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Tax Matters

Ten Lessons on Managing Concentrated Wealth

Nathan Sosner, AQR Principal and guest co-editor of a recent special issue of The Journal of Wealth Management, identifies ten principles for managing concentrated positions. One point is especially clear: concentrated wealth is not simply a problem to solve, but an asset to manage thoughtfully over time.


Tax Matters

Managing Concentrated Wealth: Research, Perspectives, and Practical Insights

AQR Principal Nathan Sosner was guest co-editor for a special issue of The Journal of Wealth Management on managing concentrated wealth. Drawing on behavioral finance, investment analysis, wealth planning, and practitioner experience, the issue offers practical perspectives on navigating the transition from wealth creation to wealth preservation.


Perspective

I Did Not Predict What Is Going on in Privates

I push back on claims that I predicted recent turmoil in private markets, clarifying that my prior work focused on long‑term issues like volatility mismeasurement, illiquidity, and expected returns—not short‑term market calls. While privates play a real economic role, I argue investors shouldn’t confuse smoothed valuations and perceived stability with lower risk or superior long‑run performance.


White Paper

Diversifying Alternatives and the Rearview Mirror

Part 10: This paper examines how investor biases and performance-chasing behaviors can undermine the benefits of long/short diversifying alternatives. We explore why such strategies often feel disappointing in bull markets, yet remain vital for long-term portfolio resilience.


Perspective

Everything and More

My colleague and former classmate Antti Ilmanen is at it again with his second book, Investing Amid Low Expected Returns. Very rarely does a sequel stand up to the original (see Jaws II), but that's certainly not the case here!


Working Paper

Game On: Social Networks and Markets

This paper studies how echo-chamber effects and fake news can lead to disagreement and misinformation with effects on investors’ portfolios and market prices. It presents a model how an investment idea can propagate through a social network, generating a trading frenzy with high turnover, a bubble in the price, and high price volatility. The paper also presents empirical evidence on the dramatic events related to the GameStop stock in January 2021 and discusses broader economic implications.


Journal Article

A Data Science Solution to the Multiple-Testing Crisis in Financial Research

In this paper, we present a real example of how multiple testing information can be reported. We use that information to estimate the Deflated Sharpe Ratio of an investment strategy.


Perspective

Perhaps the Most Important Essay I Will Ever Co-Author

We model when a hockey coach should pull the goalie when trailing and then discuss how our results relate to key lessons for portfolio and risk management, and business in general.


Journal Article

Bad Habits and Good Practices (Supplement)

A supplement to our article about the habits that may hinder long-term investment performance: multiyear return chasing, under-diversification and comfort seeking.


Journal Article

A Historical Perspective on Time-Varying Expected Returns

Investors naturally think about the expected returns of bonds based on their market yields, thus assuming time-varying expected returns.