Epsilon Theory Podcast

We are the human animal. We are non-linear. We ARE a song of ice and fire. It’s a song that has built cathedrals and fed billions and taken us to the moon. It’s a song that can do all of that and more … far, far more … if only we remember the tune. The Pack remembers.

We live in a Cartoon Age, an era not of alienation per Karl Marx, but of alienation per Groucho Marx. What’s the cause, what’s the future, and what do we do about all this? It’s a TL;DR cri de coeur in Part 12 of Epsilon Theory's Notes from the Field series.

This is Part 11 of Ben's Notes from the Field series. I don’t need to calculate a Sortino ratio to know if my dogs are doing a Good Job. Same with active investment management. Same with active citizenship. It’s all about embracing Convexity, not as a mathematical cartoon, but as a philosophy.

The inevitable result of financial innovation gone awry, which it ALWAYS does, is that it ALWAYS ends up empowering the State. When too clever by half people misplay the meta-game, that’s all the excuse the State needs to come swooping in and crush them, just as they are with Bitcoin today they did with Bear and Lehman in 2008. Installment #10 from Notes from the Field.

What if I told you that the dominant strategies for human investing are, without exception, algorithms and derivatives? I don't mean computer-driven investing, I mean good old-fashioned human investing ... stock-picking and the like. And what if I told you that these algorithms and derivatives might all be broken today? You might want to sit down for Part 9 of the Notes from the Field series.

We've all fallen victim to a bad retcon at some point in our lives. When the story we've been following takes a turn no one was prepared for and we have to act like it all makes perfect sense. It's Sherlock Holmes coming back from the dead. It's the reveal that an entire season of Dallas was only a dream. It's the author changing their mind and trying to convince you that it's all part of the plan. I don't buy it. And neither should you.

The pecking order is a social system designed to preserve economic inequality: inequality of food for chickens, inequality of wealth for humans. We are trained and told by Team Elite that the pecking order is not a real and brutal thing in the human species, but this is a lie. It is an intentional lie, formed by two powerful Narratives: trickle-down monetary policy and massive student debt financing. Part 8 of the Notes from the Field series.

Part 7 of Ben's Notes from the Field series reminds us that you don’t break a wild horse by crushing its spirit. You nudge it into willingly surrendering its autonomy. Because once you’re trained to welcome the saddle, you’re going to take the bit. We are Clever Hans, dutifully hanging on every word or signal from the Nudging Fed and the Nudging Street as we stomp out our investment behavior.

In Part 6 of the Notes from the Field Series, Ben observes that we think we are wolves, living by the logic of the pack. In truth we are sheep, living by the logic of the flock.

In Part 4 of the Notes from the Field Series, Ben identifies how the natural lines of a tree and shaping the tree to follow those lines over time is a lot like shaping a portfolio.