Real S&P 500 earnings per share went from roughly $5 in 1921 to about $250 today — a 50-fold gain over a century.
Jonathan Treussard's point in citing it: every single time along that climb that earnings merely stopped growing, investors panicked anyway. The market's real risk was never the news cycle.
"The reality is sure, read the news, but watch the earnings."
Treussard runs Treussard Capital Management, holds a PhD in economics, and recently watched one fund go from managing $45 billion to $10 billion in a single week — a real-time case study, he says, in what actually breaks a market built on debt-financed growth.
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👤 Guest: Jonathan Treussard, founder of Treussard Capital Management and host of the "Treussard Talks" podcast
🎙️ Host: Chuck Jaffe, longtime financial journalist and former Boston Globe personal-finance columnist who has hosted Money Life since 2004
🧩 Other segments: Roy Schwarz, co-founder of Axios and co-author of Simplify, and Stan Hathcock, known as Stan the Annuity Man
📰 Published: 16 September 2026 on YouTube · recorded before that day's Federal Reserve decision
🔴 YouTube | ⏱️ length not available
Key Takeaways
Real S&P 500 earnings have grown roughly 50-fold since 1921, and that record — not the news — is what the market is actually pricing
Every time along that climb that earnings merely plateaued, not even fell, investors panicked
He watched a fund go from managing $45 billion to $10 billion in a single week from one margin call
It was long AI-related names and short software, and a brief software rally was enough to wipe it out
War is inherently inflationary, and this one is hitting the one channel — energy — that transmits it fastest
His portfolio framework reduces to two buckets: a risky "blob" of stocks, and TIPS as the closest thing to a risk-free asset
The test: could you tolerate that blob being 30% smaller next year without changing your life
AI already competes directly with 60 million white-collar workers and a $2 trillion annual wage bill
The credit market and the equity market are pricing two different AI questions, and only one gets attention
How much AI-buildout debt the system can absorb versus whether the equity story gets overhyped, the way railroads and dot-com stocks were
He deliberately declined to forecast the Fed's decision on the show taped hours before it
His own framing: this isn't a prediction exercise, it's about positioning so a short-term shock can't do you permanent damage
1. Read News, Watch Earnings
Jaffe opened by asking how worried Treussard actually is, given a market that keeps climbing a wall of worry — tariffs, the war with Iran, and interest rates up more than a percentage point since late February.
His baseline claim is simple. "In the face of worry, the market is doing what it has been taught to do when it's trying to be rational, which is looking at earnings. And earnings have been, pretty strong certainly since they dipped in 2022."
The conclusion follows directly. "So to just address upfront the question of this wall of worry, the reality is sure, read the news, but watch the earnings."
The corollary is what to actually watch for. If earnings are what has kept the rally alive, the real risk is a change in that one input — not sentiment on its own.
2. Real Earnings, Up 50x
To make the earnings case concrete, Treussard reached for a century of market history.
The data source is a well-known one. Citing economist Robert Shiller's long-run earnings series, he said real S&P 500 earnings collapsed after World War I, when they were "roughly some version of $5 a share." At last read, that figure was "something like 250."
That is a 50-times gain in real terms over a century. "Real earnings have grown over the course of a century to the tune of 50x, which is gigantic." He called it one of American capitalism's great successes and the real explanation for the S&P 500's long-term track record.
The historical pattern is what matters going forward. On that climb from 5 to 250, every time earnings so much as stopped growing, "there was massive concern, often tipping into panic." His advice: worry, but "worry about the right thing" — a plateau or a marginal dip in earnings, not the news cycle.
3. What's Testing the Market
Jaffe pushed on how the market's rising costs and elevated rates connect to the earnings story, and Treussard pointed to the bond market as the place where the tension is showing up first.
Financial conditions have genuinely tightened. He cited a 2029 Treasury note that yielded about 3.6% in March and roughly 4.7% by the time of taping — a move he called "much more expensive money" for anyone borrowing against that maturity.
He described the market as testing its own limits. "I think the market has been testing itself. it's playing chicken with itself. It's now officially taken the 10-year yield at and above 5% for, a minute to see what it feels like."
His framing of the mechanism is direct. "Tighter financial conditions will make it less appetizing, less appealing to conduct economic activity." The real spook factor, in his view, is when "something breaks somewhere" — not simply higher rates on their own.
4. A $45B-to-$10B Week
The clearest illustration Treussard gave of "something breaking" was a fund he watched implode in real time.
The setup was a leveraged, debt-financed bet. He described a firm that was long a slate of AI-related names and short the software sector as a whole, financed with fixed debt against an uncertain outcome.
A brief rally in the wrong direction was enough. When software companies had a short rally, the position faced a margin call it couldn't meet.
The scale of the unwind was extreme. "That's how you go from, managing $45 billion on Monday to managing$10 billion on Friday." He put it plainly: "not a good week for anybody."
He was careful to frame the lesson. The episode "happened to not be systemic, risk realization," he said, but it shows how a piece of unrollable debt inside the AI trade could quickly turn sentiment: "yeah I don't love what's going on."
5. War as an Inflation Machine
Asked how much of today's rate pressure connects to the conflict with Iran, Treussard framed it as a structural point about war rather than a one-off.
His claim is general, not political. "War in all of its forms throughout history is an inflationary process." Spending limited resources to destroy other productive capacity is inherently inflationary, he said, whichever war is under discussion.
This war hits the fastest transmission channel there is. It happens to be "tapped into the one economic pathway" that generates inflation fastest — "namely the energy market" — which is why rates are rising even as consumers feel the pinch at the pump.
He connected it back to the AI trade. A "decent fraction" of what has pulled the market forward is corporate spending turning the economy into an AI economy, financed by both public and private borrowing — the same debt-driven fragility behind the $45 billion fund's unwind.
6. The TIPS Framework
Asked how investors should actually prepare rather than simply worry, Treussard offered a two-bucket model he credits to a family member's own book.
His starting principle is simplicity itself. "Keep it simple and stupid is incredibly valuable," he said — a clean framework with "10 lines to make decisions on," not a hundred variables.
The book behind it is his own family's. He is, in his words, "a PhD economist and the son-in-law" of an economist who wrote a book called Worry-Free Investing — "the point is very simple," he said, and explicitly "not financial advice."
The model reduces a portfolio to two pieces. One is a risky blob — for most people, simply broad stock exposure. The test, if that blob were 30% smaller next year: "freak out or would I be okay?"
The second piece is Treasury Inflation-Protected Securities. He called TIPS "closest thing we have to a risk-free asset" in real, after-inflation terms — currently pricing something like 3% real, before taxes. Knowing that number, he said, would "get you pretty far down the line" toward being confident he could tolerate whatever came next.
He noted the trade-off honestly. TIPS taxation "makes people upset if you don't hold them" in retirement accounts, and the instrument isn't perfect — but it tells you the market's actual price for consumption safety.
7. Structure, Not Bill Gross
Jaffe raised a different guest's call from the previous day's show — that bonds are entering a rough multi-decade stretch — and asked Treussard to weigh in.
He didn't dismiss the call. He noted that bond investing has just come off "a 40-year bond rally," running "from 1980 to, some version of 2020," so a multi-decade reversal is a reasonable premise, even if he wouldn't put a number on it himself.
But he said it misses what his own clients actually want. His clients, he said, are "not looking to be the next Bill Gross" and are "not actually running a bond fund." What they want is to sustain a known level of spending over a defined horizon.
His closing point was about structure, not return. "If you buy a bond at 5% you know what your return is going to be." You might see something else outperform along the way and feel regret, he said, but structure itself "has a lot of value in this world."
8. AI's Two Fronts
Asked how AI itself changes the picture, Treussard split his answer into the real economy first, then markets.
The labor exposure is concrete and immediate. He cited "60 million white collar workers in this country" with a wage bill of "some version of $2 trillion a year," and said AI now gives employers a genuine outside option: if the economy slows, "I could see CFOs across the nation say," in his telling, "Man, it'd be nice to save even a fraction of that $2 trillion in wages."
He connected it to the "SaaSmageddon" thesis — that software companies who thought subscription revenue gave them a permanent moat are now facing AI-built competitors: "a startup out there that used AI" to build something cheaper.
Markets face two separate AI questions, in his framing: the credit market is asking how much AI-buildout debt the system can absorb, while the equity market is repeating a familiar hype pattern. "Whether it's railroads or tech stocks in the [1990s], we all have a tendency to get kind of hyped up on new technology" — the destination may be right, he said, but the path there is usually exaggerated.
He closed on the same note he opened with. Recorded hours before the Fed's decision, he declined to forecast it: "I don't know if I'm worried, if I'm not worried... there are a lot of ways to make very smart investment decisions that are very poorly timed. And that's the challenge here."
Bonus Insights
Jaffe's own rule of thumb on rate hikes, stated before the interview: historically, a market shrugs off the first one or two hikes in a cycle — "up a year later" — but three or more hikes is when things "starts to get scary."
The interview was recorded blind on purpose. Both host and guest agreed not to speculate on the Fed's same-day decision: "It would have been the shortest lived thing ever, especially if we were wrong."
A different guest's bond call got a name-check. Jaffe referenced technical analyst Ryan Redfern of Shadow Ridge Asset Management, who had told the show the day before that markets are "3 to four years into a 40-year bond cycle" he expects to be poor for bonds.
Treussard's bottom line is that the market's real vulnerability isn't the headlines feeding the wall of worry — it's the debt quietly financing the AI buildout underneath the earnings that are actually holding the market up, and the discipline that matters most is positioning a portfolio so a short, sharp shock can't do lasting damage.
Products, Companies & Tools Mentioned
Treussard Capital Management (Jonathan Treussard's firm; he also publishes the newsletter "Wealth Empowered" and hosts the "Treussard Talks" podcast)
Books & Resources Mentioned
Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals (The two-bucket risky-assets-versus-TIPS framework Treussard uses with clients, credited to a family member's own book)
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