Cliff Asness Finds Common Cause with Compass on Coin-Flip Capitalism

Happy new year! Although, if you’re like me, you’ve spent the last week cancelling your kids’ sleepover plans and screaming at them to drum nonstop for America, which can lead to some tension on the home front. Thanks for the advice, Vivek. But we’ll get to all that on Monday. For now, there’s lots to catch up on.

Your one thing to read this week is Cliff Asness’s “2035: An Allocator Looks Back Over the Last 10 Years.”

Asness is one of the world’s best known hedge fund managers and an incisive critic of the foolish herding in asset allocation, the ineffective hedging of most hedge funds, the poor performance of private equity, and the speculative excesses of crypto. Here, he provides a delightful send-up of the many ways his industry will likely fall on its face over the next decade (and be paid handsomely to do so!), with a satirical retrospective sent back from the future.

While he has taken strong issue with American Compass’s work on what we like to call “Coin-Flip Capitalism,” his critique closely mirrors our own and he deserves credit for calling out the absurdity of modern finance from within its richly gilded halls. There’s a reason we keep our very own Cliff Asness Chair of Applied Liberty in the kitchen at American Compass! Maybe we’ll upgrade it to a BarcaLounger.

Where we seem to differ, mostly, is on what to do about the situation. This is a common challenge as the various facades of market fundamentalism crumble. The unavoidable next steps are to clean up the rubble and rebuild something sturdier. Where markets are failing, public policy becomes useful and often quite necessary. But those muscles have atrophied badly on the right-of-center. Satire is fun, but at some point it becomes incumbent on those closest to the problem to begin offering solutions.