Daily short-form pieces for those without the time (or attention span) for classic Epsilon Theory notes. Look out for regular features like the subscriber mailbag and guest contributions from within the Epsilon Theory network.
Disney is making a play to return to Neverland, a land where valuations are based on establishing market share and dominance of an emerging industry, where the moment you start worrying about how much money you’re making is the moment the narrative breaks. For students of markets and narratives alike, it will be worth watching.
The arrest of Julian Assange presents one of the most fascinating, explainer-laden, Fiat News-driven narrative maps we have seen. Tread carefully in taking what you read about this one at face value, friends.
The gravity of political polarization is real, and the mass which lies at the base of its well are narratives of existential risk.
When it comes to telling us how ‘the smart money’ and ‘the dumb money’ are playing it, there’s always someone who will tell us it’s Duck Season, and someone who will tell us it’s Rabbit Season. The reality is that it’s always Elmer Season. You and me? We’re Elmer in this cartoon.
An interesting question with a straightforward answer. Put simply, if a fund manager tells you they’re selling, ignore the reason they give and replace it with “Big founder wants liquidity.”
It’s the most valuable lesson I’ve got for any smart, young coyote embarking on a career in the Mob or in Wall Street: never ask for a cut on an existential trade idea.
Our Thing isn’t about the money. IT’S. ABOUT. THE. MONEY.
Except when it’s not.
ET contributor Demonetized takes a fresh look at the fable of the Ants and the Grasshopper. Or rather, it’s an Epsilon Theory look, with Clear Eyes and a Full Heart. Metastability, too.
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We take a break from Fiat News to talk about the much simpler, much more straightforward ways that we are told how to think.
They’re not new, but in the widening gyre of our current political Zeitgeist, they are becoming the main attraction.
Helicopter parenting produces kids whose ability to evaluate and take risks has been crippled. If we’re not careful, helicopter parenting from policy-makers will do the same to us as investors.
One of the missionary’s most powerful tools is admiring the unsolvable problem – finding new ways of describing what’s wrong without an honest effort to actually fix it.
With apologies, add this to the list of things that you will now see everywhere.
Ben has already talked about the biggest and most important thing we can do in the face of the admissions bribery scandal.
But many remain convinced that this scandal is an inflection point, a change in the Zeitgeist. It isn’t. But that doesn’t mean we can’t be watching for our opportunity to weaken the influence of the Church of Credential.
“Oh, little Jimmy is going to 20-Years-Ago-This-Was-A-Second-Rate-University? I hear really good things about that school. Congratulations!”
“Thanks! We’re all very pleased. Everyone except my bank account, that is. Hahaha!”
It’s true, everyone is VERY pleased by the current system. Prestige university credentialing is a steam valve … \whispers\ just like elections.
It all started with the Maestro, Alan Greenspan, and his determination to create a Great Moderation. And it was all going so swimmingly, too, until the Great Disaster of 2008.
Now that there’s so little central banks can do, they are dead set on preventing another downturn before it even starts. So how does risk ‘price’ in capital markets when the cost of capital is constantly set too low? It doesn’t.
Everything about the Zeitgeist is working to steer promising minds toward cultivating the skills and temperament needed to succeed in a Fiat World. We are creating a generation of missionaries.
Just one small problem: a competitive game among missionaries is a stag hunt. The dominant strategy for each of us individually is bad for us all. So what the hell do we do?
The Nudging State and Nudging Oligarchy believe they are giving us a gift: Freedom from Choice.
Except that it is neither a gift nor freedom in any sense. Rejecting it isn’t always easy and it isn’t always costless. But it’s the only choice for anyone who would be free.
We are immersed 24/7 in a Fiat World, where we are TOLD that inflation does not exist, where we are TOLD that wealth inequality and meager productivity and negative savings rates just “happen”, where we are TOLD we must vote for ridiculous candidates and buy ridiculous securities and borrow ridiculous sums.
We’re not Flat Earthers. Ha Ha! Those guys are idiots! Can you imagine believing that stuff?
No, we’re not Flat Earthers. We are Fiat Earthers.
ET contributor Neville Crawley is simply one of the wisest people I know, and he outdoes himself in this killer Rabbit Hole note.
Come for the Amazon anecdote. Stay for the book recommendations.
Why are institutional investors in trouble with the new Zeitgeist of capital markets transformed into a political utility?
Because everything you think you know about portfolio diversification will fail. Because emerging markets are going to be crushed before this is over. Because everyone’s inflation-investing muscles have atrophied to the point of helplessness. Because you think long-vol and crisis-alpha are things.
The problem isn’t that we derive too much of our worth and value from work. The problem is that our jobs are becoming increasingly abstracted from work. Friends: Your work is holy.