Capital Allocators – Inside the Institutional Investment Industry Cliff Asness - Simple Investing is Hard (EP.385)
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May 13, 2024 
Cliff Asness, Founder and CIO at AQR, shares his witty and insightful journey through the finance world. He reflects on studying market efficiency with Eugene Fama and transitioning to capitalize on market inefficiencies. The conversation dives into the integration of machine learning in investing, the rise of pod shops, and the psychological challenges investors face during downturns. Asness humorously addresses cognitive dissonance in private equity and advocates for a balanced, long-term perspective in finance.
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Early Life and Underachievement
- Cliff Asness, initially an underachiever, got Bs and Cs in high school despite high standardized test scores.
- He became more serious academically in college, facing and overcoming anxiety about his potential.
Path to AQR
- Cliff studied finance and computer science at Penn, influenced by his dad's advice on diversification.
- He pursued a PhD at the University of Chicago, swayed by faculty recommendations and a fateful spring day visit.
Challenging Efficient Markets
- Gene Fama acknowledges markets aren't perfectly efficient, which challenges the efficient market hypothesis.
- Asness studied price momentum, a strategy that seemed to contradict perfect market efficiency.