I’m Not Predicting, I’m Observing

George Soros has a great line, one that I’ve stolen many times: “I’m not predicting. I’m observing.” We really don’t have a crystal ball, and it really is a dumb idea to pretend that we do. But what’s not dumb is to keep your eyes and ears open, observing both what the world is telling you (playing the cards) and what other market participants are telling you (playing the players), and reacting accordingly. That’s the heart of tactical investing.

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The Evolution of Competition

Over the past few weeks, I’ve had a fight with my wife and email spats with two of my best and oldest friends. In each case, I didn’t recognize that we weren’t really talking about what I thought we were talking about, and by the time I did recognize the real issues, I was already too far down the path of combative Ben to care.

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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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Virtue Signaling, or … Why Clinton is in Trouble

Don’t get me wrong. I’m thoroughly despondent about the calcification, mendacity, and venal corruption that I think four years of Clinton™ will impose. Trump, on the other hand … I think he breaks us. Maybe he already has. He breaks us because he transforms every game we play as a country — from our domestic social games to our international security games — from a Coordination Game to a Competition Game.

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Pressure and Time

Red: [narrating] In 1966, Andy Dufresne escaped from Shawshank prison. All they found of him was a muddy set of prison clothes, a bar of soap, and an old rock hammer, damn near worn down to the nub. I remember thinking it would take a man six hundred years to tunnel through the wall with …

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1914 is (still) the New Black

There are decades where nothing happens; and there are weeks where decades happen. – Vladimir Lenin (1870 – 1924)  In 1914, Europe had arrived at a point in which every country except Germany was afraid of the present, and Germany was afraid of the future.  – Sir Edward Grey (1862 – 1933)  Last week’s email, …

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1914 is the New Black

Man in Black: All right. Where is the poison? The battle of wits has begun. It ends when you decide and we both drink, and find out who is right … and who is dead. – “The Princess Bride” (1987)  Time is a game played beautifully by children. – Heraclitus of Ephesus (535 – 475 …

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Sometimes a Cigar is Just a Cigar

Neurosis is the inability to tolerate ambiguity.– Sigmund Freud (1886 – 1939) To learn which questions are unanswerable, and not to answer them: this skill is most useful in times of stress and darkness.– Ursula K. Le Guin, “The Left Hand of Darkness” (1969) Is everything connected, so that events create resonances like ripples across …

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It’s Still Not About the Nail

Reader reaction to the March 31 Epsilon Theory note, “It’s Not About the Nail”, was probably the strongest and most positive for any note to date. The message in a nutshell: financial advisors of all stripes and sizes would be well-served to do more than serve up old-school diversification platitudes in this Brave New World …

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It’s Not About the Nail

Do, or do not. There is no try.” – Yoda, “Star Wars: Episode V – The Empire Strikes Back” (1980) I see it all perfectly; there are two possible situations – one can either do this or that. My honest opinion and my friendly advice is this: do it or do not do it – …

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Why Take a Chance?

Vinny Forlano: He won’t talk. Stone is a good kid. Stand-up guy, just like his old man. That’s the way I see it. Vincent Borelli: I agree. He’s solid. An effin’ Marine. Americo Capelli: He’s okay. He always was. Remo, what do you think? Remo Gaggi: Look… why take a chance? At least, that’s the …

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The Clash of Civilizations

Thomas Cole, “The Course of Empire: Destruction” (1836) In the emerging world of ethnic conflict and civilizational clash, Western belief in the universality of Western culture suffers three problems: it is false; it is immoral; and it is dangerous. – Samuel P. Huntington, “The Clash of Civilizations and the Remaking of World Order” (1996) The …

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Mike Tyson: Master Game Theorist

Everyone has a plan until they get hit in the mouth.– Mike Tyson My long-term strategy turned into a 12-hour strategy.– “Survivor” contestant Dale, voted out in last week’s tribal council Reality doesn’t interest me.– Leni Riefenstahl, acclaimed German film director and Nazi stooge Ben, there is no such thing as a good redouble.– Grace …

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Calvin the Super Genius

People think it must be fun to be a super genius, but they don’t realize how hard it is to put up with all the idiots in the world. ― Bill Watterson, “Calvin And Hobbes” Here is the most fundamental idea behind game theory, the one concept you MUST understand to be an effective game …

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The Game of Thrones and the Game of Markets

Two items for the mid-week. First, an invitation to attend a Salient Webinar I’ll be presenting next Thursday, September 18th at 2pm ET, titled: “The Game of Thrones and the Game of Markets”. I’ll be tying together various threads from past Epsilon Theory notes, with the goal of showing how to listen to financial news and …

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