This week, we speak with Richard Bernstein, the chief executive officer and chief investment officer of Richard Bernstein Advisors LLC, which manages $14.6 billion in assets. Bernstein, who was previously chief investment strategist at Merrill Lynch, has been named to the Institutional Investor’s “All-America Research Team” 18 times and has been inducted into the Institutional Investor Hall of Fame. He is also the author of “Style Investing: Unique Insight into Equity Management,” widely viewed as the seminal book on style-oriented investment strategies; he also wrote, “Navigate the Noise: Investing in the New Age of Media and Hype.”
Bernstein explains the four drivers of their models: Profits, Liquidity, Sentiment, and Valuation. What RBA is looking for are sectors where profitability and fundamentals are improving, there’s lots of liquidity to take advantage of it, and nobody cares — that’s a great combination of elements. He explains why Macro focused funds did so well in 2022 — they moved out of growth stocks that had done so well the prior few years and stepped into sectors that were “180 degrees” from growth and had lagged — areas like energy and oil.
We discuss the challenges of launching a Quantitative Macro focused firm right into the teeth of the Great Financial Crisis in 2009. As frightening as that era was, it turned out to be a wonderful time to launch an asset management firm.
We also reminisce about the good old days at Mother Merrill.
You can stream and download our full conversation, including any podcast extras, on iTunes, Spotify, Stitcher, Google, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Cliff Asness, co-founder and chief investment officer at AQR Capital Management. The quant firm manages $100 billion in 40 diversified strategies across equity and alternatives, applying mathematics to market data and making evidence-based investments. His published research can be found at Cliff’s Perspectives.
Rich Bernstein’s Current Reading
The Spy and the Traitor: The Greatest Espionage Story of the Cold War by Ben Macintyre
Rich Bernstein’s Authored Books
Navigate the Noise: Investing in the New Age of Media and Hype by Richard Bernstein
Style Investing: Unique Insight Into Equity Management by Richard Bernstein