Large-Cap Tech vs. Small-Cap Risks

In this episode of Excess Returns, we sit down with John Tinsman, portfolio manager of the AOT Growth and Innovation ETF (AOTG). John shares how his investing journey began, the lessons he learned from both successes and failures, and how those experiences shaped his current investment philosophy. We dive deep into the concepts of low marginal cost, profitable growth, digital toll booths, and the transformative impact of AI. John also discusses his approach to valuation, position sizing, and why he believes large-cap growth and technology will continue to lead in the years ahead.

Main topics covered:

• John’s path from personal investing to launching an ETF

• Lessons learned from early stock picks and market-making experience

• The power of low marginal cost businesses and long-term compounding

• How AI is reshaping software development, innovation, and profitability

• The importance of revenue and earnings growth in stock selection

• Digital toll booths as the future of software business models

• Differences between profitable vs. unprofitable growth companies

• Why technology leadership today differs from the dot-com era

• The role of sectors, valuation, and position sizing in portfolio construction

• John’s views on growth vs. value, large-cap vs. small-cap, and future innovation trends

Timestamps:
00:00 The riskiest thing in investing
02:00 John’s background and early investing journey
05:00 Lessons from Apple, Boeing, Visa, and Potash
10:00 Insights from agriculture and value investing
12:00 AI’s impact on software development and innovation
16:00 Sectors, classifications, and thematic approaches
18:00 Comparing AI disruption to past bubbles
21:00 Profitability in today’s tech companies
22:00 Will the top companies stay dominant?
26:00 Large-cap vs. small-cap technology investing
28:00 Growth vs. value in today’s market
30:00 Demographics, Buffett’s lessons, and sector shifts
34:00 Value vs. software companies
35:00 Digital toll booths explained
37:00 Growth sustainability and digital infrastructure
40:00 Semiconductor cycles and long-term demand
44:00 Screening for growth and low marginal cost
47:00 Sell discipline and valuation checks
49:00 Position sizing and portfolio management
51:00 ETF tax benefits and structure
53:00 Where AOTG fits in portfolios
54:00 One belief peers disagree with
56:00 One lesson for the average investor
57:00 Closing thoughts and outro