Office Hours is back this Friday 04/19 2-3pm EST. Subscribe to Epsilon Theory to check it out.

ET Podcast #8 – Leverage and Its Discontents

April 2, 2021 | Ben Hunt | 3 Comments |

The Epsilon Theory podcast is free for everyone to access. You can grab the mp3 file below, or you can subscribe at:

Spotify: https://open.spotify.com/show/3ZXOnreiGGiUtuGHzbin6d

Apple: https://podcasts.apple.com/us/podcast/epsilon-theory-podcast/id1107682538

Three blow-ups in three months: Archegos, Greensill, and Melvin Capital.

What do they have in common?

Insane leverage employed to maximize private gain, provided by lenders that can socialize losses.

We reference three archived ET notes in the podcast, linked here and taken out from behind the paywall.

The Grammar of Risk

Leverage / Illiquidity /Concentration

In a normal market you can handle two. In a bad market you can’t.

Read More

By Our Own Petard

We will never – can never – be aligned with our agents.

Sorry.

Read More

Oh hell, Martha, go ahead and burn yourself if you want to.

We all need some burns. But they have to be OUR burns

Read More

If you’d like to sign up for a free email to let you know what we’ve published in the prior week, please go here. We have about 100,000 email recipients, and your contact information will never be shared with anyone.

If you’d like to learn more about our subscription options, including unlimited access to more than 1,000 published notes, private content not available on the public-facing website, and engagement with an active community of truth-seeking investors and citizens, please go here.

To learn more about Epsilon Theory and be notified when we release new content sign up here. You’ll receive an email every week and your information will never be shared with anyone else.

Comments

  1. > Insane leverage employed to maximize private gain, provided by lenders that can socialize losses.
     
    A spot-on observation like that deserves immediate translation into Esperanto:
     
    “Freneza levilado utiligita por maksimumigi privatan akiron, provizita de pruntedonantoj kiuj povas socialigi siajn perdojn.”

  2. I found the discussion interesting thank you. I somehow feel that the narrative about the “private” investor coming into the market to provide idiosyncratic opportunities to be a bit naive! we should improve the analysis: If people have not worked out that Robin hood and co. we should help: they are the best allies of Wall Street and they are not a casual occurrence, they are the conduit from what once was a bucket shop to financial markets. the narrative about them needs to be rectified: these tools that are simply luring into the game the greater fools and allowing them to leverage beyond this solar system… happy Easter everyone

  3. When you’re among wolves, you must bay at the moon.

Continue the discussion at the Epsilon Theory Forum

Participants

Avatar for bhunt Avatar for fladarama-ch Avatar for mondano

The Latest From Epsilon Theory

Slot Machine 4x3

Cursed Knowledge #28: Casual Gambling in Videogames

By Harper Hunt |
Intentional Investor - 1 (5)

The Intentional Investor #1: Ben Hunt

By Harper Hunt |
EPSILON CONNECT (3)

Breaking News #19: Number Go Up For November

By Harper Hunt |
Untitled design (7)

Breaking News #18: The Rise of the Raccoons

By Harper Hunt |
Maslow 4-3 small

Bitcoin Endgames & The New Hyper-Agents

By Dave Nadig |
Untitled design (1)

Breaking News #17: The Rise of Financial Nihilism

By Harper Hunt |
Louis xv 4-3

And You Wonder Why Bitcoin and Gold are at Record Highs

By Ben Hunt |
uncut gems 3 4-3

Financial Nihilism

By Travis Kling |
ts-eliot-4-3

The Semantic Universe

By Ben Hunt |
Untitled design (1)

Breaking News #16: Technology and the Teenage Mind

By Harper Hunt |
DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.