Awesome post by @CliffordAsness taking on the many narratives used today to explain away record valuation spreads in the market.
The TL,DR is that neither leverage, nor quality, nor size, nor monopoly, nor P/B being dumb account for the record spreads
aqr.com/Insights/Persp…
The TL,DR is that neither leverage, nor quality, nor size, nor monopoly, nor P/B being dumb account for the record spreads
aqr.com/Insights/Persp…
@CliffordAsness Controlling for every narrative, spreads are record wide 
@CliffordAsness 🔑 "today looks more like a relative depression in value stock prices rather than euphoria in the expensive stocks... important, as most arguments and ex post rationales for value’s difficulties generally come from theories about the expensive “monopoly” “winner-take-all” stocks.
@CliffordAsness Might the explanation lie somewhere other than big differences today in leverage or profitability for expensive vs cheap stocks as compared to history (because these are not big today)? Sure. It’s also technically possible the NBA restarts and the NY Knicks take the championship.
