AQR's Asness Says Value Trade Has 'Quite a Ways to Go'

The video discusses the concept of diversification, focusing on the expected returns of 3% over the medium term and the rationale for investing in bonds. It examines the 60/40 portfolio, highlighting its historical context and the challenges of timing the market. The speaker emphasizes the importance of value trade strategies and trend following, especially in the context of macroeconomic volatility. The discussion also touches on the limitations of trend following post-GFC due to a lack of market direction.

What is the expected return over the medium term as discussed in the video?

• 5%

• 2%

• 3%

• 4%

Why does the speaker mention the 60/40 portfolio?

• To show its high returns

• To illustrate its role in diversification discussions

• To discuss its legal requirements

• To highlight its popularity among investors

What is the speaker's view on market timing?

• It is irrelevant to investment strategies

• It is easy to predict

• It guarantees high returns

• It is almost impossible to time

What is one benefit of the alternative long cheap and short expensive strategy?

• Reduces market correlation to almost zero

• Increases market correlation

• Eliminates all risks

• Guarantees high returns

How does macroeconomic volatility affect trend following?

• It has no effect

• It is detrimental

• It tends to be beneficial

• It makes it unpredictable