Weekly Roundup

Cliff Asness: An hour interview with Cliff Asness.

 It would be hard to improve upon Cliff's Big 4 Investment Principles:

1. Cheap stocks beat expensive stocks 
2. High carry beats low carry 
3. Low risk beats high risk 
4. The trend is your friend

I would just add that, 'risk' doesn't really help understand these principles, because while you can tell a risk story for #1 and #2 they generally seem characteristics more than covariances, for #3 it goes the wrong way, and #4 it doesn't really seem relevant.

Cliff also riffs on a hot new value metric, based on a paper by Robert Novy-Marx highlighting profit margin.

Sex and Envy: Tim Wadsworth at the University of Colorado Boulder finds that

 “There’s an overall increase in sense of well-being that comes with engaging in sex more frequently, but there’s also this relative aspect to it,” he said. “Having more sex makes us happy, but thinking that we are having more sex than other people makes us even happier.” 

Keeping-up-with-the-Joneses in bed. It's not much removed from my sons, whose misery is most affected by knowledge their brother can do something they can't. Wadsworth notes that regardless of the adjective--attractive, funny, smart, poor--these are only meaningful in a relative sense to peers, and so being sexually active only makes sense relative to others.

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