A Game of Them
January 4, 2019·9 comments·In Brief
We've built an elaborate system for manufacturing enemies who are ridiculous. A trivial dance video becomes a national outrage. A forgotten opinion piece triggers weeks of defensive rage. The threats we obsess over barely exist in real life, yet every news organization and social platform amplifies them anyway. The mechanism works because it feels good to be righteously opposed to something clearly stupid.
• The pattern repeats across domains. From manufactured culture war controversies to investment portfolios, we construct strawman versions of people we disagree with, assign their worst qualities to entire groups, and then declare victory when we "expose" them. The source of the outrage was never genuine threat assessment. It was performance.
• The stakes shift in zero-sum games. In entertainment and social media, this is mostly cost-free. In investing, it becomes lethal. When your story about competitors is false, and you act on it, you take uncompensated risk. Your cartoon about others directly determines which trades you make and which risks you think are worth taking.
• The biggest investor lie masks a bigger problem. Over 90% of fund managers claim their edge is time-horizon arbitrage. They think they're focused on the long-term while others obsess quarter-to-quarter. This story feels true because it's comforting. It's also almost certainly wrong.
• False beliefs about competitors reveal false beliefs about yourself. If you're wrong about how others are playing, you're probably wrong about how you're playing. The edge you think you have might be the same delusion everyone else is running. Your competitors might be operating from the exact same confused playbook.
• Your cartoon about them becomes your real blindspot. When you build a competitive narrative based on how ridiculous others are, you stop asking harder questions about your own reasoning. The story that makes you feel clever about your edge might be the thing preventing you from seeing where you're actually vulnerable.
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Comments
It seems to me that an individual investor can use “time horizon arbitrage” whilst a professional (who gets measured annually) has a much more difficult time doing it.
Neither is easy as emotions are a part of the human psychological make-up, but pros face career risk to use that long term useful strategy.
BTW, the Federal Reserve (and all the Central Banks) clearly recognized the time-constraint that PM’s face when they designed their market manipulation strategies of QE, Portfolio Theory, communication strategies, etc.
Probably a key factor in how they’ve created their Narrative as such a powerful force in markets.
Perhaps (and hopefully) to their chagrin and doom in coming years as free markets eventually win out.
(Thanks for the quote! Now I understand why NNT blocked me on Tw when I said he was the sillyest.)
Cheers and Happy 2019!
There has to be a middle ground between being a Cynic and a Fool, some way of playing the game without losing one’s soul. Recognizing that all of us human animals, including me and including you, are playing multiple multi-level games … well, that seems like a good start to me. The Truths in life are still death and taxes (and maybe compounding returns). Everything else is theatre, where honesty (with a small h) and truth (with a small t) are probably the best we can achieve. And that’s not so bad. --Ben Hunt
Seeing missionaries on TV doesn’t mean they are an expert but a “Performer” … end-of-story.
Trying my best not to post much until I read the entire archive of Ben and Rusty,up to 2015 on Ben, once finished, I will start with Rusty…Take Care all, always a Skeptic and Optimist!
The OAC photo in the header is a fantastic grab! I didn’t quite get the reference at first You must have spent some effort capturing that look - who is the ridiculous one? Us or them (her) - amazing
Hah - there were a couple to choose from!
You have quite the task ahead of you! The content library is presently the rough equivalent of War and Peace.
I think there’s probably some truth in that. Individual investors really do have a lot of underrated advantages. I still favor a professional adviser for just about everyone, just to help manage behaviors, but point remains.
And I’m not sure one can ever truly know why NNT blocked them. Somehow I’ve managed the block hammer, although Ben has been in the penalty box for a couple years now.
Up to 14 pages of notes and to 2018…the most interesting is def the first year and currently the last year to the present! Very interesting to see the cycle/rhythms/sentiment of thought and conversation…will be done with Ben today and start Rusty in am…its the only way to get the full appreciation and understanding! Thank You. My notes will be used for future reinforcement of the ideas as I compare to my future fuckups…pardon my french! It’s all learning…
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