Excess Returns · Oct 18, 2026 · 1h 3m · 55m saved
With Paisley Nardini, Strategist at Tema ETFs
Photo via temaetfs.com
About 73% of S&P 500 companies were trading below their 50-day moving average in early October, Paisley Nardini, strategist at Tema ETFs, told Justin Carbonneau and Jack Forehand on Excess Returns.
The index itself has barely moved. Paisley says that calm comes from a handful of mega-caps, and that the real drawdown of this cycle has already happened in the stocks underneath them.
"This rising tide lifts all boats that we've become accustomed to over the last couple years is starting to break down." — Paisley Nardini
Paisley's firm runs thematic ETFs that hold listed stocks alongside pre-IPO stakes in companies such as SpaceX, so her view of concentration comes from building portfolios meant to sit beside an index fund.
The full interview is covered here so you can skip it. 1 hour 3 minutes of audio, 8 minutes of reading.
Here are the 7 calls that matter.
Key Takeaways
More than half the S&P 500 is in a meaningful drawdown while the index and the VIX look calm
Bond prices have not hedged stock losses since 2022, but Paisley holds bonds for their income
Prediction markets are a source of information, not only a bet, and Jack says they have beaten election polls
Hyperscalers have issued about $450B of AI debt this year, the kind of leverage Paisley ties to past crises
40% of small caps now have negative earnings, against about 15% in the 1990s
The S&P 500's 500 names behave like about 50, so Paisley does not count it as diversified
Tema holds private companies inside daily-traded ETFs and charges nothing beyond the expense ratio
1. Breadth Has Already Cracked
Paisley opened on breadth. With about 73% of S&P 500 companies below their 50-day moving average, she argues that this cycle's drawdown, plausibly the 15% to 20% typical of a midterm-election year, has already happened across most of the index. It has not shown up in the cap-weighted headline because a few mega-caps are holding it up.
Paisley Nardini says the VIX understates the risk in most portfolios
"How can you say... 50-plus percent of the underlying index is in a meaningful drawdown or bear market, but there's no volatility in the market?" — Paisley Nardini
Smaller companies that depend on capital spending and outside funding have taken the brunt of higher rates. Because individual stocks are moving in different directions, their swings offset each other at the index level, which keeps the VIX low even as most holdings fall.
