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Schrödinger’s Price

By Ben Hunt | October 30, 2020

The insight of Schrödinger’s Cat is that the cat is alive AND the cat is dead before the box is opened. It’s not merely unknown whether the cat is alive or dead. The cat is actually alive AND actually dead at the same time.

In our real-life world of investing in markets, we frequently deal with real-life cats that are both alive AND dead at the same time. Like US Treasuries.

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Fractures in the US Energy Independence Narrative

By Ben Hunt | October 20, 2020

Every once in a very rare while, we see what we call a Missionary statement (an action or a speech by a famous person or organization on a ubiquitous media platform) that has the potential to change the Common Knowledge (what everyone believes that everyone believes) about an important aspect of our investment lives.

Here’s one.

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From Pillar to Post

By Ben Hunt | October 14, 2020

We are only given the world once. Usually that’s not a big deal from an investing standpoint, because the possible parallel universes aren’t that far apart in their market consequences. Over the next three weeks (and maybe longer than that!), the fact that we are only given the world once is a very big deal indeed.

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The Best Hedge

By Ben Hunt | October 7, 2020

Markets happen at the margins. So does narrative impact on the market.

That’s important for understanding our semi-bearish narrative monitor signals here in October, as well as for understanding why they may not matter very much right now.

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Cartoon Network

By Ben Hunt | September 29, 2020

This Friday’s jobs report could show a wage inflation “shock” as salaried Americans work fewer hours to help out their kids with a shattered school schedule.

Maybe it will end up being nothing, but there are plenty of algos that trade these releases immediately as they are reported, and this is classic example of how an algo can get really wrongfooted when the underlying ultra-stable data series goes haywire. Forewarned is forearmed.

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The Beachball Theory of Volatility

By Ben Hunt | September 23, 2020

No matter how hard you try to keep a beach ball underwater … pushing it, sitting on it, laying on top of it … it seems to have the mind of a trapped animal, turning and spinning to get to the surface at all costs.

I think exactly the same thing is true when it comes to volatility in markets.

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Adventures in Hollow Market – SoftBank

By Ben Hunt | September 7, 2020

I don’t know if this is what SoftBank did.

But this is how I would do it.

Although I wouldn’t because I think it’s probably illegal.

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September Monitors and Election Risk

By Ben Hunt | September 2, 2020

My take on the “massive” VIX election premium? Not massive enough.

This isn’t a “fiscal cliff” we’re talking, which was about as manufactured a “crisis” as I’ve seen. This is an honest to god non-trivial chance that we have an intractably disputed election and Constitutional crisis in the United States, against a backdrop of widespread violence in American cities. If that sounds like a VIX of 30 to you … well, bless your heart.

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The Inflationary Shock Recipe

By Ben Hunt | August 27, 2020

Massive real-world household formation growth + positively correlated stock and bond prices + ZIRP forever and ever amen = an inflationary shock to your portfolio.

I don’t know when, and I don’t think it happens before the election, but this is the recipe.

The time to start preparing your portfolio for an inflationary shock and the havoc it will wreak on what you think is a well-diversified portfolio of stocks and bonds is NOW.

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Narrative Monitors

Legacy Monitor Archive (Pre-January 2020)