Investment success is about sticking to the plan.
That’s according to Cliff Asness, co-founder of money manager AQR Capital Management.
During a Bloomberg TV Monday, Asness said that investment success is the result of finding a strategy that works and sticking with it through thick and thin.
“I used to think being great at investing long-term was about genius,” Asness said.
“Genius is still good, but more and more I think it’s about doing something reasonable, that makes sense, and then sticking to it with incredible fortitude through the tough times.”
AQR managed $US135.3 billion at the end of September, according to the firm’s website. The firm employs a systematic approach, and looks to “identify long-term, repeatable sources of expected returns grounded in sound economic theory”, according to the firm’s website.
Asness cited a study analysts at his firm conducted on the the 35-40 year performance of the “Oracle of Omaha” Warren Buffett as evidence.
“Of course they found he was fantastic — but not quite as fantastic. His track record was phenomenal… but human phenomenal,” Asness said. “What was beyond human was him sticking with it for 35 years and rarely, if ever, really retreating from it.”
“That was a nice little lesson that you have to be good, even very good, but sticking with it and not getting distracted is much more the job,” Asness said.
Asness also had a reassuring note for investors more attuned to long-term trades in a market that seems increasingly dominated by firms obsessed with second-by-second swings.
“You get fired by those people,” he said, referring to firms that trade on the short-term data. “You find other people out there. They invest with you, and then you do well.”
“I think there are more investors, there are more institutions, there are more individuals through their — either on their own or through advisers who have a longer time horizon,” Asness said.
Watch the Bloomberg video here.
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