All Epsilon Theory Content


Everything we have published at Epsilon Theory including our long-form content, a library of hundreds of pieces written by Ben, Rusty and others over the course of the last 5+ years. Plus, short-form pieces for those without the time (or attention span) for classic Epsilon Theory notes.


By Ben Hunt | March 9, 2014 | 0 Comments

Question: Mr. President, a clarification if I may. The people who were blocking the Ukrainian Army units in Crimea were wearing uniforms that strongly resembled the Russian Army uniform. Were those Russian soldiers, Russian military? Putin: Why don’t you take a look at the post-Soviet states. There are many uniforms there that are similar. You …

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Two Quick Points

By Ben Hunt | March 6, 2014 | 0 Comments

Two quick Epsilon Theory points before the jobs report tomorrow. First, remember the Goldilocks Narrative of the post-Great Recession Era…slow growth keeps the Fed in play, so disappointing but still positive job numbers are an initial shock but ultimately market friendly. Conversely, surprisingly good job numbers may be good news for the real world, but not for …

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The Power of Why, Exhibit 4,512 in a Continuing Series

By Ben Hunt | February 28, 2014 | 0 Comments

No man is an Iland, intire of it selfe; Every man is a peece of the Continent, a part of the maine; If a Clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were, as well as if a Mannor of thy friends or of thine owne …

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Don’t Fear the Reaper

By Ben Hunt | February 23, 2014 | 0 Comments

Buck Finemann, seventy two years old. Cantankerous old geezer. No-one liked him much, but they allowed him to play poker with them once a week because he was a terrible card player and had been known to lose as much as seventy five cents in a single evening. – Carl Kolchak, “Kolchak: The Nightstalker – …

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Goldilocks and the Dog That Didn’t Bark

By Ben Hunt | February 13, 2014 | 0 Comments

Det. Gregory: Is there any other point to which you would wish to draw my attention? Holmes: To the curious incident of the dog in the night-time. Det. Gregory: The dog did nothing in the night-time. Holmes: That was the curious incident. – Arthur Conan Doyle, “Silver Blaze” The market was down more than 2% …

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Oh Stewardess, I Speak Jive

By Ben Hunt | February 6, 2014 | 0 Comments

Instead of a long-form note this Sunday, I thought I’d write a briefer note in advance of this Friday’s jobs report. I’ll be back next Sunday, Feb. 16, with a long note taking an Epsilon Theory view on portfolio diversification. Please feel free to forward this email to whomever you think might be interested, and …

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Yen Strengthens Below 102

By Ben Hunt | February 3, 2014 | 0 Comments

There was a clear short-term narrative developed in the financial media last week creating a focal point at 102 in the Yen/USD exchange rate. The short-Yen trade is perhaps the most crowded trade in the world right now, so a strengthening of the Yen to break below the focal point is a big deal for …

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The Play’s the Thing

By Ben Hunt | February 2, 2014 | 0 Comments

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.

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By Ben Hunt | January 28, 2014 | 0 Comments

To lose one parent, Mr. Worthing, may be regarded as a misfortune; to lose both looks like carelessness.  – Oscar Wilde, “The Importance of Being Earnest” Behold yon miserable creature. That Point is a Being like ourselves, but confined to the non-dimensional Gulf. He is himself his own World, his own Universe; of any other …

Read moreFlatland

American Bandstand

By Ben Hunt | January 19, 2014 | 0 Comments

Well, Dick, it’s got a good beat and you can dance to it.  – standard response to Dick Clark’s “how do you rate this song” question Dancing is a vertical expression of a horizontal desire. – Robert Frost I know nothing, except what everyone knows – if there when Grace dances, I should dance.  – …

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Parasite Rex

By Ben Hunt | January 12, 2014 | 0 Comments

The most effective alpha-generating strategies are, technically speaking, parasites. I say this with love and admiration.

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Adaptive Investing: What’s Your Market DNA?

By Ben Hunt | January 5, 2014 | 0 Comments

It is not the strongest or the most intelligent who will survive but those who can best manage change. – Charles Darwin We think we know that chimpanzees are higher animals and earthworms are lower, we think we’ve always known what that means, and we think evolution makes it even clearer. But it doesn’t. It …

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The Construction of Robert Capa

By Ben Hunt | December 22, 2013 | 0 Comments

I went to the Democratic Convention as a journalist, and returned as a cold-blooded revolutionary. – Hunter S. Thompson Some people will say that words like scum and rotten are wrong for Objective Journalism — which is true, but they miss the point. It was the built-in blind spots of the Objective rules and dogma …

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Whatever It Takes

By Ben Hunt | December 17, 2013 | 0 Comments

A few observations on what to look for in the language of the FOMC announcement tomorrow from a game theoretic perspective. Ever since Mario Draghi ad-libbed the lines “whatever it takes” in his July 2012 speech in London, a speech that together with the equally fabulistic OMT program rescued Europe and the Euro from the …

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The Stuka

By Ben Hunt | December 9, 2013 | 0 Comments

The Fed is now playing the Common Knowledge game openly and directly, making public statements through their media intermediaries to tell you how ALL market participants perceive reality, even though in fact NO market participant has a clear view of reality. Media intermediaries such as the WSJ’d Jon Hilsenrath are the equivalent of the Jericho …

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A Dogmatic Slumber

By Ben Hunt | December 1, 2013 | 0 Comments

FREEDOM IS SLAVERY IGNORANCE IS STRENGTH WAR IS PEACE. – George Orwell, “1984” SECRETS ARE LIES SHARING IS CARING PRIVACY IS THEFT. – Dave Eggers, “The Circle” Beauty is no quality in things themselves: It exists merely in the mind which contemplates them; and each mind perceives a different beauty. One person may even perceive deformity, where …

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The 18th Brumaire of Janet Yellen

By Ben Hunt | November 24, 2013 | 0 Comments

One of the more painful lessons in investing is that the prudent investor (or ‘value investor’ if you prefer) almost invariably must forego plenty of fun at the top end of markets. This market is already no exception, but speculation can hurt prudence much more and probably will. Ah, that’s life. And with a Fed …

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When E.F. Hutton Talks

By Ben Hunt | November 17, 2013 | 0 Comments

If you like your health plan, you can keep your health plan. – Barack Obama Of course, one objective of both traditional and nontraditional policy during recoveries is to promote a return to productive risk-taking. – Ben Bernanke Most people are other people. Their thoughts are someone else’s opinion, their lives a mimicry, their passions …

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The Wages of Fear

By Ben Hunt | November 10, 2013 | 0 Comments

You don’t know what fear is. But you’ll see. It’s catching, it’s catching like small pox! And once you get it, it’s for life! So long, boys, and good luck.  – Henri-Georges Clouzot, “The Wages of Fear” I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will …

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Poindexter Über Alles

By Ben Hunt | November 7, 2013 | 0 Comments

Recent papers written by Fed functionaries and the attendant media attention serve as a reminder of the academic and bureaucratic capture of the Fed. More interesting is whether this same capture has occurred in other policy areas, such as national security and healthcare, such that QE, Obamacare, and NSA eavesdropping are all best understood as …

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