Ben Hunt - The Stories that Drive Markets (EP.393)
Jun 24, 2024
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Ben Hunt, founder of Epsilon Theory, discusses the power of narratives in markets, the role of storytelling in finance, starting with a hypothesis for market analysis, using big data for investment strategies, and the manipulation of language in news and society. The conversation explores understanding market narratives, risks in investment, and personal insights on career success.
Stories drive market behavior and shape investor perceptions.
Geopolitical and systemic risks can be tracked through narrative analysis for market disruptions.
Deep dives
Michael Lefel's Investment Platform Ten East
Michael Lefel, a former executive at Davidson Kempner, leads Ten East, an investment platform offering private market access to investors. With a decade-long track record, the platform provides opportunities in private credit, real estate, venture capital, and other unique investments sourced and committed by Michael and his team.
Ben Hunt's Path to Finance and Storytelling in Investing
Ben Hunt's journey from academia to finance highlights the importance of storytelling in investing. He leverages narratives and unstructured data to understand markets, emphasizing that stories shape market behavior. Through Epsilon Theory, he explores how narratives, not just data, drive market movements.
The Role of Narrative in Predictive Investing
Ben Hunt's approach as a 'strong form narrativeist' underscores the dominance of stories in markets. He believes narratives are reactive, not predictive, shaping market perceptions and behaviors. By understanding and analyzing changing narratives, investors can navigate market dynamics effectively.
Identifying Investment Risks Through Storytelling
Ben Hunt focuses on geopolitical and systemic risks, such as tensions between China and Taiwan and Iran and Israel. He warns of risks in private credit, comparing current structures to pre-financial crisis practices. Through narrative analysis, he tracks early warning signs for potential market disruptions.
Ben Hunt is the creator of Epsilon Theory and co-founder of Second Foundation Partners, where he writes and invests through the lens of narratives, or in his words “If a price moves, it is because a human told themselves a story.” Before turning to investing twenty years ago, Ben was a tenured political science professor and founder of two technology companies. He has been studying trends using what we now call big data ever since his first book about predicting international conflict in 1997. Our conversation covers Ben’s path to finance, the power of stories, tracking and measuring narratives in markets, and applying the lens of narrative to investing. Ben’s insights offer a careful consideration of what’s really going on in markets. Learn More Follow Ted on Twitter at @tseides or LinkedIn Subscribe to the mailing list Access Transcript with Premium Membership
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