In this episode of the Money Stuff podcast, Matt Levine and Katie Greifeld interview Cliff Asness, the founder of AQR Capital Management, about quantitative investing and market efficiency. Asness discusses the economic function of AQR, which involves predicting security returns and taking positions based on those predictions. The conversation explores the role of momentum trading, the impact of behavioral biases on market prices, and the challenges of market timing. Asness shares his experiences with meme stocks like AMC and GameStop, and also touches on the evolution of quant investing, comparing it to Graham and Dodd's value investing approach. The discussion further covers the use of machine learning in finance, the debate between risk-based and behavior-based explanations for market anomalies, and the implications of less efficient markets for active management. Finally, Asness critiques the private equity industry, particularly its fee structures and volatility laundering practices, and expresses concerns about the push to include private assets in retail investment products.
