The Average Return That Never Comes | Sam Ro on 10 Stock Market Truths Investors Get Wrong

In this episode of Excess Returns, we sit down with Sam Ro to revisit his widely read post “10 Stock Market Truths” and explore how each principle holds up in today’s market. From the long game of investing to short-term risks, valuations, AI, and earnings, Sam shares a timeless framework for navigating markets and separating noise from signal. Topics covered: • Why the long game is undefeated • Short-term volatility and how to prepare for it • The myth of average returns • Asymmetric upside in markets and stocks • AI as both opportunity and risk • Earnings as the ultimate driver of stock prices • Why valuations don’t predict the next year • The role of uncertainty and hidden risks • Turnover and evolution within the stock market • Why the stock market isn’t the economy Timestamps: 00:00 Average returns are misleading 02:00 Introducing Sam Ro 02:15 Truth #1: The long game is undefeated 08:40 Truth #2: You can get smoked in the short term 14:20 Do markets have a government backstop? 18:00 Truth #3: The myth of average returns 23:00 Truth #4: Asymmetric upside 28:00 AI as macro and micro driver 33:00 Truth #5: Earnings drive stock prices 36:30 Truth #6: Valuations won’t tell you much about next year 51:40 Truth #7: There will always be something to worry about 55:20 Truth #8: The destabilizing risks are the ones people aren’t talking about 01:05:00 Truth #9: There’s a lot of turnover in markets 01:11:00 Truth #10: The stock market isn’t the economy 01:20:00 Closing thoughts