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Ben Hunt

Ben Hunt

He is the chief investment strategist at Salient, a $14 billion asset manager based in Houston and San Francisco, and the author of Epsilon Theory, a newsletter and website that examines markets through the lenses of game theory and history. Over 100,000 professional investors and allocators read Epsilon Theory for its fresh perspective into market dynamics.

Articles by Ben Hunt

Why Take A Chance?

4 days ago

DISCLOSURES

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

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Pushing on a String

11 days ago

DISCLOSURES

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

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The Widened Gyre

12 days ago

From the ET Forum …

Yesterday, the 20th anniversary of 9/11, I read and heard several mainstream references to “the Widening Gyre”. It makes sense that yesterday would spur that sort of narrative connection, as the juxtaposition of the political images and texts from then and now is breathtaking. It’s amazing (and obvious), how polarized we’ve become over the past two decades.

But at this point – where the Widening Gyre is not happening but has already occurred – I think what we’re seeing is the Widened Gyre, where everything is autotuned to the poles of the gyre, including references to the Widening Gyre itself!

Case in point, on Twitter I am now routinely criticized for “contributing” to the Widening Gyre if I don’t engage in perfunctory political whataboutism on any topic

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The Green Protocol: A New Vision for Crypto, Pt 2

16 days ago

PDF download (subscribers only): The Green Protocol

Yggdrasil, the World Tree

This is a proposal to plant one billion new trees in North America over the next ten years.

I’m not asking for your donation to make this possible. I’m not lobbying local, state and federal agencies to spend tax dollars on this. I’m not writing grant proposals to get foundation or endowment money for planting trees. In fact, I may not plant a single tree myself.

This is a project that I hope will encourage you to want to plant trees, to want to pay money to people who are planting trees, to want to join this effort, not out of guilt or fear, and not only out of a sense of civic responsibility, but also out of good old-fashioned greed.

This is a project to establish a cryptographic protocol –

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Thanks I Hate It

22 days ago

DISCLOSURES

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

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C’mon, Australia

August 25, 2021

From the ET Forum …

An Australian Pack member living abroad published what I think is an outstanding review of the depths to which Australia’s Covid-zero policy has descended. Here’s the skinny:

We are a country that pulls things out of the ground, sells coffee to each other, and invests every dollar we don’t have in residential property. And that’s been fine until this point. Australia, more than any other country, has ridden a wave of prosperity over the last 30 years that resulted in a quality of life almost unsurpassed anywhere in the world. But it has bred complacency, and the country’s response to COVID has revealed this complacency and its worrying lack of urgency. We’ve convinced ourselves that we generated long-term prosperity because there’s something special about us;

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Barking Dogs and Not-Barking Dogs

August 23, 2021

DISCLOSURES

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

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Afghanistan and the Common Knowledge Game

August 23, 2021

Afghani president Ashraf Ghani in happier times, before fleeing Kabul with “four vehicles and a helicopter full of cash”

For many months now, the US government knew that the Afghan government would fall to the Taliban.

For many months now, the Afghan government knew that the Afghan government would fall to the Taliban.

For many months now, every NGO, every foreign government, and every Afghani citizen knew that the Afghan government would fall to the Taliban.

For many months now, EVERYONE knew that the Afghan government would fall to the Taliban, and that there would be tens of thousands of Afghani citizens and thousands of US and NATO ally citizens who would need to get the hell out of Dodge when that happened.

And yet for many months now, nothing much happened to

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Kabul is Falling

August 18, 2021

DISCLOSURES

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

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ET Podcast #13 – Wanting

August 17, 2021

DISCLOSURES

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

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US Dollar Exposure Dashboard (NEW)

August 10, 2021

DISCLOSURES

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

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Sauron Remains Undefeated

August 9, 2021

Concealed within his fortress, the lord of Mordor sees all. His gaze pierces cloud, shadow, earth, and flesh.

What happened this weekend in Washington DC, where the Senate debated and ultimately rejected various crypto-related amendments to the infrastructure bill, was not a bad thing at all for Bitcoin! TM, the Wall Street-abstracted representation of the price of Bitcoin. If all you care about is Number Go Up, then you can stop reading this note. All is well!

But if it bothers you even a smidge that the core censorship-resistant and anonymity-preserving DNA of OG Bitcoin is being genetically modified by Washington so that it’s just another gaming table in the Wall Street casino …

If you care in the least that what made Bitcoin special in the first place has been reduced

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This Is What a Wage/Price Inflation Cycle Looks Like

August 6, 2021

DISCLOSURES

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

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Nudging State, Noble Lies

August 4, 2021

“Not that you lied, but that I no longer believe you, has shaken me” – Friedrich Nietzsche

Nudge is a book by Nobel prize-winning economist Dick Thaler and law professor Cass Sunstein, wherein they describe a system of “libertarian paternalism” for State-directed “choice architectures” to improve public policy outcomes by influencing our behavior through clever framing techniques.

To be clear, I’m not applying the word “paternalism” to their work. That’s their word. Because that’s what they think good government is, a father-knows-best apparatus where we unruly teenagers should be pushed and prodded into making better life choices.

In its most basic application, the nudge of “choice architecture” is literally a reframing of formal choices available to us children

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Narrative Machine Webinar Replay

July 29, 2021

DISCLOSURES

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

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Low Demand, Low Supply, High Price Expectations

July 28, 2021

From the ET Forum …

So that’s where we are in our local real estate market – low demand, low supply, high price expectations – and my sense is that this is where we are in lots of markets … not just CT residential real estate. Maybe it’s just the summer doldrums, I dunno. Maybe I’m just taking my local experience as more meaningful than it is. I’d be really interested to hear if anyone is seeing or experiencing the same, either in RE or anywhere else.

Because this is how stagflation happens.

Seasonality is so tough to parse, especially against pandemic-affected seasonality, but it sure seems like inventory got legitimately bought down in Q4/Q1, after which brokers sold that experience and y-o-y % changes to drive a corresponding increase in supply.

Also no idea

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The Third Horseman

July 27, 2021

DISCLOSURES

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

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ET Podcast #12 – Proof of Plant

July 16, 2021

The Epsilon Theory podcast is free for everyone to access. You can grab the mp3 file below, or you can subscribe at:

I want to change the language of crypto from mining to growing, and I don’t mean in a metaphorical sense.

I mean a proof-of-plant method for literally growing crypto tokens as a representation of the value stored in the human cultivation of plants.

More generally, this is a method for the tokenization of symbolic betting markets in positive social goods. I think this is how crypto can change the world. Not as “money” and not as Bitcoin! TM and not as a security and not as this speculative coin versus that speculative coin. Not by facilitating a market of goods, but by facilitating a market of GOOD.

Here’s the note that started the

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The Narrative Machine v3.0

July 6, 2021

DISCLOSURES

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

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The Political Autotuning of Inflation

July 2, 2021

The politicization of inflation into a partisan “There Is No Inflation!” TMnarrative by the nudgers and mandarins on the left is really depressing.

The politicization of inflation into a partisan “Biden Inflation!” TM narrative by the clowns and raccoons on the right is really depressing.

It’s really depressing because it makes it impossible for me to say anything on inflation without getting lumped into an insane partisan box. It’s an entirely constructed and false framing of the issue, and I’m just so freakin’ weary of it.

We call this political auto-tuning. We call this a political shock collar.

It’s the go-to move of incumbents in a two-party system with high-peaked bimodal electorate preferences. THIS is why there are no successful centrist

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I’m So Tired of the Transitory Inflation “Debate”

July 1, 2021

In Epsilon Theory notes, we use a lot of images of politicians and bankers shaking their fingers at us, because it’s a great way to communicate what we mean by Fiat News – the proclamation of opinion as fact. Fiat News is to hard news what fiat money is to hard money, and like fiat money, it’s a dominant transactional medium in modern human society.

When a famous person shakes his or her finger at you, they’re not telling you a fact.

They’re telling you how to think about a fact.

For the past six months or so, the Federal Reserve and US Treasury have made a concerted and highly intentional effort to shake their collective finger at us and tell us how to think about inflation. This effort to encourage doubleplusgood thinking about inflation has a number of tenets, the

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Proof of Plant: A New Vision for Crypto

June 23, 2021

[Author’s note: This is the first of two notes where I set out a proposal for a new way of looking at and applying cryptocurrency systems. This note will review the rationale and general form of a proof-of-plant token, and the follow-up will examine a specific use case and distributed ledger instantiation.]

“Mining” is a bad word.

I’ve spent a professional career looking at the ways we humans are hard-wired and socially-trained to respond to words and patterns of words, and “mining” is a particularly evocative word, a word that contains a story arc in and of itself.

It’s a negative story.

“Mining” tells a story of extraction and destruction. “Mining” tells a story of aggression against nature, a defilement of nature. What’s the first image that pops into your head

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ET Podcast #11 – A Working Narrative

June 16, 2021

The Epsilon Theory podcast is free for everyone to access. You can grab the mp3 file below, or you can subscribe at:

We write a LOT about work. And the responses we get are … weird.

Narratives of work are among the most varied and intensely personal of all narratives. And for good reason. Whether you see it as a social construct or an inherent feature of the human animal evolved to deploy his many faculties productively, work engenders narratives which are also narratives of identity.

Once again, the most important narratives are the ones we tell ourselves.

Like I say, we’ve written a LOT about work. If you’d like to read more, here’s your path:

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“Yay, Stock Buybacks!”

June 15, 2021

H/t @SouthernValue95 for the brilliant memework!

I saw this work of art on Twitter today, referring to Dropbox management using stock buybacks to sterilize their outrageous stock-based comp, and it made my day.

The Epsilon Theory notes I wrote about stock buybacks in 2019 are the most controversial thing we have ever published. They generated more anger, more arguments and more cold shoulders from the mainstream finance community than anything else we’ve done. Here’s my position:

When stock buybacks are used to sterilize stock-based comp (i.e., a company gives managers stock with one hand and buys it back from them with the other hand), no money is “returned to shareholders”. This is true whether or not management actually sells its shares into the buyback program.

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The Fed Won the Narrative Battle in May

June 11, 2021

DISCLOSURES

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

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“Yay, Environment!”

June 10, 2021

In Epsilon Theory-speak, we use “Yay, Good-Thing!” as shorthand for a narrative that takes a linguistic construction that we all agree is a Good Thing (something like “capitalism” or “freedom” or “democracy”) and turns it into a behaviorally powerfully argument for something that is decidedly not that Good Thing, but can be painted with other behaviorally powerful words into something that sorta kinda looks like that Good Thing if you squint really hard and you say the behaviorally powerful words loudly enough.

In rhetorical construction, “Yay, Good Thing!” is a variation on begging the question (in the correct way of understanding that phrase, where the conclusion is assumed in the proposition), or if you’re in marketing or sales you would recognize this as a variation of the

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Fiat News in Action

June 8, 2021

It wasn’t enough for ProPublica to do actual news reporting by publishing these tax records.

The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

No, they had to tell you how to think about their news reporting.

They had to turn news into Fiat News by constructing a metric of “true tax rate” based on unrealized capital gains, because … you know … the actual true tax rate just wasn’t damning enough for ProPublica’s purposes.

To capture the financial reality of the richest Americans, ProPublica undertook an analysis that has never been done before. We compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.We’re going to call this their true

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A Disturbance in the Force

June 7, 2021

Yesterday, one of Softbank’s largest portfolio companies – Katerra – filed for bankruptcy.

Katerra was at the heart of the relationship between Softbank and Greensill, and I think it’s the most viable path by which the Greensill fraud and financial crimes can be shown to be Softbank fraud and financial crimes.

You can read our full take on Greensill and Softbank here …

… but the skinny is this:

in 2019, Softbank put ~$3 billion into Greensill, turning it into the Vision Fund’s private bank. In 2020, Greensill lent Softbank portfolio company Katerra $435 million. When Katerra ran into trouble, Greensill wrote off the $435 million loan in exchange for 5% of common equity. LOL. A $435 million senior secured loan – which had been packaged and sold to Credit Suisse – was

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The Shift to Dovish

June 4, 2021

DISCLOSURES

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

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ET Zeitgeist: Deadly Theatre

June 4, 2021

Here’s what we’re reading and working on this week at Epsilon Theory.

To receive a weekly full-text email of The Zeitgeist, please sign up here. It’s free, and your email will not be shared with anyone. Ever.

The ET Zeitgeist is a window on the discussion threads of the Epsilon Theory Forum – a safe space to speak your mind, a safe space to find like-minded truth-seekers. Watch from a distance if you like, but when you’re ready … join us.

Rusty published this note – Deadly. Holy. Rough. Immediate. – right after we launched the Epsilon Theory website three years ago, and I think it’s still my fave out of all his work. Ostensibly it’s about a book: The Empty Space, by Peter Brook. Really, it’s about Narrative World. It’s about the water in which we swim.

“Peter

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