This is an ET Professional note, and for the next few days we’re making it available to everyo
Wage Growth, Groucho Marx Edition
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This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results. Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
Thanks for sharing this Ben. As a “premium” subscriber considering the upgrade to “Pro”, you hit on my exact issue in your conclusion. I can’t bring myself to base my investment decisions on the momentum of what I consider to be false cartoons. I don’t think that I could ever get my heart into it.
Can we make money by betting against cartoons that are a) false b) driving prices in a meaningful way and c) running out of steam? In other words, objective reality as gravity and crumbling narrative as a catalyst. Presumably the inverse (new narrative that is “true to reality” and gaining momentum) could also work. I know that this approach would reduce the opportunity set, but at least I would be able to respect my process and “serve my pack” with “clear eyes and a full heart.”
I think the way to invest in a Clear Eyes and narrative-aware way is this:
base your investments on a real-world view, because that’s the only investment that a real-person can stick with.
start buying when the narrative is against you … not all at once, because the narrative can always go MORE against you … but this is when you start to buy.
accelerate your buying when you see the narrative start to shift your way … this “discovery” phase is where you will make most of your money.
start selling when the narrative is with you … not all at once, because the narrative can always go MORE with you … but this is when you start to sell.
accelerate your selling when you see the narrative start to shift against you … this “Thermidorean” phase is where you can lose your nerve.
Wash, rinse, repeat. Like England, you have no permanent allies (or investments); you only have permanent interests.
Ben this may be the clearest and best investment “advice” I’ve ever read. And it’s also why I think a sell-discipline based on strict, conservative price targets will leave money on the table as often (if not more often) than it will prevent big losses.