The Meb Faber Show - Better Investing Cliff Asness: Timely & Timeless Investment Wisdom | #528
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Apr 5, 2024 
Guest Cliff Asness from AQR Capital Management discusses diversification, managing client expectations, alternative trend-following strategies, and implementing AI in investing. They explore real vs fake quotes, moving away from market cap weighting, and Cliff's most controversial opinion. Discover how AQR is using AI in their investment process.
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Leverage Diversified Portfolios Over Single Bets
- Cliff argues levering a diversified portfolio can outperform putting everything into one great asset.
- Adding modest uncorrelated risk (e.g., bonds) improves returns without greatly increasing risk.
Past U.S. Equity Wins Don't Guarantee Future Gains
- Asness warns against assuming past US equity outperformance repeats indefinitely.
- He recommends diversifying across countries, assets, and strategies to avoid concentration risk.
Assess Bonds In Portfolio Context
- Don't panic about recent bond drawdowns; evaluate the whole portfolio instead of line items.
- Remember nominal return recovery isn't the same as real return or long-term suitability.