertilizers could take weeks, weeks that Northern Hemisphere farmers simply do not have.

What does this mean for grocery bills? More than many realize. Higher fertilizer costs squeeze grain yields, and grain is the feedstock for virtually all livestock. Cattle, hog, and poultry producers are all downstream consumers of corn and soybeans. The Chart shows live cattle up 14% and lean hogs up 8.6% over the past year, and those figures predate the full fertilizer crunch working its way through the supply chain. Chicken, not shown in the chart, faces similar pressure.

Oxford Economics has already raised its Q2 2026 fertilizer price forecast by roughly 20%, with risks “skewed to the upside.” Energy costs represent approximately half the total retail food bill, meaning the inflationary impulse from this shock is broad-based and persistent, not a one-month blip in the CPI.

The energy commodities in the Chart are attention-grabbing. But I’m watching the agricultural commodities. The second-order effects of a fertilizer shortage are slower, stickier, and harder to reverse. I believe that’s the inflation story for the next 12-18 months, and I don’t think that it’s been fully priced in yet.

Sources: Center for Strategic & International Studies, The Fertilizer Institute

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🤷🏼‍♂️ What the Heck Is a Zero-Employee Business?

👋🏼 Parting Thought

Yesterday was “Agony of Defeat Guy” Day.

56 years ago, on March 21, 1970, a 22-year old Slovenian ski jumper Vinko Bogataj took the iconic spill at the World Ski Jumping Championships in West Germany and it was forever memorialized in the intro to ABC’s Wild World of Sports.

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

St. Patrick’s Day is right around the corner. To honor my wife’s heritage as well as my good friend, MW, who is an American, but also an Irish citizen, this week I’m vibin’ to The Irish Tenors’ version of When Irish Eyes Are Smiling. ☘️

💭  Quote of the Week‌

📈  Chart of the Week

When the Bond Market Gets Nervous

Every once in a while the bond market clears its throat. When it does, equity investors should at least look up from their screens.

This week’s Chart shows the $MOVE Index, often referred to as the bond market’s equivalent of the VIX. It measures implied volatility in U.S. Treasury options, essentially how uncertain investors are about the future path of interest rates. After spending much of mid-2025 in a relatively calm range, the index has surged to roughly 95, marking new nine-month highs.

That’s not a trivial move.

The Treasury market sits at the center of the global financial system. Every discounted cash-flow model, every mortgage rate, every corporate borrowing cost ultimately traces back to the Treasury curve. When volatility in that market rises, it usually means investors are suddenly less confident about where interest rates are headed.

And when the discount rate becomes unstable, risk assets tend to get wobbly.

Historically, spikes in the MOVE Index have often preceded turbulence in risk assets. The logic is straightforward: equity valuations depend heavily on the assumed path of interest rates. When bond traders begin aggressively repricing that path, a stock market narrative built on stable discount rates can unravel quickly.

On the other hand…

Bond volatility does not automatically mean equities are in trouble. In fact, there are plenty of episodes where the MOVE spikes while stocks remain surprisingly resilient. The bond market is often reacting to macro uncertainty that may not immediately translate into weaker corporate earnings.

In other words, the bond market can be nervous without the economy actually breaking.

What did catch my attention in the Chart, however, is the trend. The MOVE didn’t jump from calm to chaos overnight. It bottomed near the mid-50s earlier in the year and has been grinding higher for weeks before this latest breakout. That kind of slow-building rise in volatility suggests a deeper disagreement forming about the future path of policy rates.

In my experience, persistent uncertainty tends to matter more than single-day spikes.

There’s also a structural factor worth considering. Over the past two years the Treasury market has been absorbing an enormous amount of new supply while the Federal Reserve has stepped back as a marginal buyer. That shift alone can create more volatility in rates, even if the underlying economy remains stable.

So what should stock investors do with all this?

Probably not panic.

But it is a reminder that the calm backdrop for interest rates that supported equity valuations through much of 2025 may be fading. When bond volatility rises, the market’s margin for error shrinks, particularly for long-duration assets where valuations depend heavily on future cash flows.

Think mega-cap growth stocks, speculative tech and healthcare, and anything trading on distant earnings expectations.

The bond market hasn’t necessarily sounded an alarm yet.

But it has definitely raised an eyebrow.

And when the largest and deepest market in the world starts getting uneasy, it’s usually worth paying attention.

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🤷🏼‍♂️ Something Feels Weird About This Economy

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

Given the tensions around the world, and in particular the Middle East, I thought it might be nice to vibe to something that reminds us that love conquers all.

H/T to my daughter for surfacing On My Soul, just released a few days ago by Bruno Mars. I hope you enjoy it because you’ll likely hear it played at every wedding you attend for the next 20 years.

💭  Quote of the Week‌

📈  Charts of the Week

History Doesn’t Repeat, But It Rhymes

As I write this week, I fully acknowledge that the situation in the Middle East is very fluid and the shelf life of this piece could be very short. However, given the importance of current events, I thought it was still worth discussing.

This week’s Charts tell a story that feels eerily familiar, and yet fundamentally different.

The first Chart shows ship traffic through the Strait of Hormuz, one of the most important energy arteries on the planet. In February 2026, daily transits ranged between roughly 100 and 123 large vessels. By the first week of March, that number collapsed to just four or five ships per day, effectively a shutdown.

That’s not a disruption. That’s a chokepoint going dark.

If the Strait remains closed for an extended period of time, the economic implications are obvious. Roughly a third of globally traded crude exports originate from producers that rely on the Strait, including Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates. Meanwhile, Qatar sends about one-fifth of global LNG exports through the same corridor. When that artery tightens, energy prices move fast. Crude prices have already surged, and refined fuels: diesel, jet fuel, and LNG have jumped even faster.

For investors with a sense of economic history, the parallels with the 1973 Oil Embargo and the 1979 Oil Crisis are obvious. Those events triggered the stagflationary spiral that defined the decade: rising energy costs, falling real incomes, and central banks trapped between inflation and recession.

But the second Chart highlights a crucial difference between then and now.

Since 1990, the energy intensity of global GDP, the amount of energy required to produce a dollar of output, has fallen dramatically. Oil intensity alone has dropped by roughly half, while coal and natural gas show similar long-term declines. Decades of technological progress, efficiency improvements, and the shift toward service-based economies have fundamentally changed the relationship between energy consumption and economic growth.

In the 1970s, oil wasn’t just transportation fuel, it was embedded everywhere: industry, heating, electricity, chemicals, and manufacturing. When supply collapsed, economic output collapsed with it.

Today, the system has more resilience. Electric vehicles, more efficient aircraft, improved building standards, and digital services all reduce the oil-to-GDP link. That doesn’t mean an energy shock wouldn’t hurt. It simply means the direct economic damage is smaller than it once would have been.

The real risk, as always, lies somewhere else.

Repeated shocks: the pandemic, war-driven energy disruptions, supply chain fragmentation, and now geopolitical conflict all begin to change expectations. When households and businesses start assuming that inflation will remain high, behavior changes. Wages adjust, but not usually enough. Pricing adjusts. Policy becomes harder.

That’s the real ghost of the 1970s.

Not the oil itself, but the psychology that followed.

Sources: Energy Institute Statistical Review of World Energy; Lloyd’s List/Seasearcher

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🚀 Why Are Startups Growing Faster Than Ever Before?

📈 The Rise of Hyper-Creators

👋🏼 Parting Thought

Does anyone else feel like the world is being held together these days with duct tape and chewing gum?

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

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👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

Many of us “of a certain age” grew up in a world where there was a fairly well defined path. Get a good education. Find a good firm to be a part of, and contribute to. Build a career.

But these days, there seems to be much to worry about in terms of what many professional paths might look like in the future, much that doesn’t seem logical or sensible or predictable.

So this week, I’m vibin’ to Supertramp’s classic, The Logical Song.

💭  Quote of the Week‌

📈  Chart of the Week

On Second Thought…

For decades, venture capital operated on a simple exit playbook: build, scale, and eventually distribute gains through an IPO or strategic sale. This week’s Chart shows that exits have become “a third, a third, a surprising third”. The playbook seems to have been quietly rewritten. Secondary transactions, just 3% of exits a decade ago, now rival IPOs and M&A as a core liquidity channel.

At its core, a secondary transaction is simply the transfer of existing ownership. No new capital reaches the company. Instead, liquidity flows to founders, employees, early investors, or limited partners (LPs) who want to rebalance risk or return capital. What’s changed is not the mechanism, but the motivation and scale.

One innovation engine has been the General Partner (GP)-led continuation fund. Rather than selling crown-jewel assets into a weak IPO or M&A market, managers now roll them into new vehicles, offering existing LPs a choice: cash out or stay invested. This vehicle appears to have solved a structural mismatch: venture funds have finite lives, but great companies compound over decades. Continuation funds effectively refinance duration.

A second form, LP-led secondaries, have evolved from distress sales into portfolio management tools. Large allocators now actively shape vintage exposure, geography, and sector weightings through secondary sales.

Direct secondaries add a third layer, enabling employee liquidity programs that double as talent retention tools, a subtle but powerful shift in how private companies compete for human capital.

Macro forces accelerated the shift. When the IPO window effectively closed in 2022 and distributions evaporated, secondaries filled the void. Liquidity didn’t disappear; it rerouted.

Today’s estimated $130–150 billion annual secondary market across private assets reflects institutional acceptance, tighter pricing spreads, and specialized buyers ranging from dedicated secondary funds to sovereign wealth capital. (Source: Pitchbook).

The implications extend beyond venture capital. A robust secondary market reduces liquidity risk, lowers the cost of capital, and may ultimately support higher private-market allocations in institutional portfolios. In effect, secondaries transform venture capital from a blind-pool, long-duration bet into a more actively managed asset class.

Speculatively, we may be watching the emergence of what might think of as a true private-market yield curve, where duration, liquidity, and pricing can be actively traded rather than passively endured. If so, the “surprising third” isn’t just a new exit path. It’s a structural evolution in how capital compounds outside public markets.

On second thought, the real story isn’t that secondaries grew. It’s that venture capital may have finally built a liquidity mechanism sophisticated enough to match the scale of the ecosystem it created.

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📈 The Number Is Going Up: AI Speculation, Market Concentration, and the Upward Vacuum of Value

👋🏼 Parting Thought

The AI angst that many folks are wrestling with these days…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy another Sunday Drive around the internet.

🎶 Vibin'

Recent events in my life have reminded me just how grateful I am to have such an amazing family - both personally and professionally. My friends and colleagues at Investment Research Partners are an amazing group and I count myself as exceedingly fortunate to have them in my life.

So this week, I’m vibin’ to Neil Young’s classic, Heart of Gold.

💭  Quote of the Week‌

📈  Chart of the Week

Timing is Everything: The Lag Between Productivity Growth and Job Growth

One mistake investors often make is assuming that economic progress and labor-market health move in lockstep. History suggests otherwise. Productivity can surge while job growth stalls.This week’s Chart shows just such an example: strong real GDP growth alongside weakening payroll gains deep into an expansion.

This divergence isn’t a bug. It’s a feature of technological change.

Technology Moves Fast. Labor Markets Move Slowly.

Major technological shifts, from electrification to the internet to today’s AI buildout, follow a familiar pattern. Productivity improves first. Employment adjusts later.

Why? Because capital moves faster than human skills evolve.

A firm can deploy AI copilots, automation software, or robotics in months. Retraining a workforce takes years. Educational pipelines, credentialing systems, and social expectations are slow-moving institutions. The result is a temporal mismatch: output rises while labor growth lags.

We saw versions of this in the early 2000s productivity boom, and again in the post-Global Financial Crisis recovery, when GDP rebounded faster than employment. What feels different today is the speed and scope. AI doesn’t just automate routine tasks, it compresses the skill curve across knowledge work, from coding to legal research to marketing.

In other words, we are not just automating labor. We are redefining what it means to be skilled.

The Jobless Boom as a Transitional Phase

The phrase “jobless boom” sounds a bit dystopian, but I think it describes a transitional phase rather than a permanent condition.

When productivity surges, firms initially produce more with the same or fewer workers. Margins expand. Output rises. Earnings growth accelerates.

But over time, new industries emerge. Entire job categories, unimaginable at the outset, begin to absorb displaced or sidelined labor. The lag can span years or even decades. The automobile eliminated blacksmith jobs but created mechanics, highway engineers, and logistics networks. The internet destroyed travel agencies but birthed digital marketing and e-commerce ecosystems.

The key variable is timing.

Investors who misread this lag risk extrapolating short-term labor weakness into long-term economic pessimism, or conversely, assuming that productivity gains will immediately translate into wage growth and consumption strength.

Neither happens on schedule.

AI and the Collapse of Barriers to Entry

I also think there is an underappreciated second-order effect at work here: AI may lower barriers to entrepreneurship faster than it displaces jobs.

Historically, starting a business required capital, specialized labor, and operational infrastructure. Today, AI tools can function as a fractional workforce, handling coding, design, customer service, marketing copy, and financial modeling.

A single founder can now operate with leverage that once required a team of ten.

This shift matters. If displaced workers can redeploy themselves as entrepreneurs, enabled by AI, the employment recovery may not come from traditional payrolls but from a proliferation of small, highly productive firms.

Think fewer employees per firm, but more firms overall.

Investment Implications: Watching the Lag

For investors, I think the main takeaways are:

• Productivity booms do not immediately translate into job growth.

• Labor-market weakness during technological transitions may mask underlying economic strength.

• The future of work may skew toward AI-enabled entrepreneurship rather than traditional employment recovery.

Timing is everything—not just in markets, but in how innovation diffuses through society.

And if history rhymes, the current “jobless boom” may prove less a warning sign than a waypoint on the path to a more productive and more decentralized economic future.

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🤓 R.I.P. chatbot era (2023 – 2025)

📈 Software Not a Macro Problem

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

As we all know, yesterday was Valentine’s Day. ❤️ So, I’m vibin’ to a collaboration between Ed Sheeran and Taylor Swift - Happy Valentine.

Only it’s not…

Ready for the plot twist? The whole thing - the song, the video, all of it - was generated by AI.

It’s absolutely amazing to me how quickly things are moving in the world of creative content creation. There are those who are afraid of it, but I am not one of them. I choose to embrace it and imagine how beautiful the creative works of the future will be given the tools that are rapidly becoming available to creators. Enjoy.

💭  Quote of the Week‌

📈  Chart of the Week

Navigating Markets Through the Lens of Dunning–Kruger

The first Chart above shows a graphical version of Gartner’s Technology Hype Cycle that is very familiar to many investors. Interestingly, it is quite similar to the Dunning-Kruger effect shown in the second Chart.

In a world of AI-driven angst and optimism, retail investor-driven meme stocks, concentrated stock indexes, and fiscal and monetary policy uncertainty, I think it’s worth considering how investors ought to be thinking about the navigational challenges of the current environment.

The Behavioral Cycle Behind Market Cycles

The Dunning–Kruger effect describes a cognitive bias in which individuals with limited knowledge overestimate their competence, while true expertise often brings humility. Markets can exhibit the same arc:

• Technology Trigger / “Know-Nothing” Phase → A new theme emerges (AI, crypto, EVs). Early adopters understand the nuance; the crowd does not.

• Peak of Inflated Expectations / “Mt. Stupid” → Prices detach from fundamentals as narrative overwhelms analysis.

• Trough of Disillusionment / Valley of Despair → Reality intervenes. Capital is destroyed. Weak hands exit.

• Slope of Enlightenment → Survivors refine business models; investors regain discipline.

• Plateau of Productivity / Sustainability → Cash flows validate the theme; long-term winners compound.

If you think about it, this is really less a technology cycle than a human behavior cycle.

Using Dunning–Kruger as an Investing Construct

Most investors try to identify what will win. But I think a more durable edge can come from understanding where we are on the curve.

1. Avoid buying confidence; buy competence.

The best opportunities often emerge when confidence collapses but underlying adoption continues. Think Amazon post-2000 or cloud software in 2009–2012. Today’s analogs may exist within AI infrastructure, industrial automation, or energy systems supporting data centers.

2. Narrative intensity is a contrary indicator.

When taxi drivers, TikTok influencers, and your dentist are day-trading the same theme, you are likely near the peak. Elevated retail participation and options activity often signal late-cycle speculation rather than early-cycle discovery.

3. The valley is where institutions are built.

Capital scarcity forces discipline. Companies shift from “growth at any cost” to unit economics and free cash flow. This is where durable compounders are born.

4. Expertise requires surviving the valley.

Investors who endure drawdowns without abandoning their original thesis develop the pattern recognition that separates process from outcome.

A Practical Framework for Today

I think that we may be oscillating between the peak and early disillusionment in parts of the AI ecosystem, particularly in application layers, while infrastructure and power generation may be earlier in the slope of enlightenment. However, it does seem as though semiconductors may still be at or near the peak of expectations.

Rather than attempting to time changes in market sentiment, investors might consider:

• Scaling into positions during narrative fatigue

• Favoring balance sheets over storytelling

• Tracking adoption metrics instead of price momentum

• Separating enabling infrastructure from end-user hype

Final Thought

Markets don’t simply price cash flows, they also price confidence. The Dunning–Kruger lens reminds us that the greatest risk is not ignorance, but the illusion of understanding. Investors who recognize where confidence diverges from competence can potentially create a structural investing edge.

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💰 Anthropic’s Historic $30bn Funding Round

👋🏼 Parting Thought

A (half) joking comment on the challenges facing Gen Z…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s take a Sunday Drive around the internet.

Many of you know that I started The Sunday Drive as a way to stay connected with friends and former colleagues when I retired from Eaton Vance at the end of 2021. It was and is a way to share more of myself and my life beyond just investing. A couple of examples are HERE and HERE. Today I do something similar.

This past week, the Lord called my 90-year old mother home. Now she is at peace and forever in His loving embrace. ✝️❤️

Please forgive the brevity of this edition.

🎶 Vibin'

This week, I’m vibin’ to one of the songs that will be played at my mother’s funeral this week, Alan Jackson’s version of I’ll Fly Away.

💭  Quote of the Week‌

📈  Chart of the Week

Many charts allow for various interpretations. This week’s Chart is one of those.

According to the Chart, insider selling is at a 5-year high. The obvious and most typical interpretation is that company executives and other insiders see trouble ahead for their companies.

However, I think it’s also worth considering that after such a dramatic rise in equities over the last several years, it’s understandable that insiders would want to take some chips off the table for the sake of diversification and prudent long term planning.

As is most often the case, the answer is that there is no single answer but likely a combination of the two.

Not particularly insightful, I know. But I thought it was an interesting chart worth adding to the mosaic of our investment thinking.

🚙 Interesting Drive-By's 🚙

💯 You Spent Your Whole Life Getting Good at the Wrong Thing

📉 The Fall of the Nerds: The age of humans who could think like computers is drawing to a close.

🤔 The End of Illusion: Financial Repression Unmasked

💡 A Plan For UHI (Universal High Income)

💰 The Devil Wears Prada 2: How a Fashion Film Quietly Turns Cultural Buzz Into Sales

👋🏼 Parting Thought

Sending positive energy to Santa Clara, CA this evening…

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison

👋🏼 Hello friends! Let’s enjoy a Sunday Drive around the internet.

🎶 Vibin'

Given the frigid temperatures we’ve been dealing with the last several weeks, I’m very much looking forward to tomorrow - Groundhog Day - and saying to Punxsutawney Phil, “Please, please, please don’t see your shadow!”

Although the song is in a very different context, this week I’m vibin’ to Foreigner’s classic hit, Cold As Ice and praying for an early Spring.

💭  Quote of the Week‌

📈  Chart of the Week

Navigating AI Risk: Returns and Real Growth

I ran across a very interesting piece from The Carlyle Group entitled, “Bubbles as a Feature, Not a Bug” and I thought it was worth discussing.

As markets grapple with the scale and speed of artificial intelligence adoption, the real economic story is often obscured by headline-chasing narratives about bubbles and “irrational” valuations.

But from a strategic investment and macro lens, the Carlyle piece offers a compelling reframing: what looks like a price bubble may instead be the early pricing of a deep structural shift in economic productivity, a shift that ultimately routes value far downstream from the hardware and frontier infrastructure that has historically been bid up in early cycles.

1) Future Investment Returns: Where Value Actually Accrues

The historical analogies in the piece — from electrification to the internet — are instructive precisely because they show how broad, diffuse returns emerged over long term horizons:

• In the electrification era of the early 20th century, early electrification hardware stocks soared, then corrected. The much richer, sustained returns accrued to firms that harnessed electricity to reshape production and consumption. Durable goods manufacturers, for instance, delivered double-digit, decade-plus returns after broader infrastructure prices peaked.

• Similarly, the 1990’s internet boom’s real economic payoff was downstream, in efficiencies unlocked across logistics, retail distribution, and network effects that traditional valuation frameworks initially missed.

Applied to AI, this suggests that the near-term froth in frontier compute and platform equities is less an outright bubble than the market’s early attempt to price an expansive reshape of enterprise economics. Strong returns could actually come from:

• incumbents who integrate AI into core workflows and unlock persistent margin expansion,

• firms that leverage AI to restructure supply chains and data-enabled business models,

• new categories of services that monetize the attention, automation, and prediction layers above base compute.

From an investment perspective, one theme is pretty clear: half-life matters. Early hardware and semiconductor returns may be fleeting, but the more durable returns could come from structural adopters and business model reinventers, the downstream beneficiaries that capture long term productivity gains.

2) Productivity-Led Growth: Beyond the “Bubble” Narrative

Most productivity narratives around AI focus on automation lifting output or lowering labor costs. But the Carlyle analysis points to a broader lens on productivity:

• AI’s largest impact is not just efficiency but the redefinition of workflows, supply chains, and decision-making itself, the equivalent of factories moving from steam to electrified lines, or retail moving from bricks to connected digital ecosystems.

• Even when AI doesn’t directly transform results (e.g., basic data center demand), it catalyzes productivity improvements, accelerating digitization projects, data capture initiatives, and analytic infrastructures that firms had long postponed.

• Productivity growth isn’t uniform; it diffuses through sectors over years. That’s the pattern seen in electrification and early internet adoption: initial investment surges unlock a cascade of follow-on gains across manufacturing, distribution, and consumption platforms.

So perhaps the smarter way to think about AI’s economic lift for the economy is not as a capex supercycle, but as a multi-stage productivity wave: first infrastructure, then workflow transformation, then ecosystem expansion. The result is latent GDP growth driven as much by organizational redesign as by the underlying technology itself.

Bottom Line

I don’t view AI as a binary bubble or bust story. Like electricity and the internet before it, AI’s economic value will migrate downstream, creating years of compound returns and productivity expansion that only become obvious in hindsight. The near-term speculative froth reflects the market’s attempt to price innovation, but tomorrow’s durable winners will be those capturing the enhanced economic output unlocked by AI-driven productivity, not simply owning the frontier compute stack.

Source: Carlyle: Bubbles as a Feature Not a Bug (Navigating AI Risk)

🚙 Interesting Drive-By's 🚙

💯 The AI Jobs ‘Bloodbath’ That Keeps Getting Postponed

📈 The AI Boom Loop: Recursive machine intelligence could turn automation into compounding innovation

💡 Small Is the New Big

🎯 Participation Inflation: When Participation Gets Expensive

🤔 Empathy, Housing, AI, and the Trick of Nostalgia

💰 Retirement Isn’t Just Financial, It’s Existential

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed. The views expressed in The Sunday Drive are mine alone, and are not necessarily the views of Investment Research Partners.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

Share The Sunday Drive by Mike Allison