Epsilon Theory is Dr. Ben Hunt’s ongoing examination of the narrative machine driving human behavior, political policy and, ultimately, capital markets—an unconventional worldview best understood through the lenses of history, game theory and philosophy.
Ben’s originally from Alabama but now lives out in the wilds of Fairfield County, Connecticut, on a “farm” of 44 acres. While his pre-electrification, dairy farmer grandfather may’ve laughed at his calling his modest spread a farm, Ben’s learned a few things over the years from the farm and its animals, and they’ve helped him become a better investor. Here are his notes from the field in this regular Epsilon Theory feature.
From our A-Team of seasoned subject matter experts, the Narrative is an evolving stream of perspectives and insights on a broad range of financial subjects and asset classes. Please read, enjoy and share.
To understand the impact of catalytic narrative forces, we have to monitor the vital signs of the capital markets they affect. To analyze the big picture through the lenses of game theory and history, we must also examine the details through lenses like volatility, momentum, income, correlation and inflation. These are the indicators of systemic vitality and stress—the fine details we use to fine-tune our worldview. We hope they help you sharpen your understanding of the investable universe.
Dr. Ben Hunt hosts the Epsilon Theory podcast with co-hosts and special guests from financial services, the financial media *gasp* and beyond. The Epsilon Theory podcast is the quickest way to get all of the unconventional perspective, historical context and narrative analysis you’ve come to expect from Epsilon Theory pumped directly into your head.
We’re growing our family of Epsilon Theory contributors to include a broad range of voices on an evolving range of subject matter. If you listen to the podcast, you’ll recognize some of the names as colleagues, partners and friends of Ben from Salient, any number of past lives, and the growing circle of outspoken truth-seekers in financial services and beyond.
Epsilon Theory author Dr. Ben Hunt is frequently quoted in print, radio and TV appearances.
Salient Partners is the proud parent company of Epsilon Theory. Salient is a diversified asset management firm and leading provider of real asset and alternative investment strategies for institutional investors and investment advisors.
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It’s that time of year, when the kids get out of school and somehow you’re supposed to have more time to spend reading. I’m going to share a few of my current, hopefully off-the-beaten-path favorites with you. These recommendations are going to focus on good old-fashioned free email subscriptions, kind of like Epsilon Theory. If you want to read great literature, please check out the McSweeney’s store, where the books are as beautiful on the outside as the words are on the inside. And if you want the list of finance-related classics, well, Ben’s already done that work for you here (I can’t recommend Fortune’s Formula highly enough!). So, on to my email list recommendations:
Ostensibly, Bob writes about music and the music business, so this is certainly most applicable for those with an interest in music and the music scene, but Bob’s near-daily communiques are about so much more than music. I’ve been reading Bob for about three years now and his advice for artists is applicable to business leaders as well — primarily to focus on being authentic and not to worry about appearing vulnerable, which is actually humanizing and allows others to bond with you. http://lefsetz.com/wordpress/
I don’t know where I first came across Scott’s blog/newsletter, which is nominally about digital marketing strategy, but it’s now a weekly blessing. He’s a professor at NYU Stern and just sold his consulting business L2, but he’s continued to publish notes that are very much in the Lefsetz vein. Scott’s an expert in his field, and he also understands that transparency and authenticity drive the connection with the reader. His tagline or motto is “life is so rich,” and it is, especially when you’re reading his smart, beautiful, and brutally honest stuff. https://www.l2inc.com/
When it comes to technology and the VC world, my go-to used to be Bill Gurley of Benchmark Capital and his wonderful Above the Crowd (great name; Bill’s super-tall); however, Bill is down to about a post a year of late, so don’t expect much on a regular basis, but consider signing up because when he does post, it’s a must-read. However, his friend and Benchmark venture partner, Scott Belsky has started doing a monthly-ish collection of his thoughts and links to interesting content in the technology and design arena which he is calling Positive Slope, and I highly recommend it. http://digest.scottbelsky.com/
Tim’s WaitButWhy blog is tech-focused also, but his specialty seems to be explaining Elon Musk’s ambitions in relatively plain but plentiful (like 40,000 words at a time) English for those of us who aren’t engineers, using low-tech stick figure diagrams and clip art. http://waitbutwhy.com/
Lacy Hunt & Van Hoisington
OK, so this is a more straightforward investment management letter, but if you want to understand why interest rates are so stubbornly low in the face of unprecedented “money printing” by central banks around the world (spoiler alert: velocity of money!), you should be reading whatever Lacy and his partner Van Hoisington of Hoisington Asset Management in Austin, Texas are writing. Yes, they run a long-dated Treasury fund and are “talking their book,” but they’ve been so right for so long while almost everybody else in our business has used every 20-basis-point backup in rates as an excuse to call for the Death of the Bond Bull Market. http://www.hoisingtonmgt.com/newsletter
I learned to meditate a few years ago using a simple technique called passage meditation pioneered (or documented!) by Blue Mountain Center of Meditation founder, Eknath Easwaran. You can sign up for a daily dose of wisdom, taken from his book Words to Live By and delivered via email. https://www.bmcm.org/subscribe/