Cliff Asness: An hour interview with Cliff Asness.
It would be hard to improve upon Cliff's Big 4 Investment Principles:
Sex and Envy: Tim Wadsworth at the University of Colorado Boulder finds that
It would be hard to improve upon Cliff's Big 4 Investment Principles:
- Cheap stocks beat expensive stocks
- High carry beats low carry
- Low risk beats high risk
- The trend is your friend
I would just add that, 'risk' doesn't really help understand these principles, because while you can tell a risk story for #1 and #2 they generally seem characteristics more than covariances, for #3 it goes the wrong way, and #4 it doesn't really seem relevant.
Cliff also riffs on a hot new value metric, based on a paper by Robert Novy-Marx highlighting profit margin.
Cliff also riffs on a hot new value metric, based on a paper by Robert Novy-Marx highlighting profit margin.
“There’s an overall increase in sense of well-being that comes with engaging in sex more frequently, but there’s also this relative aspect to it,” he said. “Having more sex makes us happy, but thinking that we are having more sex than other people makes us even happier.”Keeping-up-with-the-Joneses in bed. It's not much removed from my sons, whose misery is most affected by knowledge their brother can do something they can't. Wadsworth notes that regardless of the adjective--attractive, funny, smart, poor--these are only meaningful in a relative sense to peers, and so being sexually active only makes sense relative to others.
4 comments:
Well, so much for your retirement from blogging!
Not that I mind! I have enjoyed reading your postings, and I have found the links to other articles and discussions to be very interesting. I can understand your ambivalence about writing here regularly, but I do hope you find time - if only now and again - to put up some brief missives like this one.
I really enjoyed your list of quotations, too. I thought I was the only person who did that sort of thing!
Falk,
Just admit you like to enlighten the rest of us who are more motivated by envy and thereby sustain your thesis. Or even if you don't like it, then do it for altruistic purposes. Whatever you do, don't be selfish (if it means not posting). Come on man!!!!!:P
Less than twice a week is a violation of the Geneva Conventions as far as I’m concerned but I admit that sometimes I have to make due with a rolling, semi-weekly average instead of a semi-weekly minimum.
I’m convinced that envy is a big deal and a huge driver of human behavior but perhaps the general decline of standards that now seems to be endemic in our culture feeds and worsens relative status anxieties. Isn’t it harder to define where you are in life when many, long established landmarks are crumbling or gone? Wouldn’t that cause people to measure themselves more against other people instead?
High personal standards and the ability to recognize high absolute quality are generally noble things I believe and not so easy to shake. Once you are aware of the existence of something of superior design/quality/beauty/craftsmanship that is both of real value to you and within your means it’s hard to be very satisfied with the skinniest girl at fat camp. Once you are aware that better things are within your grasp (or close enough to be irritating) you can’t really un-learn those things nor should you want to regardless of what your immediate peers have for themselves. And *sigh* both a blessing and a curse, having impeccable taste certainly limits the amount of happiness that one can derive from merely being perceived as occupying a position of higher relative status but by the same token it severely limits the amount of condescension that can be inflicted on you by a person sitting on an ugly sofa.
Maybe a good strategy for squeezing maximum happiness from the relative status game is to keep yourself in charge of defining exactly who your peer group is. For instance, don’t worry about driving the least expensive car on the block if you can consider yourself a member of the top tier of a larger group of people who own well-restored, vintage cars.
Also, it’s hard to believe that the person who actively joins clubs, activities and organizations –even if he is a bottom half performer in each of those peer groups- isn’t more likely to be happier than the person who always seeks to be the biggest fish in small ponds. There are always many other moving parts of course and even though I think I’d rather be at the bottom of my class at MIT than the top of my class at ‘Ole Miss I can certainly see how the later situation (especially in the dating dept.) might beget greater happiness at least in the near term.
I don't recall where I read it, but the observation that "envy is a good 'gateway sin'" seems to acquire more significance the older I get and the more I see of human behavior. Leaving questions of sin and evil aside, I suspect it's responsible for more actions - and more irrationality - than is commonly acknowledged.
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