AQR’s Antti Ilmanen – US Exceptionalism: Growth Story or Valuation Trap? | #607
Today’s guest is Antti Ilmanen, Global Co-head of the Portfolio Solutions Group at AQR Capital Management. In today’s episode, Antti discusses the complexities of investment returns, the importance of understanding both objective and subjective expectations, and the dangers of relying on past performance as a guide for future investments. We explore the current state of the US market, the role of diversifiers in portfolios, and the behavioral biases that affect investor decisions. Antti also contrasts the behaviors of bond investors, which tend to be more contrarian, and equity investors, which tend to extrapolate.
Key Points
- Equity market returns have been heavily driven by valuation changes rather than earnings growth, emphasizing the need for cautious expectations moving forward.
- Retail investors often exhibit rearview mirror behavior, extrapolating recent strong performance into the future, while institutions tend to rely more on forward-looking yield-based expectations.
- Diversifiers, including liquid alternatives and trend-following strategies, provide valuable risk management and potential upside exposure, particularly in environments where traditional assets like US equities may underperform.
Follow Antti: Website
Resources: How Do Investors Form Long-Run Return Expectations?
Exceptional Expectations: U.S. vs. Non-U.S. Equities
Why Are Bond Investors Contrarian While Equity Investors Extrapolate?
How Did We Get Here? A Brief History of Expected Returns Formation
Equity Market Focus: Interrogating the Historical Data
Equity Market Focus: Objective Expected Returns
Equity Market Focus: Subjective Expected Returns
Bond Market Focus Understanding Treasury Yields with Survey Data
Bond Market Focus: Yield Curves and Mean Reverting Rate Expectations
Diversifying Alternatives and the Rearview Mirror
Sector-Adjusted Global Stock Market Valuation and Long-Term Outlook
Stocks Are Allowed To Be Expensive Since Bonds Yields Are Low…Right?
Chapters
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| 1:13 | |
| 8:26 | |
| 24:33 | |
| 36:18 | |
| 48:11 | |
| 56:26 |
Transcript
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