The Epsilon Theory Archive

“History doesn’t repeat itself, but it often rhymes.” Mark Twain said that, or Abraham Lincoln depending on what corner of the internet you find yourself on any given day. Likewise, there are common themes, topics and subjects that run throughout the Epsilon Theory archive. All of our writing is categorized, tagged and organized to be easily accessible, but beware: your search for truth on one matter may very well lead you down any number of rabbit holes (and we hope that it does).

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quant

Volatility

Overall price volatility for stocks remain low supporting the bullish setup seen in the momentum data.  Read more »

quant

Correlations moved higher over the week, we think this is likely indicating strength of macro events such as increased rates and increased pressure on inflation. Read more »

quant

Momentum

Short-term stock momentum is picking up, as in energy and metal commodities, while developed country bonds are slipping.  Read more »

quant

The 10-year Treasury closed the week at 2.47%, moving higher in the first week of trading. Read more »

note

We’ve had a heckuva busy year at Epsilon Theory, so to ring out 2017 I thought it might be helpful to distribute a master list of our publications over the past 12 months. Read more »

note

In a two-body market, the interactions of fundamental data and prices are generally predictable. In a three-body market, the epsilon — investor behaviors in response to narratives — exerts a powerful gravitational force which must be considered when building a portfolio. Read more »

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 this one. Read more »

note

Costs in investing are one of the big Things That Matter, but the decisions you make about risk, diversification and behavior are all going to impact your portfolio more than the expenses you are paying on funds or to your financial advisor. Read more »

note

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. Read more »

note

As we strive to truly be somebody in the world, we find ourselves forced into a Competitive Game that kills our ability to have a dialogue with one another. Rusty explains what keeps us there. Read more »

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