AQR's Asness Calls Stock Market 'Very Expensive'

The video discusses the difficulty in defining a financial bubble, focusing on unrealistic assumptions needed to justify certain prices. It contrasts value and growth stocks, noting that the market in late 2020 was in a bubble. The 2021 market had high stock prices and low bond yields, leading to low expected returns. The current market is not considered a bubble but is still expensive, with a caution against assuming short-term corrections solve long-term trends.

What is a key challenge in defining a market bubble?

• The rapid growth of technology stocks

• The influence of government policies

• The lack of historical data

• The need for unrealistic assumptions to justify prices

How does the speaker differentiate between cheap and expensive stocks?

• By their market capitalization

• By their dividend yield

• By their growth potential

• By avoiding the terms value and growth

What was notable about the stock market at the end of 2021?

• Stock prices were low against fundamentals

• Bond yields were high compared to expected inflation

• It was priced to its lowest expected return ever

• It had the highest expected return ever

What does the speaker suggest about the market's recovery?

• The market is still in a bubble

• The market has fully recovered

• The market is undervalued

• The market is no longer in a bubble but remains expensive

What is the speaker's view on the market's current state?

• The market is fairly valued

• The market is very cheap

• The market is in a bubble

• The market is very expensive