Cliff Asness Predicts Comeback for Quant Algorithms (Full Interview)

Jan.13 -- Cliff Asness, the co-founder and managing principal of AQR Capital Management, could be questioning his faith in factors after 2 1/2 years of poor returns. But he remains as confident as ever in the quantitative strategies that powered the firm’s growth for two decades. In this interview, Asness explains why, the emotional challenges of underperformance, AQR’s strategy, and Bitcion. He spoke exclusively to Erik Schatzker on Bloomberg’s Front Row.

[@Nepenhyah]

The caliber of these interviews are nothing short of premium.

[@christophersteiner4863]

Agree, I remember this interviewer getting slammed in the early days for interrupting but he has really changed his style.

[@joshuaofomaja]

One of the best asset management interviews. God bless you, Cliff Asness in Jesus Christ's name. Wish you all the best ahead.

[@IsaacWendt]

Wow, The honesty is unreal. How can you not like this!

[@dwalsh5925]

I didn’t think someone like this was in the investment world? That was incredible! He’s NORMAL?!!

[@denniscannon1943]

Is the converse also true here? Would it also be true to say that the reality is dishonest? if not, perhaps the logic needs to be further analyzed. Still, I do fully agree with your original premise, that Cliff's forthrightness is commendable. It seems that, unfortunately for Cliff, who is a very likeable fellow, the market is ruled by the macro factors mentioned, and irrational emotions, such as fomo.

[@IsaacWendt]

@@denniscannon1943 honesty was properly the wrong choice of word, but forthrightness is. I do believe that most money managers and hedge funds wouldn't be able to express getting crushed so openly and without fear of reprocussion.

[@denniscannon1943]

@@IsaacWendt I wholeheartedly agree. Thank you for your considerate reply, and I apologize if the tone of my previous comment was rather sarcastic- it was intended as friendly 'play on words'. I am in accord with your admiration of the conscientious professionalism of Mr. Cliff Asness, and I feel that your point was well made and important, to highlight the contrast of Mr. Asness with the often arrogant and self-serving wave of wall street 'experts'.

[@TDesting]

Excellent interview

[@fredreickweaver809]

Well, this aged like wine

[@christophersteiner4863]

Despite his millions seems like a really grounded guy, the kind of person you could have a drink with and be non the wiser that he actually is a billionaire.

[@robertlopez9347]

Past performance is no indication of future performance. Current performance is no indication of future performance... Investing is difficult and complicated. Anybody telling you investing is easy is either a Bernie Madoff or don't understand investing....

[@Ygnez]

Great interview. Thx

[@ryantinney]

Very rare to see some real talk like this from money managers.

[@johnbailey3351]

These guys are talking about value stocks from a finance perspective. I am an accountant which knows a little finance. For the last 3 +/- years the PE ratios of most value stocks have gone down down down. PE ratios can only go down so much before X,Y or Z occurs. X being the rising dividend yield and/or share buybacks turning valuations around given must nominal increases in top line revenues or bottom line net income. Y being someone buying the company out whether it be management, corporate competitor, or private equity firm. Finally Z being that the market shifts back from growth to value like the mid-1970's or 2000/2001.

[@dwalsh5925]

Cliff, with all due respect, you do realize your timeline of frustration directly correlates to the Fed artificially supporting equities since the GFC!? Why would any strategy that involves “mathematical common sense” and not “blind FED faith” work in a rigged environment? The disconnect between a companies balance sheet and it’s perceived valuation diverged years ago! i.e.... stock buy backs, moral hazard etc etc...

[@saintz7056]

Could you explain this depth ? I’m fascinated by this comment

[@dwalsh5925]

@@saintz7056 from a mathematical standpoint there are way more variables than constants with regards to valuations. These variables span the spectrum from blatantly fraudulent accounting practices by these companies to government intervention and new policy implementation that cannot be accurately predicted. The “laws”, if you will, of capitalism have been suspended in the name of stimulus, green initiative, corporate welfare and so on.

[@luisfernandoalves2748]

He's gonna be just fine. Even Buffet's been struggling the past 3 years. Rotation from growth to value will happen eventually.

[@ancientkid1635]

LMFAO

[@albertosantangelo6872]

Buffet never managed investors’ money

[@sukkeri]

It's already happening.

[@MrDavieeBoy]

@@albertosantangelo6872 not true

[@albertosantangelo6872]

@@MrDavieeBoy did he ever manage money from institutional investors? I only know he managed money from family and friends, but may be wrong

[@arturocastelo]

Great interview and yes value style is coming back 💪

[@YomeLang4466]

Painful to watch, but retail traders have outperformed quant traders 14:1. These new retail traders have absolute no idea of value trading, so I do think the models no longer work. You now have 13m+ new global irrational traders on Robinhood, which will put in a trade based on a tweet. Leverage means they also have the power to sway the direction of the market.

[@ancientkid1635]

and ima get wealthy just buying and holding while they wipe each other out trading

[@artofexistance]

Ancient Kid best way to weather storms

[@vinestreet4031]

How is AQR different from Renaissance Tech?

[@jsjsbsv1924]

Rentech makes money

[@iury0x58]

Cliff is a great guy.

[@Panorabeach]

It's all about trust: AQR to Liquidate Some Funds After 'Persistent Outflows' - 18 nov. 2020...🤔

[@yossirosenfeld8161]

think you would have a hard time hanging out with Ken Griffin

[@blin7509]

It made me feel better about myself. :)

[@PrashantTayshetye]

I think your time will come be patient. Value is always best

[@rickpickle]

Bloomberg was Biden's largest campaign contributor, donating over *$92 million*

[@anthonyrobinson5532]

I’m praying for you cliff and the rest of our fallen brothers

[@ronaldevans4457]

All software is experiencing a slump. Not just Quant. The FAANG companies haven't released a cool new product in 5 years either.

[@mermadone6465]

He looks like Odediah Stane (antagonist) from Iron man

[@raniellloren8558]

Boss Cliff promote niyo po Renzo pangalan. Mabangis.

[@bleacherz7503]

He has been grumpy, cliff blocked me on Twitter !

[@Krath1988]

Get into crypto?

[@florenciovela7570]

we traveled to Boca Chica to see the starship get built. & we got the S dual motor fsd last Christmas 🎄 😎 still have the cybertruck tri motor or 4 motor fsd on order, i got lots of solar & backup battery system to charge them both. i have tsla too. i just got tired of paying $5 for a gallon of gasoline.

[@hadawaycolton4263]

True shit, its like poker except with vulkans. Know when to be a Vulkan

[@jackjackthompson5771]

Of course he does. It’s like asking a dairy farmer if the cows are healthy...🙄🙄

[@briankukk1487]

you can dis grade every thing you no its a new day in trading

[@faksibey8906]

So many years of success has blinded his psychology of an externality like a 2020 pandemic with Government Stimulus implemented or at least noise in the global stock markets.

[@j.marley8365]

oh ok I am sure he and his team have yet to consider those things...lol...some people really are ignorant

[@tiendoan1333]

The same logic can be applied to any crisis because they are all unique

[@faksibey8906]

@@tiendoan1333 No. Every crisis does NOT have a health pandemic, i.e. an externality across history across countries. Some economic crises are all internal, thus not unique.

[@marryreddd3838]

I took the risk dealing with Luiz on my bitcoin trade and finally end up with perfect testimony.💕

[@marryreddd3838]

Thanks Luiz [phone]💕

[@dwalsh5925]

Cliff, we have an annual golf trip to Orlando with 20 guys every January. We rent 2/ten bedroom homes and talk ZERO politics or financial subject matter. Your invited for 2022😂😂😂😂. Handicaps range from high 70’s to low 100’s

[@neves69]

This guy is very biased towards value investing. I don't see much quant in him.

[@thegolffreak]

Runs one of the biggest quant shops. Haha. Just so happens the quant models are showing value.

[@cobravoadora]

Dinosauro narrative!

[@petecheng1]

Why do we pay crazy fees for someone who cannot predict the stock market?

[@XYZ-dy9je]

He cannot even converse properly. "It would be great to see anyone."

[@XYZ-dy9je]

"It would be great to see anyone." This guy is a genius? I'm not putting my money on him after hearing that statement.

[@farhanmemon388]

he doesnt need your capital

[@j.marley8365]

if that's your takeaway from this whole interview you need a new line of work

[@Ygnez]

What's wrong with that statement? Everyone is just working from home. Any social interaction is divine right now!

[@XYZ-dy9je]

Honestly, I thought he was insulting the interviewer. I misread him. I was wrong. [I offended an interviewer when I was young. Really bad decision on my part. ... My bias caused me to read it the wrong way.]

[@albertosantangelo6872]

I am not into their investment process, but their research papers are crap

[@shammuk02]

Cahtie Wood and Chamath Palihapitiya had a explosive 2020 they r the only two people investors need to listen to going forward... everyone else is outdated in their investing strategy... times have changed

[@niveaulimbo6101]

It is just awesome reading arrogant comments like this now.😂

[@minionmememindset7889]

Oh nononono ARKKbros we got too cocky

[@sleepless2541]

K Dawg

[@q44444q]

Cliff is a smart guy and a funny guy, but he's stuck in the past right now. Value is dead. Factor investing is dying or already dead. These ideas had their peak in the 90s! You gotta move on!

[@christophersteiner4863]

Despite his millions seems like a really grounded guy, the kind of person you could have a drink with and be non the wiser that he actually is a billionaire.

[@marryreddd3838]

I took the risk dealing with Luiz on my bitcoin trade and finally end up with perfect testimony.💕

[@marryreddd3838]

Thanks Luiz [phone]💕