The AQR chief sure knows how to sell his industry, and is now continuing his somewhat less-than-full-throated “Hedge Funds: They’re Alright, I Guess” campaign on his own website. To sum up his masterpiece, “Hedge Funds: The (Somewhat Tepid) Defense”: Most hedge funds are crap and you should probably just invest in an index fund. But if you can find yourself a non-crap hedge fund manager—one C. Asness comes to mind—you’re probably better off with him or her. Either way, the most common criticisms of the industry are pretty off-base, and as such, can be added to the Asness Menagerie of Peeves. Read more »
Europe’s leaders, adopting a money begets money approach, are looking to conjure a few billion dollars to juice up the continent’s economy. Perhaps they should give Cliff Asness a call. He’s always happy to weigh in on such things. Read more »
Surprise, surprise: Low-key investment funds that diversify their portfolios across asset classes to protect them for the long term are again proving their value. So-called “risk parity” funds—run by prominent investment firms like Bridgewater Associates, AQR Capital Management and Invesco—are up an average of 3.3 percent through March, according to data from Morningstar, easily beating returns for stocks and bonds. That also is better than a classic 60-40 percent stock-bond allocation, which gained 1.87 percent in the first quarter. [NetNet]
Ringleader Of Insider-Trading “Fight Club” Didn’t Want Any Sarcastic Comments With His Inside InformationBy Matt Levine
I suppose in like 1985 there were people who worked on Wall Street and un-self-consciously ate cheeseburgers for breakfast, got shoeshines at their desks, went to strip clubs every night, and slammed down their phones hard enough to break them, but my assumption is that in 2013 any remaining “stereotypical Wall Street behavior” is mediated through popular culture. Some people go into finance with the goal of having a memoir that reads exactly like Liar’s Poker,1 and no one wears contrast-collar shirts because they look good. You wear them – if you do (do you?) – because you saw them in that movie.
In 2009, Tortora e-mailed a group that included Abbasi and Adondakis: “Rule number one about email list, there is no email list, fight club reference. Rule number two, only data points can be sent, no sarcastic comments. Enjoy. Your performance will now go up by 100 percent in 09 and your boss will love you. Game theory, look it up.”
Look it up, yo. That’s also from Bryan Burrough and Bethany McLean’s amazing Vanity Fair article on the endless pursuit of Steve Cohen, and while the fact that Tortora and his crew of cheeseballs called themselves “Fight Club” has been reported before, the fact that Tortora had to remind them of it BY SAYING “FIGHT CLUB REFERENCE” AFTER HIS FIGHT CLUB REFERENCES is new to me and makes me ashamed to be a human.
Why did these tools insider trade? Read more »
Area Billionaire Threatens “Legal And Illegal Tax Avoidance” To Protect Comic Book Funds From Drum Circling Hippie Freeloader IdiotsBy Bess Levin
“The only way to finance a big European-style state is to have it paid for by massive taxation of everyone, mostly the middle class. Right now, we are avoiding honest debate on this fact…The first truth is that the current tax rates cannot support the promises made to middle-class Americans. The most unaffordable items in fiscal projections are Social Security for everyone and government-sponsored health care for the middle class. You cannot preserve these even with Draconian slashing of military, infrastructure, welfare, education, and other expenditures. The second truth is that you cannot pay for the Life of Julia, or any vision of a cradle-to-grave welfare state, without massive and increasingly regressive middle-class taxes. The poor don’t have the money to pay for a European-style welfare state, and the rich, rich as they are, don’t have anywhere near enough. Not only that, it’s easy to tax middle-class assets and transactions — things like payrolls, sales, and real estate — but soaking the rich means taxing investments. Investments are complicated and can be restructured to minimize taxes. Also, investments are the lifeblood of economic growth. Raising significantly more taxes from the rich also requires higher marginal tax rates — and their rates are already quite high. High marginal rates distort the economy and yield less revenue than anticipated because they increase the rewards for legal and illegal tax avoidance…to achieve anything like the European-style entitlement state they advocate, we need to tax everyone a lot more, not just the 1 percent. Despite all the drum circles protesting the inequitable distribution of resources, the wealthy just don’t have enough. The middle class and even the poor must step up to carry more of the burden if this is our desired endgame.” [The American via Heidi Moore, related]
Do you want to invest like Warren Buffett? Sure you do. You know who will tell you how? Strangely, some guys at AQR:*
[W]e create a portfolio that tracks Buffett’s market exposure and active stock-selection themes, leveraged to the same active risk as Berkshire. We find that this systematic Buffett-style portfolio performs comparably to Berkshire Hathaway.
They acknowledge that Robo-Buffett doesn’t incur transaction costs that flesh-Buffett does (because R.-B. is as of yet just a simulation) but, that aside, “comparably” is an understatement:
Whee! Go Robo-Buffett! Who, intriguingly, looks a lot like … AQR: Read more »