Abby Joseph Cohen - Blending the Quantitative with the Qualitative

Value Investing with Legends

“The data is the data, and that’s it.”

As a model user, it’s easy to get hyperfocused on quantitative data but reality requires a broader approach.

In the current market environment with uncertainty at every turn, it’s an advantage to be able to blend quantitative and qualitative analysis with years of experience observing the interaction between the economy at large and financial markets.

Today we’re joined by Wall Street Legend, Abby Joseph Cohen, a student of the market who has seen lots of ups and downs from early in her career. Abby was most recently Senior Investment Strategist at Goldman Sachs and she is now a full-time member of the faculty at Columbia Business School, where she teaches a very popular course called the Future of the Global Economy.

Abby started her Wall Street career at T. Rowe Price, ultimately landing at Goldman Sachs in 1990. She made her name there as Chief US Portfolio Strategist, was named a Managing Director in 1996, and made Partner in 1998 shortly before the firm went public. Abby is a native New Yorker, attended Cornell University, and received a master's degree in economics from George Washington University.

In this episode, Abby, Tano, and I discuss the unusual route Abby took in her studies when she combined economics with computer science, why she considers herself a reformed quant, the importance of combining quantitative and qualitative data, what we can learn from financial crises of the past, why she doesn’t believe we’re experiencing the end of globalization, and so much more!

Key Topics:

• Welcome Abby to the show (1:06)
• The unusual path Abby charted for herself in her studies (2:25)
• Why Abby considers herself a reformed quant (4:35)
• When a model stops working (6:23)
• The art of using a model (7:55)
• What happens when many investors are using the same models (9:58)
• How declining interest rates have impacted financial markets in recent decades (13:08)
• The issues that have developed out of the rise of ETFs and index funds (15:03)
• What we can learn from the TMT (technology, media, telecom) sector runup in 1999 and 2000 (18:46)
• The sustainability of companies and how it affects pricing (20:27)
• The evolution of the syllabus for the Future of the Global Economy (23:00)
• Factors that cause a crisis to become a lasting phenomenon (25:19)
• Risks associated with monetary and fiscal policy decisions taken during COVID (27:11)
• Abby’s take on the potential end of globalization (31:37)
• The problem with current methods for measuring productivity (36:22)
• The increasing role of the Federal Reserve in stabilizing the world financial system (38:21)
• The anticipated evolution of the energy sector over the next few decades (42:14)
• Abby’s single biggest worry (45:44)
• What keeps Abby optimistic about the future (47:17)
• Abby’s book recommendations (48:54)
• And much more!

Mentioned in this Episode:

• Madeleine Albright’s Book | Fascism: A Warning
• Fiona Hill’s Book | There Is Nothing For You Here: Finding Opportunity in the Twenty-First Century
• Amor Towles’ Book | The Lincoln Highway: A Novel

Thanks for Listening!

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