All Epsilon Theory Content
Everything we have published at Epsilon Theory since 2013, an archive of more than 1,000 evergreen notes.
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.
In which Ben introduces the concept of fiat news, which is to “real news” what fiat currencies like dollars and euros and yen are to “real money” like a gold coin.
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?
There are three questions I’d like to answer in this Epsilon Theory note: what did The Narrative Machine tell us about the market immediately before and immediately after the November 8 election, what am I preparing for now as an investor, and what am I preparing for now as a citizen? I’m giddy about the first, quietly confident about the second, and pretty darn depressed about the third. Could be worse, I suppose.
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.
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.
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.
Here’s the thing. The Fed is now revealing its one True Love — its own reputation and its own political standing — and that’s going to be a bombshell revelation to investors who think that the Fed loves them.
The problem with magical thinking run amok and its perpetuation of a fantasy world is that sooner or later the dream of the delusional king becomes a real world nightmare for real world people. It’s time to wake up.
“So, in the interests of survival, they trained themselves to be agreeing machines instead of thinking machines. All their minds had to do was to discover what other people were thinking, and then they thought that, too.” – Kurt Vonnegut
If there’s a better description of modern markets, I have yet to find it. We have become agreeing machines.
Man in Bar: Tomorrow, I’m gonna be a hero. Gideon: I’m sorry? Man in Bar: You may just be a patsy, but you’re an important…
On Monday, Verizon Wireless successfully securitized more than $1 billion in cellphone contracts and sold the notes into the Asset-Backed Securities (ABS) market. Here’s the…
How many things served us yesterday as articles of faith, which today are fables for us? – Michel de Montaigne, The Complete Essays (1580) That…
Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall. All the king’s horses and all the king’s men Couldn’t put Humpty together…
“No wonder kids grow up crazy. A cat’s cradle is nothing but a bunch of X’s between somebody’s hands, and little kids look and look…
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…
The Mysterious Stranger is a liar, to be sure, but he’s a proper villain, as the Brits would say, and he’s quite upfront about his goals and his use of clever words to accomplish those goals.
Your goal? Survive the encounter.
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…
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…
Campaign Company Launch Date “Flo” Progressive Insurance 2008 “Rhetorical Question” “Happier Than A … ” “Did You Know?” “It’s What You Do” GEICO 2009 2012…