Cliff Asness on How Markets Got Dumber in the Last 10 Years | Odd Lots

The Odd Lots podcast has been around for 10 years. Unfortunately, markets have gotten less rational over the same time frame. At least this is the contention of Cliff Asness, the co-founder and CEO of AQR Capital Management, a quantitative investing firm that's been around for nearly three decades. Asness' approach to investing is rooted in academic theory, having studied under the legendary Eugene Fama at the University of Chicago. Unfortunately, in the world of social media and meme stocks, it's tough out there for the academically minded. And that's forced Cliff to adjust his approach over time. On this episode, we talk about the history of quantitative investing, market efficiency, and the emergence of AI/ML in his process. We also talk about the reality of investing other people's money, and the challenge of sticking with one's convictions at a time when temporary forces are working against you. Join the conversation: discord.gg/oddlots [00:00:00] - Introduction: Wisdom of Crowds and Market Efficiency [00:01:18] - Podcast Anniversary Celebration [00:02:53] - The Death of Value Investing [00:05:03] - Introduction of Cliff Asness [00:05:10] - The Less Efficient Market Hypothesis [00:08:58] - AQR's Early Days and Market Extremes [00:12:29] - Technology and Data Evolution [00:14:14] - Defining Market Efficiency [00:16:26] - The Pain of Staying Rational [00:21:25] - Retail Participation and Zero-Day Options [00:23:19] - Measuring Market Inefficiency [00:25:07] - Why Markets Are Becoming Less Efficient [00:31:54] - The Who Wants to Be a Millionaire Analogy Extended [00:35:26] - AI and Machine Learning at AQR [00:40:18] - Multi-Strat vs Multi-Manager [00:44:47] - The Debate Over Factor Explanations [00:49:48] - Sports Betting and Prediction Markets [00:54:45] - Interest Rates and Market Behavior [00:56:47] - Conclusion Subscribe to Bloomberg Podcasts: https://bit.ly/BloombergPodcasts Check out more Odd Lots: https://youtube.com/playlist?list=PLe4PRejZgr0MuA6M0zkZyy-99-qc87wKV Get the Odd Lots newsletter via https://www.bloomberg.com/account/newsletters/oddlots And for all things Odd Lots, visit https://www.bloomberg.com/oddlots Bloomberg's Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Monday and Thursday for interviews with the most interesting minds in finance, economics and markets. #OddLots #Markets #Investing #Business #Finance #Podcast Visit us: https://www.bloomberg.com/podcasts For coverage on news, markets and more: http://www.bloomberg.com/video

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