Post-Fed
Follow-Up

A quick post-Fed follow-up to “Tell My Horse”, the best-received Epsilon Theory note to date (thank you!). I’ll jump right into what I’ve got to say, without the usual 20 pages of movie quotes and the like. Well, I’ve got one quote above, because I can’t help myself. They’re the lyrics to the best break-up song ever, and they’re what Janet Yellen was singing to the market on Wednesday.

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Tell My Horse

So yeah, I’m overweight and I need to get more sleep. I’m not happy about the market, and I’m anxious about living up to my obligations to my partners and clients. But I wake up every morning thinking independent thoughts about idiosyncratic risks. I’ve got a Tribe. I’m nobody’s horse. And that’s about as good as it gets here in the Hollow Market.

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Westworld

If political parties in Western democracies were stocks, we’d be talking today about the structural bear market that has gripped that sector. Show me any country that’s had an election in the past 24 months, and I’ll show you at least one formerly big-time status quo political party that has been crushed.

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The Art of the Probe

We often write about Common Knowledge – the game of markets. It’s time to talk about how to play it. So how can you be a better game-player? What are some specific strategies one can adopt to play the game of markets more effectively?

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You Had One Job

Every dog needs a job, and every investment does, too. No single dog can be all things to all people, and neither can a single investment. Nor can any pack of dogs accomplish anything and everything you like. The biggest mistake people make when they get a dog is trying to make the dog fit into the life they wish they led, rather than the life they actually lead.

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Anthem!

I want to be a patriot again. I want to be a fundamental investor again. It won’t ever be exactly like it was before, but that’s okay. A renewed faith can be a stronger faith. It just won’t be a blind faith. It has to be a faith based on my own labor and my own time, a non-alienated patriotism and a non-alienated investment strategy. It has to be a political participation and a market participation based on who we are, not who we are paid to be.

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Cat’s Cradle

Negative rates are ice-nine. If you don’t know what ice-nine is, read the book. Spoiler alert: the world ends. TIAA will end the voluntary expense waiver on the CREF Money Market Account by April 14, 2017. This decision was reached after ongoing discussions with the TIAA and CREF boards, as well as our state insurance …

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Optical Illusion / Optical Truth

Portion of original dot map by Dr. John Snow, the founding father of epidemiology, showing the clusters of cholera cases in the London epidemic of 1854. The visual representation of Snow’s data analysis convinced local authorities to shut down the contaminated public well at ground zero of the cholera outbreak, although it would be another …

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The Placebo Effect

BOTOX® is the only FDA-approved, preventive treatment that is injected by a doctor every 12 weeks for adults with Chronic Migraine (15 or more headache days a month, each lasting 4 hours or more). BOTOX® prevents up to 9 headache days a month (vs up to 7 for placebo). BOTOX® therapy is not approved for …

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My Passion is Puppetry

Campaign Company Launch Date “Flo” Progressive Insurance 2008 “Rhetorical Question” “Happier Than A … ” “Did You Know?” “It’s What You Do” GEICO 2009 2012 2013 2014 “Mayhem” Allstate 2010 “University of Farmers” Farmers Insurance 2010 “Magic Jingle” State Farm 2011 2011 “That’s Not How It Works” Esurance 2014 “Chicken Parm You Taste So Good” …

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Hobson’s Choice

If you don’t like what’s being said, change the conversation. – Don Draper, Mad Men: “Love Among the Ruins” (2009) It is better for reputation to fail conventionally than to succeed unconventionally. – John Maynard Keynes, “The General Theory of Employment, Interest, and Money” (1936) Bobby: What do you mean you don’t make side orders …

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Snikt

As longtime Epsilon Theory readers know, I’m a big comic book fan. One of the joys of a comic done well is the effective representation of a dynamic multi-dimensional narrative within a static two-dimensional art form. As the saying goes, a picture is worth a thousand words, but occasionally so is a sound. Or rather, …

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You Can Either Surf, or You Can Fight

Kilgore: Smell that? You smell that? Lance: What? Kilgore: Napalm, son.  Nothing else in the world smells like that. – Apocalypse Now (1979) Hello, hello, hello, how low? [x3]– Nirvana, Smells Like Teen Spirit (1991) Outside the bus the smell of sulfur hit Bond with sickening force.  It was a horrible smell, from somewhere down in the stomach of the …

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Storm Warning

Unfortunately for mariners, the total amount of wave energy in a storm does not rise linearly with wind speed, but to its fourth power. The seas generated by a forty-knot wind aren’t twice as violent as those from a twenty-knot wind, they are seventeen times as violent. A ship’s crew watching the anemometer climb even …

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I Know It Was You, Fredo

Sen. Geary: Hey, Freddie, where did you find this place? Fredo Corleone: Johnny Ola told me about this place. He brought me here. I didn’t believe it, but seeing’s believing, huh? Old man Roth would never come here, but Johnny knows these places like the back of his hand. – “The Godfather, Part II” (1974) …

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Rounders

Mike McDermott: In “Confessions of a Winning Poker Player,” Jack King said, “Few players recall big pots they have won, strange as it seems, but every player can remember with remarkable accuracy the outstanding tough beats of his career.” It seems true to me, cause walking in here, I can hardly remember how I built …

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Season of the Glitch

When I look over my shoulder What do you think I see? Some other cat lookin’ over His shoulder at me. – Donovan, “Season of the Witch” (1966) Josh Leonard: I see why you like this video camera so much. Heather Donahue: You do? Josh Leonard: It’s not quite reality. It’s like a totally filtered …

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When the Story Breaks

The Three Types of Fear: The Gross-out: the sight of a severed head tumbling down a flight of stairs. It’s when the lights go out and something green and slimy splatters against your arm. The Horror: the unnatural, spiders the size of bears, the dead waking up and walking around. It’s when the lights go …

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The New TVA

War is too important to be left to the generals.– Georges Clemenceau (1841 -1929) Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off. … If we call the method regulation, people will hold …

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