Cliff Asness: One of the Biggest Mistakes That Investors Make

During this interview with Bloomberg, Cliff Asness discusses the mistake that investors make of overanalysing individual components within a portfolio, rather than focusing on the overall performance. Ultimately, the goal is to build a cohesive portfolio, not simply fill individual slots. Here’s an excerpt from the interview:

Asness: I’ve made every one of them.

I would probably go with obsessing about every line in the portfolio, more so than the total portfolio.

You got to look at the lines, how am I doing here? Is the manager doing what they said they were doing? But very often you build a portfolio.

So different parts are working at different times. And I’ve been on a ton of investment committees. I know you’ve run many investment committees.

At least the ones I’ve been on we tend to talk about the two at the bottom all the time,

Which is fair. But you got to ask yourself, why are they there? Is this their time? Should they be there?

And you should ask the same questions about those at the top. Are they taking too much risk?

So I think people have to look at the line items, but number one should always remember they’re building a portfolio. They’re not buying individual slots in the portfolio.

Host: What’s the best investment advice you’ve ever received?

Asness: Pretty much every week my wife tells me, stop looking at the screen. You’ll be a happier… you’ll be a happier man. And she’ll be met… a happier person married to a happier man.

You can watch the entire discussion here: