Cliff Asness, Founder, Managing Principal and Chief Investment Officer of AQR Capital Management

Cliff Asness, Founder, Managing Principal and Chief Investment Officer of AQR Capital Management, shares his insights on the markets during a challenging environment of record-high inflation, rising interest rates and recession fears.

On living through non-normal events: “Crazy big stuff happens. It’s okay to use things like the normal distribution, as long as you never forget that it is an approximation to reality and sometimes a very bad approximation. You have to think about the worst cases. You could certainly argue that COVID was an example. The meme stock craze was an example of a non-normal event. I can’t decide about now. I think everybody has the arrogance to think they’re living through unique times, including me. It’s always like, ‘No one’s ever experienced this before.’ … I think what we’ve been experiencing for the last 6-12 months is a return towards normalcy. Positive interest rates. Spreads between cheap and expensive, still very high but not being astronomically high. And that involves a lot of pain for some people, but that’s not abnormal. What’s abnormal is probably the ten years after the GFC [Global Financial Crisis] with very, very cheap money and virtually any strategy long doing well, without a lot of very bad hiccups … The things we look back and call ‘painful’ over that 10-year period, you laugh at now.”

On pursuing a career in financial services: “Be really careful you’re not shifting your career to chase the hot thing. I particularly tell this to students in business school … If you love something, just do it and you might be early. But if a big part of why you’re doing it is it’s the thing everyone wants to be doing now, I think you’re going to be three to five years late … I don’t believe in doing something you don’t like. So find something that you find interesting that the world needs, and you’ll do well.”

This episode was recorded on July 19, 2022