"Two-step" bets — where investors try to profit from macroeconomic events by anticipating which companies or currencies the events will most likely affect — are usually a bad idea, or at least much less likely to work out than the original macro insight. Here's why.
For me, a good book is one that speaks to something important and that causes me to think differently and more clearly about the chosen topic. My AQR colleague Lasse Pedersen has written just such a book, Efficiently Inefficient: How Smart Money Invests and Market Prices Are Determined. (Full disclosure: he extols me as one of many, along with our competitors.) From now on, there are two kinds of investors: the efficiently inefficient ones and the merely inefficient ones who didn’t read this book.