In praise of complicated investing strategies
https://www.economist.com/finance-and-economics/2025/08/18/in-praise-of-complicated-investing-strategies
To understand markets, forget Occam’s razor.
https://www.economist.com/finance-and-economics/2025/08/18/in-praise-of-complicated-investing-strategies
To understand markets, forget Occam’s razor.
AQR's 'Hard to Believe' Study Spurs Clash Over AI Use for Quants
https://www.bloomberg.com/news/articles/2025-08-20/aqr-s-hard-to-believe-study-spurs-clash-over-ai-use-for-quants
Ungated version:
https://www.fa-mag.com/news/aqr-s--hard-to-believe--study-spurs-clash-over-ai-use-for-quants-83735.html
The Virtue of Complexity in Return Prediction
https://doi.org/10.1111/jofi.13298
ABSTRACT
Much of the extant literature predicts market returns with “simple” models that use only a few parameters. Contrary to conventional wisdom, we theoretically prove that simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. We empirically document the virtue of complexity in U.S. equity market return prediction. Our findings establish the rationale for modeling expected returns through machine learning.
https://www.bloomberg.com/news/articles/2025-08-20/aqr-s-hard-to-believe-study-spurs-clash-over-ai-use-for-quants
Ungated version:
https://www.fa-mag.com/news/aqr-s--hard-to-believe--study-spurs-clash-over-ai-use-for-quants-83735.html
https://doi.org/10.1111/jofi.13298
ABSTRACT
Much of the extant literature predicts market returns with “simple” models that use only a few parameters. Contrary to conventional wisdom, we theoretically prove that simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. We empirically document the virtue of complexity in U.S. equity market return prediction. Our findings establish the rationale for modeling expected returns through machine learning.