A Game of Them

I always made one prayer to God, a very short one. Here it is: “O Lord, make our enemies quite ridiculous!” God granted it.

Voltaire, in a 1767 letter to Etienne Noel Damilaville

Sigh. Yes, we’re going there.

Epsilon Theory readers are well aware of the prevalence and temptation of what we call the Game of You: mirroring and rage engagements. In a mirroring engagement, we follow and interact with an influential missionary of common knowledge because it is gratifying to find someone who looks and thinks like us! In a rage engagement, we follow and interact with someone who we dislike, in part because outrage is fun. But even this is usually a sort of mirroring engagement, where our rage is just performance art for our brethren. Virtue signaling, but without the pretense at virtue. In both cases, it’s largely entertainment.

Mirroring and rage engagements are not real conversations, and they’re not meant to be. They’re one layer of abstraction away from reality, in the way that most entertainment is.

There’s a special case of mirroring and rage engagements that takes this kind of interaction a step further. Let’s call these martyring engagements. They’re the same as a mirroring or a rage engagement, except they exist yet another layer of abstraction away from any semblance of reality. How, you ask, do we achieve this?

  1. Build up a ridiculous straw man about the source of unfair and unreasonable treatment of something perfectly innocent.
  2. Circle the wagons for a rage engagement by assigning that straw man to whatever group you want to take down a notch.
  3. Do a mirroring engagement victory lap with the other ‘good guys.’

There is a reason that Voltaire’s prayer – that God make his enemies ridiculous – is always answered: because we always answer it on God’s behalf. It is very easy to do. We simply find the most unmitigated imbecile among the people we disagree with, and then assign his or her imbecility to everyone whom we would make ridiculous. Et voila.

We did this back in December with the usual hyperventilation over the War on Christmas. What was the cause this time? A really dumb opinion article written by a GQ correspondent in the Washington Post. This was all it took for the internet to build up a week’s worth of bilious martyring engagements over the fear that someone out there might not like it if you said “Christmas.” We all know that in the real world, the odds of this ever being an issue that comes up at all are practically zero. We all know that just about everyone just. Could. Not. Care. Less. But there’s always one someone out there who’ll gladly be our huckleberry, and that’s all it takes.

This, of course, brings us to this week’s martyring engagement of choice – yup, Alexandria Ocasio-Cortez acting like a normal college student. Do you know anyone of any political persuasion who thought the dance video was anything but harmless, cute and funny? Do you know anyone who really thinks that it had any import on how her admittedly cringe-worthy economic ideas ought to be interpreted? Still, every news organization made it an issue, and social media buzzed in righteous defense of someone who was being attacked for something innocent by…er…Stephen Baldwin and an anonymous internet troll? Folks, there was an awful lot of rage and mirroring going on here. Its source wasn’t genuine surprise. If you responded to this meme, you knew what you were doing. You knew that practically nobody had a problem with it, but when the martyrdom engagement is in force, well, what are you gonna do?

It just feels so good to pretend that our enemies are ridiculous, doesn’t it?

The Game of Them is not just a political and civic problem. It’s a problem for those of us in markets, too. Unlike the (almost) pure entertainment value of those martyrdom engagements, when we act on the lies we tell ourselves about other investors in a zero sum game, we are taking uncompensated risk. What’s the biggest, most common, most frequent lie investors tell themselves about the ridiculousness of other investors? It’s the biggest Lake Wobegon of them all, the thing I have heard from >90% of fund managers, >90% of financial advisers and >90% of asset owners.

“My biggest edge is time-horizon arbitrage. The rest of the world thinks quarter-to-quarter. I’m more focused on the long-term.”

No it isn’t.

No they don’t.

No, you probably aren’t.

If you’re building a set of principles about any zero-sum game, the conclusions you make about others are never throwaways. They reflect which risks you think are compensated and which you think are not.  I’m telling you now, if you think time-horizon arbitrage is your edge, the odds tell me that it’s quite likely that you are probably wrong about others participating in the market, and probably wrong about yourself.

And when our cartoons about others so clearly reflect back on our own chances at success, it’s easy to see how A Game of Them becomes A Game of You.

To learn more about Epsilon Theory and be notified when we release new content sign up here. You’ll receive an email every week and your information will never be shared with anyone else.


  1. 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.

  2. (Thanks for the quote! Now I understand why NNT blocked me on Tw when I said he was the sillyest.)
    Cheers and Happy 2019!

  3. 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!

  4. 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

  5. Avatar for rguinn rguinn says:

    Hah - there were a couple to choose from!

  6. Avatar for rguinn rguinn says:

    You have quite the task ahead of you! The content library is presently the rough equivalent of War and Peace.

  7. Avatar for rguinn rguinn says:

    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.

  8. Avatar for rguinn rguinn says:

    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.

  9. 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…

Continue the discussion at the Epsilon Theory Forum


The Latest From Epsilon Theory


This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.