Cliff Asness: The 3 Reasons That Value Has Worked For The Last Hundred Years

Johnny HopkinsCliff AsnessLeave a Comment

Here’s a great interview with Cliff Asness from AQR on the Rational Reminder Podcast discussing a number of topics including – why value investing has working for the last hundred years, saying:

There are three possible reasons value has worked for the last hundred years. One is it represents a pure rational risk premium, cheap stocks are riskier in some sense than expensive stocks and you get paid for burying that risk. The next is irrationality, cheap stocks are cheap, at least partially by era and vice-versa. The third is it was all dumb luck and it’s never gonna work again. I always have to throw that one in to be intellectually honest. I don’t actually believe that one!

Other topics include:

•    Cliff’s perspective on market efficiency and the impact on his portfolios. [0:03:48.5]

•    Value investing in today’s climate where value has taken such a knock. [0:08:30.8]

•    Stories and behavioural effects on value; how we understand ups and downs. [0:13:36.2]

•    Conversations Cliff has had with clients in the tougher times. [0:21:04.5]

•    Comparing the companies driving growth now with those in the ’90s. [0:23:46.2]

•    The size effect and why Cliff does not subscribe to this philosophy. [0:25:17.1]

•    60/40 portfolios; are they still alive? Why Cliff thinks you can do better! [0:33:07.7]

•    Cliff’s experiences with institutions and advisors and contrasting the two. [0:36:31.5]

•    Informed decisions on who to invest with; thoughts on finding the right advisor. [0:38:28.7]

•    Pulling the goalie and why risky behaviour can work in certain circumstances. [0:40:42.5]

•    The value of communication skills in the game of financial advising. [0:47:29.7]

•    How Cliff defines success for his own life! [0:50:07.9]

You can listen to the entire interview here:

(Source: YouTube)

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