Capital Allocators – Inside the Institutional Investment Industry

Cliff Asness - Simple Investing is Hard (EP.385)

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.

01:08:59

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Cliff Asness

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Quick takeaways

Cliff Asness discusses AQR's journey from market efficiency to capitalizing on inefficiencies.

AQR adapts factor strategies in drawdowns through rigorous research and machine learning applications.

Private equity investments pose cognitive dissonance, balancing perceived safety with honest risk assessment.

Investment committees navigate concentration risk, leverage, and manager evaluations for optimal portfolio outcomes.

Deep dives

Investment Platform Overview

Michael LaFell, former Deputy Executive Managing Member of Davidson Kempner, leads TenEast, an investment platform offering co-investment opportunities in private credit, real estate, niche venture, and private equity. With a decade-long track record in over 350 transactions, the platform provides exposure to unique investments not commonly available. Members benefit from ongoing monitoring and reporting akin to institutional standards.

Surviving and Thriving through Business Challenges

01:24

Value in Features and International Diversification

01:22

Balancing Intuition and Machine Learning in Investment Decisions

01:39

Influential Figures in Professional Life

01:13

Intro

6min

From Class Clown to Finance Pro

7min

Navigating Market Complexity

26min

Navigating Complexity: Machine Learning and Passive Investing in Financial Markets

3min

Exploring the Dynamics of Pod Shops in Investing

4min

Behavioral Insights in Investing

21min

Personal Insights and Humor Amidst Professional Life

3min

Influences on a Professional Journey and Life Lessons

4min

Cliff Asness is the Founder and CIO at AQR, an investment management firm at the intersection of financial theory and practice that oversees $100 billion in assets. He is famously intelligent, comical, and irreverent, all wrapped into one. Our conversation covers Cliff's journey from studying market efficiency under Eugene Fama to capitalizing on market inefficiencies at AQR. We discuss regime changes in factors, difficult periods for performance and AQR’s business, research innovation, machine learning, index funds, pod shops, areas of cognitive dissonance, private equity, and serving on investment committees. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership

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