AQR on the Next Decade for US Stocks

Author

The Idea Farm
January 07, 2024

“Every time you hear a parent utter "it will rot your brain," it presages the next $10 billion industry.”

Josh Wolfe

Research

AQR states the excess-of-cash return on the S&P 500 averaged 11.9% per year over the past decade. That is well above the 90th percentile of rolling ten-year performance across global developed equity markets since 1950. Then they analyze what assumptions are needed for equities to achieve similar (or just average) returns over the next decade.

Verdad published a great piece on private equity, which can be summed up by the following:

"Our results suggest that the dispersion in private equity can be fully replicated in public markets, provided that investors focus on buying cheap, levered micro-caps and hold them in a concentrated portfolio, similar to the portfolio construction in PE."

Facts & Figures

Pinterest released their 2024 “Pinterest Predicts” report, which shares emerging trends for the coming year based on the 482 million people that use Pinterest. Link

a16z’s Katherine Boyle gave a must-listen speech on American dynamism and how to win the fight for America (19 minutes). Link

What people searched for in 2023 on Google. Link

Here’s an intellectually honest analysis of tech company dilution. Link

Robin Wigglesworth wrote 4,500 words on the past, present and future of multi-factor quant investing, with lots of insight from AQR’s Cliff Asness. Link

Podcasts

12/14/23 - 140 minutes

In a rare podcast appearance, Jeff Bezos starts by about his interest in space & Blue Origin for 87 minutes. Then he discusses Amazon, his principles, his routine and more.

12/19/23 - 73 minutes

Ishbia is the Founding Partner of Shore Capital, a private equity firm that invests in microcap businesses. He shares lessons learned from deploying $7 billion with an average transaction size of just $12 million.

12/14/23 - 60 minutes

Grant Williams talks about all the key macro topics: the US dollar, Japan, inflation, gold, the Fourth Turning and more.

What Else Is Happening