All Epsilon Theory Content

All Epsilon Theory Content

 

Everything we have published at Epsilon Theory since 2013, an archive of more than 1,000 evergreen notes.

Cheesing

By Rusty Guinn | August 26, 2020 | 19 Comments

In a world awash with cheesing, being lawful good doesn’t mean being lawful stupid.

But for God’s sake, don’t lose your soul in the process.

Sacrifice for Thee, Vast Wealth for Me

By Ben Hunt | August 25, 2020 | 10 Comments

Doug Parker, American Airlines CEO and Chairman of the Board, wrote a letter to his employees today that pretty much defines high-functioning sociopathy.

I’m going to reprint excerpts from that letter – which is couched in the saccharine vocabulary of modern team-speak, but is in truth a shakedown letter to employees and a ransom note to the US government – and then I’m going to tell you a few things about Doug.

The Fujiwhara Effect

By Rusty Guinn | August 22, 2020 | 11 Comments

Citizens must be capable of holding multiple ideas in their heads at once.

We can believe that the aims and intents of political powers are not equal while also focusing explicitly on the misuse of the tools of Narrative to manipulative the populace by BOTH.

Facebook Delenda Est

By Ben Hunt | August 20, 2020 | 45 Comments

More than any other company, Facebook is undermining our democracy and our most integral political rights.

More than any other company, Facebook has bought and paid for political cover at the highest levels of American, Indian and European government, political cover that prevents any of the actions we might take as a society to rid ourselves of this cancer.

Facebook delenda est.

Why Publish Academic Research?

By Ben Hunt & Rusty Guinn | August 17, 2020 | 3 Comments

There are many institutional gatekeepers. There are many powerful guilds and socially embedded practices that seek to limit our voices and ideas. Are academic journals the worst of these? Not by a long shot. But they ARE one of these.

This is how we change the world. This is how we unleash our voices and ideas. Not by attacking these institutional gatekeepers from the top-down with yet another institutional gatekeeper, but by making the institutional gatekeeper irrelevant through our bottom-up, decentralized actions.

“Rebalance Timing Luck: The Dumb (Timing) Luck of Smart Beta” by Hoffstein, Faber and Braun

By Academic Research Author | August 17, 2020 | 0 Comments

Hoffstein, Faber and Braun construct long-only indices that provide exposures to popular U.S. equity factors (value, size, momentum, quality, and low volatility) and vary their rebalance schedules to isolate the effects of “rebalance timing luck.”

Their results suggest substantial problems for analyzing any investment when the strategy, its peer group, or its benchmark is susceptible to performance impacts driven by the choice of rebalance schedule.

Carny Barkers

By Ben Hunt | August 13, 2020 | 18 Comments

In the age of capital markets as carny show, we are told by barkers like Cramer that this is what a smart investor or management team does … they should look to the grift du jour for their edge.

Can’t Fight This Feeling

By Rusty Guinn | August 12, 2020 | 11 Comments

No, I don’t think there’s a bubble. No, I don’t think a crash is coming. But when Mark Cuban says this reminds him of 1999 and 2000, he’s right.

And the reason worries me more than either of those things.

The Grifters, Chapter 2 – N95 Masks

By Ben Hunt | August 11, 2020 | 10 Comments

I don’t think I have the words to communicate just how screwed up our PPE distribution system is in this country, or what a profound betrayal it is for our government to support this perverse system of personal greed and corporate ambivalence in exchange for campaign soundbites and photo ops.

But I’m gonna try.

Office Hours – 8.13.2020

By Rusty Guinn | August 11, 2020 | Comments Off on Office Hours – 8.13.2020

It’s the August 11th…I mean, August 13th edition of Office Hours, an interactive livestream in which Ben and Rusty discuss all things narrative in the world today.

Get Me Tools and a Beer!

By Rusty Guinn | August 10, 2020 | 9 Comments

There is nothing wrong with wanting the US to bring back certain critical manufacturing industries to its shores.

But don’t buy the narrative that a crazy scheme like the Kodak grift is the only way to make it happen.

Deep Sociopathy

By Ben Hunt | August 6, 2020 | 6 Comments

Is murder bad? Hmm, I dunno. What are the chances I will be caught and what price will I pay if that happens? If the odds are high enough and the price steep enough, then yeah, I guess THAT would be bad. But the act of murder itself? I mean, I’m sure whoever I murdered – if I were to murder someone, that is, because I really don’t think you can prove that I did – was getting in the way of something that was very important to me. When you really think about it, they were doing the bad thing! Why do you ask?

Welcome to the world of commodity trade finance.

The Mountain and the Molehill

By Rusty Guinn | August 4, 2020 | 22 Comments

There ARE real threats to both the rule of law and our cherished capitalist system today.

But you won’t find either on the streets of Portland or Seattle.

It’s a Mad, Mad, Mad, Mad Market

By Peter Cecchini | August 3, 2020 | 5 Comments

If you’ve never seen the 1963 comedy “It’s a Mad, Mad, Mad, Mad World”, do yourself a favor and check it out. Phil Silvers and Spencer Tracy and Ethel Merman and Jonathan Winters? Yes, please.

ET contributor Pete Cecchini remembers. Better yet, it’s the perfect foil for figuring out a Mad, Mad, Mad, Mad Market.

The Grifters, chapter 1 – Kodak

By Ben Hunt | July 30, 2020 | 15 Comments

We’ve been assaulted by three brutal grifts in just the past week … three smacks from Bobo and his bag of oranges … each deserving of an Epsilon Theory note.

Here’s chapter 1 – the ludicrous crony capitalism of the US government giving Kodak $765 million for “pharmaceutical supply production”.

That’s the Thing I’m Sensitive About!

By Rusty Guinn | July 29, 2020 | 2 Comments

Like all abstractions, extremes can be misleading. They can also be revealing. Using extreme times to learn what our leaders and institutions are sensitive about is a critical, unmissable lesson.

Taiwan is now Arrakis

By Ben Hunt | July 27, 2020 | 37 Comments

“He who controls the spice controls the universe.”
The world’s principal supplier of semiconductors – the spice of OUR global empire – is now Taiwan.
Thanks a lot, Intel. Thanks a lot, Bob Swan. Thanks a lot, Jack Welch. Thanks a lot, all you Wall Street wizards of financialization.
Taiwan is now Arrakis. And we WILL fight over it.

Overserved

By Ben Hunt | July 20, 2020 | 14 Comments

Everyone is in a tizzy about day traders and Robinhood. “Ooooh, they’re going to have such a hangover when the bubble pops.”

Pffft. They’ll be fine.

The investors facing a hangover are small family offices, plied with endless offerings of fee-heavy SPVs and SPACs by multi-billion dollar asset managers.

The Stupid War

By Rusty Guinn | July 19, 2020 | 24 Comments

The war over reopening schools is a proxy war.

The real war is between political parties, but they’ve set up the fight as teachers on one side vs. parents on the other.

This is not our war. This is THEIR war.

How to stop it? We refuse to fight.

Snip!

By Ben Hunt | July 16, 2020 | 4 Comments

Both Trump and Biden have proposed $2 trillion spending plans for next year, confirming exactly what we wrote last December. To the dollar. To the word.

We can’t always write tomorrow’s headlines today. But we do try!