Sunday, June 05, 2005

Portrait of a quant

Here is a nice profile (NYT Sunday magazine) of hedge fund manager Cliff Asness. Some time ago, we discussed his research on a modified Fed model for equity valuation. Asness has a PhD from Chicago, and a quantitative style of investing. The article does a good job of explaining how hedge funds caught on with university endowments as alternative investment classes with (potentially) low correlation to the overall market, and good risk-return characteristics. Schools like Yale and Harvard led the way, with spectacular results.

Of being super rich, Asness says "Well, it doesn't suck." For a description of how the Bush tax policies favor the super rich, see here. (Those earning more than $10 million a year now pay a smaller share of their income in taxes than those making $100,000 to $200,000. So much for progressive taxation!)


Carson C. Chow said...

That basically follows the demographics of who voted for him.

Anonymous said...

I'd read this guy's "Bubble Logic" essay many years ago, before he'd become a big success. It was a welcome antidote to the willfull stupidity infusing so much financial punditry on the topics of stock valuations and options expensing. Good to hear he's done well for himself.

Anonymous said...


If I understand your comment correctly, yes, some Bush voters benefitted, but a far greater number facing larger taxes (and reduced services) voted for Bush...contrary to their interests. "What's The Matter With Kansas" explains much of this phenomenon. Unfortunately dogmatic christians, a failure to appreciate long term implications of Bush policies, and a poorly articulated Democratic message have all contributed to this bizzare situation.

More people with weird utility functions.


Anonymous said...

Well, the super-rich are playing a very short-sighted and self-defeating game. This, along with hollowing out America's industrial base without preparing the workforce/society adequately, will cost them dearly later.

Personally, I don't know what I would do with a billion dollars that would make me even epsilon happier than I already am.

But on a more pragmatic level, by creating a society of such inequality they are ultimately threatening their own wealth. This has happened earlier in history and (despite Fukuyama's claim about 'end of history' post-89) will happen again, and a lot sooner than they realize.


Steve Hsu said...

I think it is very short-sighted, but there is no force restraining the super wealthy from grabbing what they can.

Eliminating the inheritance tax (what Bush calls the "death tax") will further increase the wealth gap in the U.S.

Anonymous said...

Indeed the super-rich are making out very well, but it seems that it is the "moderately" rich (like Bush and Cheney) who are driving this bifurcation in economic status.

I do not recall any instances where Gates, Buffett, or any of the super-rich complain about taxes stifling their businesses or job creation. On the contrary, at least these two individuals bemoan the poor educational performance of our school systems.

Perhaps the biggest problem is the perception among US citizens that they all have a good chance of being super-wealthy some day, so they should vote based on their "future" interests..and buy a super-lotto ticket. Another feature of insufficient education.


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