Epsilon Theory Professional
We have been working on developing a platform for expanding our narrative monitors for almost a year now.
We are really excited to show it to you – and to work with you to develop something that will be USEFUL and ACTIONABLE.
The head-on narrative collision between ESG and crypto, which has been building for months, finally happened.
It’s the biggest threat that Wall Street’s Bitcoin! ™ has ever faced.
We believe that looking at momentum and trend-following in narrative-space through the lenses of Bullish, Bearish, Expensive, and Cheap gives a much sharper and more predictive view of this behavioral phenomenon than looking at it through the lenses of price-space alone.
New from the Narrative Machine, coming to ET Pro this summer!
The investment question you hear constantly today is whether or not supply-driven inflation will eventually make its way into wage and price inflation. This is the wrong question … wage and price inflation are already here.
The right question is how bad this wage and price inflation cycle will be.
The growing narrative resignation to a future hawkish Fed and a future tough road for high-flying, high-multiple stocks is a martingale … it makes market exuberance impossible, but also keeps the market from getting totally spooked.
I’m building a target list of individual companies where I want to do further research in developing a dedicated short or long-vol portfolio with highly asymmetric risk/reward qualities. Here’s what I’ve found so far.
The hallmark of Information Theory is this: information is neither true nor false; it is only more or less powerful, with power defined by how much it changes your mind from what you believed before.
For stocks to go up on good news, there must be a negative story of woe and doubt that the good news “overcomes”.
The internal narrative consistency – cohesion in Narrative Machine-speak – changed dramatically in both our Central Bank and Security Analysis Methods monitors this month. This is the necessary next step in the creation of market common knowledge and (I suspect) a longer-term investable trade/direction for markets.
There is a tide that is flowing out today, and it’s revealing Lex Greensill and Bill Hwang just as surely as it revealed Jeff Skilling in 2001 and Bernie Madoff in 2008. The big trade around Skilling and Madoff wasn’t directly on their specific scams and frauds, but on what their specific scams and frauds showed us about systemic rot in the financial system.