Practical Lessons from Cliff Asness

[00:00:00] Welcome to Excess Returns, where we focus on what works over the long term in the markets. Join us as we talk about the strategies and tactics that can help you become a better long term investor. Jack Forehand is a principal at Validia Capital Management. Matt Ziegler is managing director at Sunpoint Investments. No information on this podcast should be construed as investment advice. Securities discussed in the podcast may be holdings of clients of Validia Capital or Sunpoint Investments. Hey guys, this is Jack. In this episode of Excess Returns, we're featuring an episode from our

[00:00:26] separate podcast, Two Quants and a Financial Planner. On the podcast, we highlight our favorite clips from our Excess Returns episodes and break down the most important lessons we think investors can learn from. In this episode, we look at our biggest takeaways from our interview with Cliff Asness. If you want to subscribe to Two Quants and a Financial Planner, you can find it on all major podcast platforms. Thank you for listening and we hope you enjoy the episode. So Matt, we've been doing Excess Returns now for, I think it's like a little over five years. There was always like, I always think about guests I would really like to get,

[00:00:53] I know are hard to get. And like the person we're going to talk about today is probably was on the top of the list for me until he finally came on the podcast. So we're going to talk about founder of AQR, Cliff Asness, probably the person in the quant world I've learned the most from. And we were lucky enough to interview him a few months ago and there was so much great stuff in there. We're going to pull out our favorite clips and we're going to talk about what they think, what we think they mean for investors. I just such a legend for anybody who's been doing finance, I think in the modern era, probably, and especially anybody, I don't know what,

[00:01:22] under, would you put it like under 60, like anybody under 60, certainly under 50, you haven't been able to escape some snarky comment, some wonderful quip, some brilliant research piece that you're like, damn it. AQR already wrote about this. Like he is just pervasive as somebody who's there and kudos, you know, you finally broke the barrier down. Yeah. You kept asking, he kept asking until finally they relented and they were like, here you go. Here's,

[00:01:50] here's some, some time with Cliff for you, Jack Forehand to come up and even surprise him with a couple of questions, which I can't wait to get to later. Yeah. You know, it's funny. Like you, you typically, and this may shock you, Matt, but you typically don't have the quack guys on there and have tons of humor in the episode, but Cliff is one of the rare people who actually can do that. Like, I mean, there was, this episode was hilarious, but we were talking about concepts, which by their nature, at least they're not hilarious. No, because, and this is one of the brilliant things is in another life, Cliff probably could

[00:02:19] have been a comedian or something like in another life. He's got a skillset that translates into some other areas, both at his speed and ability to respond as is with just like dealing with ridiculous stuff. Watching him get mad on Twitter has been one of the greatest reasons to be on Twitter for years. And it's really great to watch him humanize something that otherwise there's a lot of math and spreadsheets because there's a lot of ways you could imagine him being dreadfully boring and he

[00:02:44] is anything but. So on the idea of him being hilarious, this is something we led the podcast with because I wanted to, because I remembered it. He had done it a while back, but I, but I remembered it because I hate this morning routine stuff that goes on where everybody's talking about these crazy morning routines. So I asked Cliff what he thinks about it. I was really excited that you gave all of us a little bit of hoax. So when I'm on Twitter all the time, I always hear that if I want to be really successful in life, I have to do a variety of things. And one of those things is I have to have a certain morning routine. That morning routine has to include

[00:03:13] some sort of ice bath. It has to include drinking something I don't want to drink. It has to include all these terrible things. And so I just want to thank you because you tweeted something that gave all the rest of us hope that maybe we can have a normal routine and be successful. So what you tweeted for people who are not watching us on video is you said, your morning routine is alarm goes off at 5 30 AM. I text my trainer, not today. I sleep another hour. I awaken, drink coffee and go into the office. Then I get mad, mad about something. I'd recommend it. So thank you very much for, from the rest of us for saying we don't have to do all those things.

[00:03:43] Yeah, there's a little bit of humor in there, but it's uncomfortably close to accurate. You know, some of these is a great example of correlation versus causation. Those morning routines may be correlated with very highly productive people, the same mindset that can make you wake up and do some wacko, uncomfortable, painful routine. But I don't, I don't think it's

[00:04:06] as causative as people, as people think. You know, Winston Churchill used to wake up at in the afternoon and work in bed till the evening and then stay up till 4 AM. Different things can work for different people. I thought his tweet was great because this is, this is what the real world looks like for most people. Like I'm not getting up in the morning, like I'm thinking about an ice bath. I'm getting up in the morning and I got kids going on. I'm getting ready for, you know, whatever I got to do. There's a work

[00:04:32] emails that came in overnight. Like it's, it's like a normal thing, you know, that the most of us do. And I think it's great to talk to someone who is a billionaire in clip and say, I don't have to do those things. Like, not that I'm ever going to be a billionaire, but to be successful, I don't have to do those things. I can probably follow like a normal routine for a normal human being and it can work out. Okay. Just this idea, the correlation causality. And again, only a quant would go and explain

[00:04:58] morning routines of correlation and causality and, and the sense of humor that he brought to this. This idea is just like, Oh, Oh really? You think like, cause that guy got up early and had a nice bath that if you get up early and you have the ice back, you could be as successful as the guy. Like you realize the stuff he does or she, the stuff they do after the ridiculous morning routine is actually the thing that makes the money unless they're like a finfluencer and they're selling the

[00:05:26] ice baths in the first place. The whole morning routine was mind boggling. And I just could never understand why people would, I don't know, brag about that stuff. So hearing him just be like, yeah, here's the reality. I mean, listen, this morning before this, like I had a, I had a shopping list. I had prep for some podcasts, prep for a bunch of client meetings and stuff like that. All that goes out the window when I, you know, slip on the stairs in the house and spill coffee, like all through the rug on the carpet, on the stairs and everything else. It's like, yeah,

[00:05:55] this is the way the morning goes. This is reality. But here, here you are. You got to just go out in the world and do the thing and survive. Humanity is rough. It's great to hear Cliff admit it so bluntly. Yeah. And to his point, maybe the fact that you're willing to sit in an ice bath for like 30 minutes and, you know, go through the pain and suffering of that, maybe that means in other areas of your life, you're willing to go through pain and suffering to achieve success. So maybe there's some sort of tie there, but it's not necessarily what leads to the success. Yeah. Maybe that's the pain and suffering of reading something idiotic on Twitter and

[00:06:25] responding or whatever like thing that gets him fired up and angry. Maybe anger is his cup of coffee in the morning and that's okay too. You just got to figure it out for yourself. And I love the honesty by which he, he tweeted that out just poetic. And I love being able to talk to people like you and Jason Buck, because you guys explain this in terms that I'm, you know, I'm thinking about this in really simple terms. Then you guys explained it like in the real terms. So Jason Buck had actually retweeted this thing when I put this clip out and he's like, the problem with morning routines is they introduce fragility, which, which I think is

[00:06:53] probably a good way to look at what we were trying to say, but in a different way. Like if you have this exact thing you have to do every single day in, in order to be successful, you have to keep doing the exact thing. You probably live a pretty fragile life. Yeah. As the, the great, the great DC band, the pie tasters, uh, they had a song and the first, the first, the opening line was drinking beer for breakfast makes the whole day painless. And I remember being like, no, no, no, this is not a good sign for how long this band is going to be

[00:07:21] around. If we're leading with that, there are a lot of problems. There's a lot of fragility. Like an 11 a.m. nap, right? Or something, right? I would think drinking beer for breakfast. I've never done that. So I don't know, but I would assume I'd be asleep fairly quickly if I was doing that. I am pretty confident that the whole day would not be painless or at least the days as they stack up, take the ice bath over the cold beer, maybe start there. So now that we're off our tangent, let's, let's go to the actual investing clips here. And the first one was the reason we had

[00:07:49] on the podcast, which is he wrote this great paper called the less efficient market hypothesis. So here's Cliff talking about why he thinks the market is less efficient. Yeah. I'm starting admittedly from two rather, only two observations with a statistician never enjoys having two observations, but they were giant observations that were very anomalous given, you know, 75 years of history. And essentially it was the dot-com bubble in the late nineties.

[00:08:17] And then surprising because, you know, it happened once and I thought it'd be honest. I thought it'd probably be 50 years till it would happen again. Very similar event in 2019 and 20, where the difference in valuation between so-called growth and so-called value stocks, I prefer to call them expensive and cheap stocks because every once in a while, the cheap guys are actually growing pretty

[00:08:41] well. But the difference in valuations hit easily far and away a record level compared to history in the dot-com bubble. And then actually surpassed that during COVID. And I can't even blame COVID because it was getting right up there pre-COVID. And, you know, that led to anyone, you know, quantitative value strategies, but anyone who cared about price. I don't care if you were a

[00:09:10] concentrated stock picking Graham and Dodd manager, you generally hated those periods to a level that was unprecedented. In both cases, they've massively recovered and the round trip has been fine. So the main challenge was holding on. But after the first one, it shaked my faith, maybe in efficient markets a little bit. I wrote a paper called bubble logic during it. That was a

[00:09:37] little sarcastic about, about some of the valuations that, that, that maybe was an odd title at that point for a Gene Fama disciple. I still love Gene, even if I, um, I, I give her at least, uh, on the spectrum of how inefficient the market is than, than, than, uh, than he is. Uh, but then when it happened again, I, I sat back and I said, all right, I'm pretty sure there's something out there

[00:10:01] causing, uh, either general levels of inefficiency to be somewhat bigger or occasional massive bouts of mania to be somewhat bigger. Um, so, you know, I was reasoning, uh, from data points. I didn't predict this and then it's always more valid if you predict something and then it comes true than if you observe it and then try to come up with a story. Uh, but I, but with, with that caveat,

[00:10:26] I, I do believe markets have gotten somewhat less efficient. I want to be clear. Um, I don't think they're grossly inefficient. Um, I, I don't have a better way for society to allocate capital. Uh, I'm fond of the Winston Churchill quote. Um, actually it's my second Winston Churchill reference in six minutes. I didn't mean to do that. Uh, but he has this great quote about democracy. Uh, it's a good data for this quote. It's a good day for this quote, actually. Um, democracy is the

[00:10:54] worst system for governing ever devised except for every other one that's ever been tried. Um, and you know, you might say the same about markets. Um, Gene Fama, uh, I, I sat through his class three times. Um, first as a student in two, two more years, full-time sat in every lecture as the TA. And he always tells the class about a few weeks in markets or after introducing the concept

[00:11:18] that markets are, are assuredly not perfectly efficient. Um, and Gene's, you know, if anything, though, super intellectually honest, um, he admits perfect efficiency is ridiculous. Nothing's perfect. Uh, but once you admit things aren't perfect, how imperfect they are and how much that varies through

[00:11:39] time become a legitimate object to test. And if it's hard to formally test to even speculate on, um, I think the intuition you mentioned that markets would get more efficient over time is largely based on technology. Um, the speed of trading, the cost of trading has gone down. Um, the ubiquity of information,

[00:12:02] uh, but I, I think most of that is about speed, not about correctly processing information. Um, I, I, I think it's almost, it's almost a certainty that information gets into prices faster than 35 years ago, which is roughly the beginning of my, uh, paying attention to this stuff. Um, but I think the difference is 10 minutes versus 10 milliseconds. Uh, I, you know, I'm old, but I'm not carrier pigeon old.

[00:12:31] We had Bloomberg's and we had phones and, you know, when news would come out, uh, prices, prices would react. Um, so it, you know, it, it, in information itself has to be processed well. And I, then I advance a bunch of theories, uh, as, as to why that processing might be less efficacious these days.

[00:12:58] Yeah. So this, this is a really interesting debate, like, you know, whether the market is efficient at all is a debate people have all the time, but whether it's changing over time, as he kind of alludes to on the podcast, is it, is it even more difficult debate? So it's, it's hard to figure out whether the market's efficient or not. I mean, although most of us think it's pretty efficient, if not very efficient, but whether that's changing over time is an even harder thing to figure out. There's the way he says this, there's almost a like game theoretical

[00:13:23] part of it. And whether or not market efficiency is this gravity that we drift away from and then get sucked back into, it's the reality that you can cheat the markets. You can do whatever, whatever scam you want to go run or whatever else you can get away with it for a little bit of time, or there can be stretches of history where market efficiency doesn't really matter by its classical definitions here, the way that he'll, he'll describe them. But the reality is you can

[00:13:49] only get away for so long if you still have to transact with somebody else on the other side, market efficiency exists because we have to clear prices somewhere and society needs markets for those clearing of those transactions. And you can only be a bad actor so long before you either get booted out of the system or the system completely falls apart. So there's a huge amount of optimism I take from like, kind of like the meta lesson from this, or it's, are they less efficient? Well,

[00:14:16] sometimes, yeah, we drift away from that gravity, but the reality is like society needs this. So having it in place and just getting the deals done and going, eh, you could have your little fancy fantasy, but we got to actually get some reality going here. I believe in that over time. And that's, I really liked the way he explained that. And it's hard. If you look at what's going on in the world right now, it's hard not to agree with them. It's hard not to agree that the market is at least getting somewhat less efficient. I mean, is there an efficient market for fart coin right now?

[00:14:43] Like, is it being priced appropriately? Like, I don't really know. I mean, I think there's, there's so much stuff going on in the world right now. And this is obviously not, that's not the stock market. That's something else, but like all the stuff we're seeing, it feels like there's a little bit less efficiency. And as he alluded to like social media and all the stuff that's being thrown at us, you know, that probably is one of the biggest reasons why it's going on. Yeah. And the fart coin cannot be a large scale collaboration game. Like there can't be a whole

[00:15:11] bunch of people who are like, Oh, we are making this, this great resource for humanity. Behold the great and sacred fart that we're trading back and forth with each other. Like that actually can't be the case. Now it can be fun. It can be like gambling sports book betting without, without the addictions, without the other things where people are actually having fun and it's providing entertainment. I am a believer in things, providing entertainment as value. You know, go see a

[00:15:37] comedian at the nightclub. We're not going to say like, it's an inefficient market because you gave your money to the comedian, the comedian took it all. Like if you laughed and had a good time, that's a beautiful thing, but don't mistake the idea that we still need this stuff for capital projects, for all the things we need the world to do so that we can have a good life. That's yes, less efficient in areas, but at some point that efficiency comes home to the stuff that actually matters. And the next clip is kind of a logical flow from the idea that the market's less

[00:16:05] efficient, which is Cliff's talking about this idea here that we have to get comfortable with discomfort, particularly if we're investing in the way he does and the way I do. I think get comfortable with the discomfort. I think the more you talk about it, I have a presentation where I talk about, and in the paper, I talk about how to get more comfortable, how to, but it's hard, right? Cause I'm effectively saying, you know, holy grail of finance is to get more long-term. And I am in some sense, I'm just saying, get more long-term, don't obsess about the

[00:16:32] short-term as much. So it is far easier said than done. Mostly, I'm just trying to be honest with people. I think the payoffs are bigger and the extremes will be bigger. Though I do think the very act of discussing that up front, ex-ante, will make tolerating it when it, and I'm not predicting it happens again tomorrow. It could be 20 years again. It could be 50 years again. But we'll make, ultimately, if it does happen again, you'll be, you know, forewarned as

[00:17:02] forearmed. I think we've now seen two episodes of this. And as I've said in other forums, I'm keeping the receipts. You know, business-wise, it was still quite difficult. But for our own ability to stick with it and keep confidence in what we do, we were open-minded. We did listen to every possible story for why this time is different and it's never coming back. And ultimately,

[00:17:28] we rejected those stories, but not after taking them seriously. But having lived through the movie once before and seeing how it ended, it did make it considerably easier, at least for me. Maybe not emotionally every day, but in terms of keeping intellectual confidence, yeah, the second time is easier than the first, and the third time should be easier than the second. So I think, number one,

[00:17:53] is do everything you can to, before the fact, get more long-term. And one major thing you can do is look at history and say, you know, we've seen this happen a few times before, and we've seen how it ends. I think the second is, I hope I don't sound like a hypocrite here, but we're also savagely pursuing things that would make us less dependent on this cycle. We think, and I'm going to do a little

[00:18:20] commercial for our stuff here, I apologize, but we think we've radically improved what we do in trend following, moving into very esoteric markets, fundamental and price trends. We think those hold up a lot better than pure rational investing at times when there's irrationality going on. We've moved more, like many quants have, into the realm of alternative data and machine learning, and sometimes those two combined. And some of those overlap with what I've been calling

[00:18:47] rational investing, but some are considerably more short-term and idiosyncratic. So I am, again, I hope this is balanced and common sense, not hypocritical, but with one voice, I say, get more comfortable with discomfort, as you said, you will be paid for it. The other, I say, if you can make money in other ways, and I think we can, then a portfolio of the two can be better,

[00:19:16] and the first one can be easier to stick with during the downturns, because it's not your whole world. It's two-thirds of your world, half your world. So I am very optimistic about the future, but that doesn't mean I'm not hopeful that it will be my descendants at AQR who have to live through the next one. I've done my time in bubble land. Yeah, this is, he's 100% right about this. You

[00:19:44] know, this is always something you have to do in investing. And obviously, the more different you look than the market, the more you have to be comfortable with this. But I think he's also right that this is getting more extreme. I mean, we'll look at a clip in a little while that'll talk about like the 90s and today. But a lot of this stuff is, I think, has gotten more extreme than it used to be. You have to sit through the longer periods of underperformance. The magnitude of that underperformance might be greater in those periods. It's just, it's a very hard thing to do. And you're

[00:20:12] the financial planner, you know, you're better at me on the behavioral stuff. Like it's easy to say, get comfortable with the discomfort. It's much harder to do getting comfortable with the discomfort. Well, we got Dr. Cliff Asnes basically doing the work here. Like he went full Brene Brown on part of this answer with this, you know, go to therapy, people get comfortable with the discomfort. But talking about the stress and talking about the anticipation of stress, and this is me with financial planner hat on for a second, talking about the anticipation of stress is most of financial planning.

[00:20:42] It's, you can run all the scenarios and go, look how much more money you're going to have. Look how much this is all going to work out. Cause you've, you're only hiring somebody like, you know, me or you to do stuff. If you've actually amassed some wealth or you're off on some path where you can afford to do the thing. So now like you got to anticipate, all right, well, what if some stuff goes wrong in front of us? How are we going to get through that thing? It will still suck. Like it will still suck. It's

[00:21:06] going to be awful. But if we have a five-year buffer, a three-year buffer, a 10-year buffer on here is how we will deal with the suck. That's a really important thing to say. I am positive for, for you, like running the concentrated back value factor strategies or any concentrated factor strategy. This is a conversation you probably have like upfront. I'm thinking of Wes Gray too on this. Just literally saying you are going to hate this for a period of time. Are you prepared to

[00:21:33] hate the thing you think is smart today? Yeah, we, we actually did at one point and Wes is the best at this. Like Wes is really good about before people get into his funds, he really talks about the pain you're going to suffer if you get in this fund, you know, in order to achieve the long-term returns, what you're going to have to go through. Like we did at one point, we wrote a document basically that outlined the pain that talked about, like we essentially listed a doc in a document that we gave to clients before they came on. Like, here are the horrible, awful things that are going to

[00:21:59] happen to you along the way. If you want to follow these concentrated factor strategies. And it did help a little bit. I mean, I think unfortunately until you feel the pain in the real world, it's, you're never going to understand what it's truly like. And so we can write whatever documents we want and we can talk about it and we can give examples. It helps, but you're never going to get all the way there until you actually see it with your face. Like until you see it with your actual money going down or your money underperforming the S and P 500 or whatever it is until you get there, you're not going to understand it.

[00:22:27] Hey, who's the smartest person who ever lost the most of your money? Like that's not, that's just not a good feeling for that. So it's, it's, it's gotta be tied to you and your personality and your identity in a way where you go, I believe in this process, even when it's not working, how can I know I can get comfortable with just the reality that yeah, life is uncomfortable. You don't need a nice bath to prove it. And although Cliff is an active investor and so am I,

[00:22:54] like this is an argument for indexing. Um, you know, to some extent, this is for many people, this is an argument. Like if you can't endure that pain, you probably shouldn't try to endure that pain because you're going to panic at the worst time. You're going to sell something that's eventually going to come back at the worst time. And you're going to end up worse off than you would have been just buying the index in the first place. So like understanding upfront, whether you can, it's very hard to do, but understanding upfront, whether I can endure that pain or whether I should just not even try is such an important thing. Yeah. And especially, I mean, we're talking

[00:23:24] about money here and it's like buying the index fund is basically, Oh, I'm going to get the average return. No, nobody wants that. And this is like, like money is like people's kids in this, in this sense. Nobody wants below average kids. Nobody wants average, you know, even average kids. They want above average kids. You work so hard, you save this money, you put it away so diligently, so carefully, and now you're going to sell for average. I feel so horrible, but in many cases,

[00:23:50] it's the best thing you can do because there's so many other things that are better to care about. So this next clip is an argument for the less efficient market hypothesis, which is something that all of us that are value investors have seen for a long time here, but this is clip putting up a chart and looking at value spreads and using Fama French and how they've evolved over time or how they've changed over time. From 1950 to 1998, it had looked like a very well-behaved series,

[00:24:16] either the straight series or the five-year moving average that you referred to looked, looked for an economic series fairly well-behaved. It varied between about three and six, which meaning means the top 30% of stocks was at the most about six times more expensive on this scale than the bottom, 30%, and at the tightest was only about three times more expensive. And then in the dot-com bubble, it exploded to, I don't know, I don't remember exactly,

[00:24:45] but 10 something. It looked like a broken chart. Or, you know, the famous the world has changed. At least on this measure, the world did change. I don't think ultimately the gravity of the world that would pull this back to normal went away, but there was a change. Then over the next 20 years, you saw meander around. I think those periods where it spends long periods around the median or below

[00:25:13] the median, those are kind of the normal periods where maybe even if markets are less efficient in extremes, nothing extreme is going on. What I'm talking about are really these bouts of crazy. Um, but the point of the five-year moving average, and I do it a few different ways, five-year moving average is of course going to be more extreme if the numbers are more extreme, but it also shows things lasting for longer. Uh, in the paper, I also quote number of months,

[00:25:41] it's been above median where when you have, uh, you know, big spreads, how long, and that's gotten radically longer. Yeah. You can see this chart and to the point Cliff makes in the clip, something changed. Um, you know, before the late nineties, like this was pretty consistent, like it was, it was up, it was down, but it was in a pretty tight band. And then in the late nineties, it blows up and then now it blows up even more. So obviously something's changed. And you know, that that is an argument for a less efficient of market that something is different in the second

[00:26:08] half of this data set than in the first half. What do you, when you look at this, so quant guy, Jack, when you look at this chart and you think about it in this way, um, how do you feel about does this bother you at all? Or does this, does this feel like this is the right, this is the right question to ask about describing why this has gotten weird again and even weirder maybe than it was in the nineties. Well, I think, I think spreads are a good way to look at whether people

[00:26:34] are being somewhat rational. Um, so when spreads break out to levels beyond what we've ever seen before, you could argue again, it's not, and the cliff's not arguing like there's no efficiency in the market, but you could argue the market is getting less efficient because things are blowing out relative to their value more than they have. Now there's, there's other things you could argue, and they've adjusted for all this in AQR. So it doesn't hold water, but you could argue companies are different and intangible assets need to be accounted for. And so when we, when we do that, the spreads wide, you know, the spreads aren't as wide and maybe we're missing or miss measuring

[00:27:04] value, but AQR has done a good job of measuring all kinds of different ways to look at this. And they really haven't found an explanation that makes sense. Can you imagine a future? So let's say this goes back to normal for a while. And now here's, you know, Matt and Jack and, you know, 2045 or something. And now we're at an even new high in the spread. Can you imagine that future? I don't want to imagine that future. Cliff kind of alluded to that in one of the clips he's talking about, like, I've been through my

[00:27:31] two times now. Like, hopefully it'll be my, like the people after me at AQR that'll be through the next one. And I've been through the first one. I wasn't really investing that much. So I've been through one. So I'm hoping I'll stop at one and there won't be another one. But like, if you look at the example there, like the nineties was one thing, like we thought it would never get worse than that. The next one's bigger. Like if the next one's bigger than that, like God help us all. Those of us that are value investors, at least it's going to be ugly. Well, you know, the market should be 99.99% passive at that point. You know, what could go wrong? It'll all be fine. Right?

[00:28:01] I hope so, at least. So, so this next clip is, this is something we've talked about with a lot of our guests and it's, it's Mike Green's arguments about passive investing and how passive is impacting the market. And one of the things we've tried to do in the podcast is get a wide range of opinions from a wide range of people about this. So here's Cliff talking about passive investing and its impact on the market. Now, here's where I think the rise of passive can matter. There is

[00:28:26] one number when let's ask the question, what percent of the market could actually be Jack Bogle style passive and still have some degree of an efficient market or not? I don't know. Some, you haven't hit inflection point where it gets really crazy. Well, there's only one number we know for sure that can't be a hundred percent. This is something I joke in the paper that PhD

[00:28:51] students drunk at 2am. And then I admit it's one wine cooler at 930 PM. Um, he, you know, you, it's, it's almost like a cone, like a, like a, where you, how do you, how do you even think about a world where everybody is trying to free ride off everybody else? There's literally nobody doing the work of saying is Nvidia worth more or less than the corner drugstore.

[00:29:17] We're all just assuming the other person did it and copying them. And so let's just say that would be nuts. I don't know what it would look like. It's hard to think about. Um, we, uh, this is funny. We once had a Jack Bogle himself on a podcast we were doing. We did a podcast for a while because as you know, legally in America, everybody must have their own podcast at some point. Um, and I was lucky enough to be friends with Jack. Uh, it was an odd friend, 85 year old

[00:29:45] godfather of passive. And at that point, a 50 year old long, short, active quant. Um, but Jack was a wonderful man. Um, I think the fact that his son was a long, short, active quant probably softened everything about me to him. Uh, you know, I know anything one of my kids do I'm predisposed to maybe think isn't the devil. Um, actually one of my kids, I would assume it was the devil, but I'll, I'll keep that to myself. Had Jack on the podcast. We got into this discussion

[00:30:12] and Jack like Gene Fama. I'm going to say this about another famous person. He's incredibly intellectually honest guy. He's like, of course, a hundred percent of the market can't be passive. I think my marginal recommendation to most investors to be passive is the right one, but a hundred percent, everything breaks down. He freely admitted that. And I said, Jack, so how much of the market can be passive before it starts to get weird? Um, and he said 75%.

[00:30:40] And I'm like, Oh, that's really cool. That's the, you know, where'd you come to that Jack? Uh, and he just looks and goes, and he gets a little twinkle in his eye and goes, Oh, I completely made it up. And when you're, I don't know, he was 85 at the time and you're Jack Bogle. You can get away with that. I think those of us who didn't create Vanguard, um, and probably shouldn't make that joke. Uh, but, but his point, even that has a point. No one really knows. Uh, a lot of people are very histrionic about this and think passive is the devil and everything has fallen apart.

[00:31:10] Um, I think it is unlikely to me that all the craziness that I admit happens at a hundred percent passive happens magically at 99.999% uh, passive and a hundred most things in life are some continuum. Um, so the idea that we're much more passive now than we used to be has contributed to maybe some, uh, some smaller tethered to reality. I find fairly intuitive.

[00:31:41] But assigning a magnitude to it and particularly, you know, again, I think markets are less efficient than they, than they used to be, but I don't think I've proven they're inefficient to where you can drive a truck through and just as the rational investor make free money all the time. Uh, I don't think it's that far gone. Um, so I think passive is part of the story for the reasons I outlined, but I, I, I think, and I admit this is all as it's still in the realm of hard to prove

[00:32:10] that putting a magnitude on it is difficult. And my instinct is those who are absolutely freaking out about it are overstating its role and have kind of made it their life's work to be kind of anti-passive. Yeah. This is always an interesting, like, there's no answer to this as he, as he alludes to, but this idea of like, if there are going to be problems with passive, like what percentage of the market could become passive before it happens? Like it's, it's a really, it's a really impossible

[00:32:37] argument to have. I mean, I think Mike thinks, I think, first of all, I think Mike thinks we're somewhere in the 40% range in terms of how, where we are right now. And I think he thinks maybe you get to 50, you start to get above that. Some of these problems could appear, but it's, it's really hard to figure this out. And it's certainly for people smarter than me to try to figure it out. Yeah. And then there's the whole percentage of the assets in the market versus the percentage of daily trading volumes and all those fun adjustments that people make. And I mean, full disclosure,

[00:33:04] we're both very drunk on wine coolers right now, right? We have to get that out of the way. Lots of wine coolers. I've never had a, I've actually never had a wine cooler. Have you had one? Yes. Yes. I've definitely had a wine cooler before. I don't necessarily recommend it. No. You know, and I'm definitely at the, uh, I saw somebody doing, trying to do the dry January type thing or whatever on social media. And they were talking about how they had the mocktail, but the sugar in the mocktail gave them a worse headache than they would get for drinking alcohol. And I'm pretty sure that's the age that I'm in right now too. I look at stuff like that and I'm

[00:33:34] just like, ah, that's just that headache in a glass. Are wine coolers still a thing? Like, can you still buy those at the, I mean, I haven't seen them at the liquor store. You know, Yes, they evolve. Let's just put it that way. They evolve. If you still wanted a daiquiri in a bottle or something, I am positive. You could find it in the back of your beer or liquor store, depending on the state of your residence. And I'm pretty sure that like the seltzer market probably like tapped into the wine cooler market or something stupid. Lots of things

[00:34:01] that apparently you and I don't drink and don't know anything about, but you can argue that you can actually argue they were innovative in terms of like all these cocktails in a can and stuff that we have now. Like maybe wine coolers are really innovative and they led to that whole revolution. I can't remember which it was some like consumer packaged goods analyst or like somebody wrote all about this. I remember being deeply fascinated by this for a period of time. It was like, it was a Twitter account or a blog pre-substack or something. And it actually like

[00:34:27] tracked disruptions in places like this. And it was, I remember them like calling the top in the seltzer market. And it was, it's just, I don't know. I love people who care about stuff like this way too much. So the passive debate though, I don't want to completely derail us with the wine cooler comment that I thought was so funny. The, uh, actually I do want to do Larry. What's going on with the trophies in the background there? What do you think the silver chalice is behind Cliff has this? Like a sailing competition? Yeah, there's a good question. We'll have to ask him.

[00:34:56] I want to know what the silver chalice thing is. And then I want to, Oh no. Is it like a, is it like a diet Coke or like, is it a weird cat Sriracha bottle? There's another one like in the middle of a bunch of other stuff. It's like, there's kids. And then there's a suspect bottle that I really want to know what is the contents of this. So it wouldn't be one of our podcasts if you didn't evaluate the backdrop because you pretty much do that at all. So many questions. Mine's almost back to normal here. We're getting, we're making progress. This, this idea and both

[00:35:24] him and Mike Green on the a hundred percent passive isn't possible. Where's the line? I love, love, love, love the Jack Bogle story about basically, you know, 75% would probably be weird. And then winking that he made it up. But like this idea that the mechanism has influence, but there's no way to assign a magnitude of it. That just that sentence, I think is really important. We both of us marvel at the back and forth between really smart people arguing about

[00:35:49] that stuff. Dave Nottig had that mammoth blog post list where he broke all the passive arguments down and they're fascinating. But like, we agree and correct me if I'm wrong. We all agree that the mechanism must have some influence, like more passive is doing something, but actually assigning a magnitude that is really hard. And unless you can find it in a corner, like Mike Green did on the, the volatility trading stuff on the, those vol securities, like unless you can find a corner where it's coiled up, it's really hard to do anything with what the magnitude of the impact

[00:36:19] would be. Is that fair to say? Yeah. And I think that's why that gets it. Why the average investor probably shouldn't do much with this because we don't know when the impact is going to come. We don't know what's going to happen. Like there's, we don't know what percentage. There's so many things we don't know here that, and if you listen to Mike's arguments, like if you believe, even if you believe what he's saying about passive, like he'll argue until the bad thing comes, owning the S&P 500 is probably the best thing you could be doing because you're benefiting from the flows in a passive. So your average investor probably can't do too much with this, but, but I

[00:36:48] think it's really interesting. And I think it's really great that, you know, one of the great things about the guests we have in the podcast is this is something you might look at Cliff vastness, or you might look at another quant guy and say, they're just going to dismiss this thing. Like this is, this makes no sense. Like, and he's thinking about this in a thoughtful way. And we'll have another clip later where he does the same thing with another thing that a lot of us believe like as quants. So I think this idea, this is one of the biggest things you can take from someone like Cliff is like, be open to it, analyze it, figure out whether you think it makes sense,

[00:37:16] look at the data, run the tests and come to a conclusion. Don't just throw it out the window, right away and say like, no, this makes no sense. Plus a million to that. Understand there's stuff that matter, but understand that people will disagree on how much it matters and why. And that is probably a common theme to yeah. All the people we talk about that have brilliant insights about this stuff. They can see something that matters. They just have different ways of expressing their views around it. So we have a standard closing question. We ask at the end of every

[00:37:44] episode, which is if you could teach one lesson to the average investor, what would it be? Here was Cliff's answer to that question. Look at your portfolio as little as possible. Probably, probably 20 of your other people have said the same thing, but that just means it's true. Particularly for, for what you call the average investor. I think there've actually been studies

[00:38:05] on this, but just intuitively, you know, whoever looks at it more loses. I don't know what the right frequency. I can't imagine someone not checking once a year. How's it going? But perceive vol, perceive risk when you look frequently. I, by the way, I think the answer is a little different for professionals. I have to look at how we're doing each day. It's just a little weird if one of my clients calls and goes, oh, big event happened today. How are you guys doing? And I go, I don't

[00:38:35] know. That's, that's just a little odd. But, but I'm a hypocrite. I look at it all day when, when I'm in the office, I look at it all day. When I'm out of the office, I'm actually much better. I can check it on my phone, but I just, I just do it a lot less. But I will tell you myself, and if anyone should be aware of these biases, I'm, I'm, I'm up there with people who should be. I don't know if I, I'm going to tell you I'm not that good at it, which is embarrassing.

[00:39:05] But if we have a day where we've been up, we've been down, we've been up, we've been down, and we ended up flat, I feel like it's been a bad day. The downs hurt me more than the ups made me feel good. The formal term for that is prospect theory, and it applies intraday. My perception of how crazy the world is, is probably larger than it, than it really is. So to the extent people,

[00:39:31] you know, once a year, make sure your money wasn't embezzled or something. That's probably a good idea. But sure, much more than that. No one, no one will probably get to that. But if you're looking daily, look weekly. If you're looking weekly, look monthly. If you're looking monthly, go further out the spectrum. Certainly the individual investor, and most professionals, including me, don't have a lot of short-term predictive power. And their instincts are

[00:39:57] probably to do the wrong thing, to sell at the bottom and buy at the top. So look less would be my one, one liner. This is a simple one, but I think it's, I think it's a really impactful one, because I can't think about, like, even for me, like when I look at my portfolio, I was trying to think about like, what are the positive things that could come of me like going when we're done with this podcast and taking a look at my portfolio? Like, what action could I take that would make it better? Like, is there any possible positive associated with that?

[00:40:25] You're not day trading your personal account right now? I thought that was why we did this. We were just day trading our personal accounts. Like there's zero TTE options that we have to get right, Jack. Come on. That's not what you're doing. And obviously, like my quant portfolio, like, it doesn't make any sense. It doesn't matter whether I look at it because I'm not going to, there's nothing running by a quant strategy. But let's say I am owning like individual stocks or something like that. Like what benefit would there be from me looking at it? And the only thing I could think about is if there was some massive move in a stock that would make me like, it was a big believer in a certain company and a

[00:40:53] 50% decline, you know, I think the market's wrong and it would make me want to buy more. It goes up, it doubles. And I'm thinking like, I probably should pair that back a little bit. Like, that's the only thing I could think about, but that happens very, very infrequently. So most of the time we're doing this, we're doing ourselves no good. An extra, extra, extra, because, you know, just like an asset manager, please don't look at my performance, right? All right. Just like an asset. This idea that anybody who sits in a professional advisor, allocator, investor,

[00:41:23] fund manager, whatever seat, you get this idea of the stuff that you have to look at and how much, what you just said, how much it actually messes with you and actually saying like, what good could possibly come of this? I have to know what's going on. I actually have to look, but understanding the people who hire you, like if somebody hires you to manage their money or whatever the situation may be, like you were being hired in part to bear the pain of looking,

[00:41:50] which there's a transfer of pain that's supposed to be going on in that relationship. Even if you're just buying an index fund, you've transferred some of the pain of worrying about that to the index fund provider or to the advisor or the allocator or the fund manager, whatever it is, you did the hard work to transfer the pain to them to look on an intraday basis. You should probably step back and ask the question that you asked, what possible good could come from me

[00:42:16] looking at this as professionals? We have to look, but I also think, and do you feel this way? I know me as a professional being forced to look has really calloused me to a lot of nastiness and a lot of just like, well, that sucks today, but I know I shouldn't try to do anything about, there's a whole laundry list of stuff. You're like, I shouldn't try to do anything about that out of my control. And I'm only going to make myself fussing with it is only going to make it

[00:42:44] worse. Do you feel like you're more callous to that because you're a professional? There's probably a point as a professional where you've looked so much, we're like at an extreme of it where you're like, yeah, I just don't care. Like not that you don't care, but it's like, I know I can't do anything about it. And also I'm a quant investor. So for me, like there's not any value in terms of like, even if you want to argue, like a professional investor could make changes based on looking like there's nothing for me to change. Like if I look at what our portfolios are doing on any given day, it doesn't matter. Now, now to your point before

[00:43:12] and to Cliff's point in the clip, you can't say as a money manager, I'm not going to look. It's impossible. And I learned that earlier in my career. Like if someone calls you up and says like, what are we doing this month? Or I see the performance is bad this month. You can't be like, not only do I not know what the performance is this month. I also don't even know the securities in your portfolio because we're a quant manager. Like I really know nothing about this because it's just the system that's running. That's correct. That's the right way to manage money when you're a quant manager, but people do not want to hear it. Like you're going to get the

[00:43:39] redemption order from that person very quickly. When you tell them, I don't know where your performance is. And I also don't know what I hold in your portfolio. Like you have to look, you have to know, but you also have to be able to not react, which I think is easier as a quant. But like for all managers, to your point, I think we all get like callous to this, to some degree, we realize we shouldn't be making changes. We become able to look without making the changes. Yeah. Professional just means you have chosen to make it your profession, to endure some

[00:44:06] specific pain that somebody else doesn't want to endure. You know, like I don't want to be a dentist. I don't want to be in other people's mouths. I think that's weird and gross and all these things, but the dentist has chosen the noble profession of looking at all those mouths and all the grossness and all the other things that I don't even want to think of. And there's laundry lists to those jobs. So it shouldn't be a surprise to us or anybody that profession means you're transferring the pain onto somebody else. You should both realize the value of that transference of pain,

[00:44:34] but then also just realize if you're going to choose to do something, know where you got to build a little bit thicker skin because yeah, looking at markets every day is of all the things that can mess with your head. This is one of the ones that I mean, we're preaching from experience here to people who also feel the same way. Like, yeah, this, this stuff will mess you up emotionally if you let it and you better have a way to deal with that. Well, I can argue that Dennis is one of the professions that actually transfers the pain onto you, maybe in a different way.

[00:45:03] Um, but I say that having a lot of teeth work myself. So, uh, can we splice in Steve Martin from little shop of ours doing the dentist song? I think we'll get in trouble for that clip somehow, but yeah, you're, you're right. Valid point, Jack. Thank you. Like I will say a dental implant is not that fun. I mean, again, you're, you're pretty numb for the whole thing, but like here, here in your mouth, like grind something, grinding away your mouth for like a very, very long period of time. Jack hammering into it. Yeah. Right. It's not something you enjoy either way, whether you're feeling the pain or not. All right. I'll pick a better profession next time.

[00:45:32] My apologies to the dentists out there and all their patients. And we've digressed too much in this episode. So we probably should go to our, to our last clip here, but this gets back at this idea of being open-minded to other ideas. And we had Alejandro Lopez, Lira and Andrew Chen on the podcast. And we talked about this idea, which is something that factor investors, I think a lot of factor investors are talking about right now, which is typically if we invest in a factor, whether it be value or momentum, we want to have some explanation as to why it works.

[00:45:59] And usually that's either a risk-based explanation. You know, we're taking more risks, so we get a better return or it's a behavioral explanation. There's some sort of mispricing going on there, but usually we want to have one of those, but there's been a rise of these types of factors where people are saying it doesn't even really matter as long as it works, who cares why it works? And so we asked Cliff about this idea. This is really interesting. I I've only paid through the paper, but, but I, a lot of things I'm lazy these days and I'm old. So a lot of times I send this to,

[00:46:27] I have a literal macro email address called academics at AQR of which we have quite a few that I will occasionally say, give me the too long, don't didn't read version of this paper. So I don't want to claim to be an expert on it, but it's a really cool paper. I think there's a lot more to be done. I'm not willing to throw away intuition tomorrow, but I will note, first of all, you have to remember, and they, they're very clear about this. They're, so I'm not, it's not a criticism of

[00:46:55] them, but you have to remember their, their, their factors without explanation. We're still dealing with economic data, returns, uh, accounting information. They weren't sunspots. They weren't, uh, the famous data mining example at, uh, Max Darnell at first quadrant or Max Darnell knows a different guy at first quadrant did many years ago that butter production in Bangladesh helps predict as the best predictor of S and P returns the next, the next year or something. I always thought he

[00:47:24] might've cheated on that just to create a funny one. Um, but you know, so, so they're not dealing with ridiculous data, which would be much more extreme. Um, I'm unwilling at this point to say we should throw out intuition, um, intuition or guardrails around things. Um, but I will say separate from their findings, the rise of machine learning, uh, even us building something we've

[00:47:53] done in the last five years, a far more, uh, systematic Bayesian approach to allocating among factors, uh, where we let the data speak more, um, has pushed us. He don't, these are made up numbers. It just does for a concept, but AQR has always prided itself on being relying on both economic intuition. Um, and that, that's, that's any good story. It could be behavioral. It could be risk.

[00:48:20] It could even be more common sense, uh, kind of, kind of thing, uh, and data roughly equally. The, the rise of better statistical techniques. Let's push test. I don't know, two thirds, one third data. We're moving in the direction of that paper. And that is a little hard for me when you've touted something for many years and you got to go, no, I'm going to, our philosophy is

[00:48:47] going to change a little bit. But if the, if the, if the data, if the data science gets better at doing its job, our intuition and our, and our theoretical models ain't getting better. Uh, so I, you know, I think the old Keens, if the facts change, I changed my mind. What do you do, sir? Um, I'm unwilling

[00:49:06] on one paper to throw out intuition, but their paper is really interesting. And for maybe some different reasons, we have been moving at least a decent step in that direction. Anyway. I mean, there are some fascinating results, a day of the week momentum where the day of the week years ago, that something has gone up, seems to have efficacy for predicting the day of the week

[00:49:34] going forward. Um, that I'm willing to admit the results are so strong that I'll do at least a little risk without theory. One, one way to think about 50, 50, even in the old days is 50, 50 doesn't require both 50, 50 says, if you don't have one, the other better be massively good. Um, and, and, you know, if you create a strategy, that's non-ridiculous, not super high turnover, butter production in

[00:50:04] Bangladesh search, everything, but it's based on economics and has incredibly high sharp ratios. We can't explain. Yeah. I'd probably take a little risk on that. Just not as much as if I had a story to go with it going the other way, to be honest, I probably wouldn't. And you can have the best theory in the world. The capital asset pricing model might be one of the best theories in the world. Um, makes perfect sense, um, that, that your contribution to risk of a portfolio of a diversified

[00:50:33] market portfolio, not your idiosyncratic risk should, should drive the required expected return. It just is a spectacular failure for 75 years, everywhere it's been tried. Um, so I'm willing to short that theory. Um, I think we have good reasons. That's the famous betting against beta factor. I think, uh, I think leverage limitations or lottery preferences are actually a pretty good behavioral story. Uh, so that's not quite the example from this paper where there's no story.

[00:51:01] Uh, but it's always been a mix of the two and, uh, maybe this paper pushes me even a little further, uh, but only in a direction that we were already voluntarily going. Um, and I'm a little mad at myself for resisting it for a while, but a little proud of myself that approaching 60, I can, I can slightly change my philosophy slightly. You watch excess returns so that Jack forehand can take a semi

[00:51:27] obscure academic paper, send it to Cliff Asness who can then say, no, I haven't seen that paper. Then drop the homework assignment on the good people at AQR who apparently are in some mass email box internally. We're all way smarter than either of us. And we'll now analyze said semi-obscure academic paper that Jack forehand sourced and provided interview material on said excess

[00:51:54] return's channel to see. Also Cliff could give this response. I mean, just bravo to Jack forehand for actually getting this question into the interview first for us. How did you feel about his intro? To your first point, I did feel bad about this because when he said he emailed all these academics, I felt really bad. Like I don't want to cry. One thing I hate in the world is creating any work for any other human being. Like it makes, it makes me feel really bad. So I'm like, I hope these academics read it very quickly, or maybe they gave it to Claude and like said,

[00:52:21] you know, give me an analysis of this. I hope they weren't grinding away reading the paper too much. Have you, have you checked the AQR filings? Did the expense ratios on any funds tick up around the time of this interview? Well, I will, I'll issue a formal apology to all the academics, whoever they are at AQR, because if you had to do this because of me, I feel bad, but it is, it's something we try to do a lot with the podcast, which is we try to find like a lot of the guests that are on a lot of podcasts and Cliff doesn't do a lot of podcasts, but he has over a long period of

[00:52:48] time. Like they get asked about the same stuff. And you know, Cliff, I'm sure when he goes on a podcast, he's like, I don't want to be asked about value investing being dead anymore. Please. Like nobody else asked me about this. I mean, he didn't say that to us, but I'm sure he says that, you know, on his head, I'm sure he says that. So like, I try to find other things we can think of that are things they haven't been asked about or things where it goes back to Mike Green's too. Like it's why we ask a lot of people about Mike Green's work is like, most people have not been asked about Mike Green's work. And a lot of quants have not been asked about this stuff. So

[00:53:15] that's why we asked it. But yeah, I thought his answer was really good. And it gets back to the idea of being open-minded at the end. You know, you have to, it's very easy to just throw this out and say, obviously a factor should be intuitive. It should make sense or it shouldn't work. But they're starting to be more and more data that maybe says, maybe that's not true. And the other thing is, and I think, and we talked about this with Adam Butler when he was on the podcast is to some degree, the more intuitive these factors are, this is not what's necessarily going on right now, but the more intuitive these factors are, the more people want to follow them. And you could argue

[00:53:44] the more that people follow them, maybe the less effective they're going to be in the future. So as long as there's some basis for why the factors should work in terms of the testing, but also, also as Cliff pointed out, we're using financial statement data here in this paper. We're not like throwing butter production in Bangladesh, I think was the example. We're not like throwing random numbers that should have nothing to do with stock prices and trying to create a factor out of that. Like you could argue there is some sort of signal in this financial information that maybe we just haven't, we don't understand why it works, but there is an

[00:54:12] explanation as to why it works. So I think going outside of this intuitive thing with factors, I think makes sense. And, you know, Cliff alluded to the idea that AQR is doing a little bit more of it, but they're doing it in the right way, which is you want to do this slowly. If you're going to do something like this, if you've been doing something a certain way for a long time and you want to change it, like all of us have to slowly embrace this idea, but I don't think we should just throw it out. Like some people have, he even says that he says, you know, starting with the economic intuition, it starts there. And that's where it started years before even he

[00:54:41] started to do it, you know, university of Chicago and all the other work that came into it that he added to it starts there with the economic intuitions, but then we get better tools just even over his career to think about the advent of computational power. And now the advent of machine learning and AI in this process, there's nothing wrong with saying, I still understand the intuition that got us up to this point, but now I have new tools that I want to use to push us beyond. And I love that he says that in the answer, like even with him, where they're going,

[00:55:09] man, the machines are figuring out how to do stuff that we never could have seen or never could have found. And we are definitely not closed to that being an advantage. That's really, that's really cool to me. This is like a Buffett expanding the circle of competence type thing, finding new bridges and new ways to use new tools. Yeah. And I don't think we can go out and like launch the cost of goods sold divided by accounts receivable ETF anytime soon, because most people are going to be like, why are you dividing those two things? And I think that actually is one of the things in the paper that actually did very well, but it's at least important to understand

[00:55:39] like this could be something that could add to another factor strategy. You know, maybe if, maybe if you're using a factor strategy where many of the factors are intuitive, but around the edges, you could maybe do some things with this. Like, I just think it's something where you learn and when you're a factor investor, when you're any kind of investor, like you get humbled over time, you realize like, I have really strong opinions about this one thing. And then over time I have to evolve it. And at the beginning of my career, I was probably like, yeah, no, let's throw the stuff in the garbage. But now like, this is a great research paper.

[00:56:07] It's really well written. It's really, you know, the tests are done the right way. Like there, there's nothing you can criticize about the actual work in this paper. So I think all of us have to look at it and say like, what type of conclusion should we draw from it? Yeah. You got to admit it's there. You got to admit it's there with like good empirical, well-researched, well-presented arguments. And again, how awesome is it that Cliff was able to give us a response for thinking through this and talk about how it's working inside of AQR.

[00:56:32] That's a very impressed by you, Mr. Forehand. And so hopefully Cliff will come back someday. Hopefully we didn't embarrass ourselves too much. You can find out whatever the chalice is behind him, if it's still there when he comes back. But yeah, it was very cool. Like I learned a lot from being able to interview him and like, hopefully we'll be able to do it again someday. One of the great minds in our business. Absolute pleasure to get to spend some time with them and share it with you all here. Thanks for joining us. Thanks for joining us. We'll see you next time. Hi guys, this is Justin again. Thanks so much for tuning into this episode.

[00:57:00] You can follow Jack on Twitter at practicalquant. You can follow me on Twitter at JJ Carbono and follow Matt on Twitter at cultishcreative. If you found this discussion interesting and valuable, please subscribe in either iTunes or on YouTube or leave a review or a comment. Also, if you have any ideas for topics you'd like us to cover in the future, please email us at excessreturnspod at gmail.com. We would like this to be a listener driven podcast and would appreciate any suggestions. Thank you.