The soul of Epsilon Theory is our long-form content, a library of hundreds of pieces written by Ben, Rusty and others over the course of the last 5+ years. These are the print-and-take-home-for the weekend notes that made Epsilon Theory what it is today.
What killing active investment management? It’s not some monster hiding behind the rabbit. No, it IS the little white bunny. It’s the Zeitgeist of capital markets transformed into a political utility, innocuous on the surface … but with killer teeth.
How do you defeat the Zeitgeist? You don’t. The smart move, in fact, is to help the killer rabbit.
But there IS another way.
In baseball and in investing, how do we distinguish truly great practitioners from merely good ones? Let’s start by looking at two greats who revolutionized how the game is played – Branch Rickey in baseball and David Swensen in investing.
The next stops in our discovery of the process of discovery? A town of 1,282 people and the mind of a German physicist named Arnold Sommerfeld.
The greatest risk to your portfolio is a change in the zeitgeist. A change from deflation to inflation. A change from cooperative international games to competitive games. A change from capital markets to political utilities.
I think it’s all happening.
When our processes of inquiry lack challenge, doubt and obsession with falsifying our best ideas, the result is inevitable. Our conclusions cease to be science and become something else entirely. That something else is a thing sensitive to narrative, vulnerable to priors and bias. That something else is scientism.
The way I see it, there are three reasons a person becomes a liar: he believes that he must, he believes that he may, or he believes it serves a Greater Truth.
Take back your vote.
Take back your distance.
Take back your data.
How to make our way as citizens in a fallen world, with Clear Eyes and Full Hearts to make it better.
Peer group comparisons are the primary measuring stick of both baseball GMs and investment PMs. Here’s how they are used and (more often) abused.
We are wired to associate outcomes with the biggest single visible variance. This is a process-breaking flaw for general managers and portfolio managers alike.
Allocators and investors can learn a lot from professional baseball about how to structure incentives and compensation for portfolio managers. And how NOT to do it.
The Fed, China and Italy are the Three Horsemen of the Investment Semi-Apocalypse. They’re major market risks, but you’ll survive.
There’s a Fourth Horseman. And it will change EVERYTHING about investing.
In Part 4 of the Three-Body Alpha series, we explore how narrative may shape the tendencies of certain trend-following strategies – and how investors should respond. We also talk Tesla, if you’re into that sort of thing.
Part 2 of a multi-part series that seeks to enhance readers’ deployment of both human and financial capital through the exploration of parallels between money management and professional baseball.
What to DO when Things Fall Apart. How to make your way in a fallen world, where the electorate is polarized, the market is monolithic, and everyone seems to have lost their damn minds.
It’s not an Answer. It’s a Process.
Part 1 of a multi-part series that seeks to enhance readers’ deployment of both human and financial capital through the exploration of parallels between money management and professional baseball.
It’s hard to be larger than life in a smaller than life world. It’s hard to be authentic in your art without being artificial. Good theatre does just that. We’re hoping to do the same in Epsilon Theory.
Part 2 of the Notes from the Road series, about the value of and problems with adaptive frameworks. In this installment, an exploration of…
Part 2 of a three-part series on what it means to have a polarized electorate and a monolithic market. Today’s note: How do things fall apart in a monolithic market? Not with a bang but a whimper.
In Part 1 of his Notes from the Road series, Rusty takes us to Ireland. There he begins an exploration of path-dependence and priors in our thinking as investors and citizens.
Part 1 of a three-part series on what it means to have a polarized electorate and a monolithic market. Today’s note: the Age of Ridiculousness and the decline and fall of the American Empire.