Modeling common knowledge by analyzing missionary statements and their reverberations works. Except when it doesn’t.
Understanding changes in the big, zeitgeist-defining narratives, in the water in which we swim, means developing a way of thinking about the barriers that make it harder for the crowd to change its mind.
What do you get when you give a raccoon like Bill Hwang tens of billions of dollars AND invisibility from regulators so that he can run his collusion and insider trading schemes to his heart’s content? You get a rolling series of squeezes and corners. You get a market that is completely disconnected from reality. You get ridiculous Chinese companies pumped and dumped through US listings. You get a Tesla that’s valued at a trillion dollars. You get Gamestop.
I’m not saying that Hwang is responsible for all of this. I think he’s responsible for some of this. And I think there are a lot more Bill Hwangs out there.
Hunger Games Saga
Early notes on investment as an exercise in decision-making under uncertainty. epsilon-theory-donald-rumsfeld-and-risk-management-october-7-2012.pdf (197 KB)
Growing political fragmentation in Europe and its structural consequences for markets. epsilon-theory-hello-darkness-my-old-friend-september-29-2012.pdf (123 KB)
An initial analysis of the Sept. 15th FOMC announcement of open-ended QE. epsilon-theory-dude-wheres-my-financial-repression-september-15-2012.pdf (191 KB)
Early notes on importance of Common Knowledge game in understanding market behavior. epsilon-theory-why-do-words-matter-so-much-august-30-2012.pdf (753 KB) Test: epsilon-theory-why-do-words-matter-so-much-august-30-2012.pdf (753 KB)
Time to cancel all my weekend plans! Fearless (Taylor's Version) is out and I have to listen to this a few hundred times before Monday.
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Search and Discovery
I’m angry that I have to write this note about the airline industry and how to structure the bail-out of United, Delta, American and Southwest. But I must, because the raccoons and the high-functioning sociopaths are looking to get their private losses socialized and their private gains locked in.
Bailout the airlines and their rank-and-file employees? You bet.
Bailout the CEOs and Warren Buffett? Not a chance.