Excess Returns The Most Extreme Speculation in 40 Years | Richard Bernstein on What It Means for Markets
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Nov 5, 2025 
Richard Bernstein, CIO and CEO of Richard Bernstein Advisors and a portfolio manager with decades of experience, explores the current speculative market landscape. He argues that while we are in a highly speculative environment, unique opportunities exist for patient investors. Bernstein delves into profit cycles versus economic cycles and highlights the potential resurgence of non-U.S. quality stocks. He also discusses the pitfalls of investor behavior, inflation dynamics, and the resurgence of value investing as well as long-term trends like deindustrialization.
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Broad Speculative Excesses Present Hidden Opportunities
- Richard Bernstein says we're in a historical environment for speculation across many asset classes, not just AI stocks.
- He also argues fundamentals-driven opportunities are abundant for patient investors ignored by the speculative crowd.
Profit Cycle Trumps Economic Cycle
- Bernstein's profit cycle focuses on corporate profit growth as the driver of market rotations, not GDP growth.
- Profit cycles boom and bust faster than economic cycles and more directly link to stock returns.
Profit Cycle Experienced A Tariff Hiccup
- The profit cycle peaked then slowed, with tariff-driven disruptions causing a temporary hiccup.
- Bernstein sees profits decelerating again after that abnormal bounce.