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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

Narrative Machine Webinar Replay

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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Low Demand, Low Supply, High Price Expectations

5 days ago

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

6 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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ET Podcast #12 – Proof of Plant

17 days ago

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

27 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 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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Deadly Theatre

June 4, 2021

The Deadly Theatre of corporate signaling on Pride Month continues to run rampant, with feel-good rebranding pop-ups in all the geographies where this is a marketing advantage … and nothing in geographies where it isn’t.

What is Deadly Theatre? It’s a performance that is so deeply abstracted from its source material that it has become painfully, obviously artificial to anyone who is paying attention.

And yes, there’s an Epsilon Theory note on that.

— Rusty Guinn | June 4, 2021 | 10:34 am

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ET Zeitgeist: Raccoons Never Sleep

May 28, 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.

Every item in this email is a discussion thread on 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.

A raccoon (in Epsilon Theory lingo) is a financial huckster or conman.

I hate raccoons.

P&C insurer Lemonade (LMND) went public last year and now has a $5 billion market cap. They’re not just a sleepy insurance company, of course. No, no … they’re actually a cutting edge AI Company! TM.

That’s why it’s okay that they lose more

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Shot … Chaser

May 28, 2021

P&C insurer Lemonade (LMND) went public last year and now has a $5 billion market cap. They’re not just a sleepy insurance company, of course. No, no … they’re actually a cutting edge AI Company! TM.

They’ve deleted the tweet above and issued a classic non-denial denial on their blog:

Let’s be clear: AI that uses harmful concepts like phrenology and physiognomy has never, and will never, be used at Lemonade.We have never, and will never, let AI auto-reject claims.

LOL. So their AI Jim textbot + video recognition program (I am not making this up) isn’t using phrenology and it can’t auto-reject claims. No, no … the supervisor will reject the claim. BITFD.

— Ben Hunt | May 28, 2021 | 7:47am

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Raccoonery in Action

May 27, 2021

Honestly, I kinda like Chamath-the-CNBC-talking-head. He’s iconoclastic and smart. A little too much Ben Shapiro / college debate team-esque with the “if I talk really fast maybe you’ll just ignore that jaw-droppingly stupid thing I just said”, but better than the usual CNBC fare regardless.

But Chamath-the-portfolio-manager? Raccoonery in action.

Here’s the Social Capital 2020 annual letter, published five months into 2021. There’s no mention of the disastrous year to date, which demands that you ask the core Epsilon Theory question: Why am I reading this NOW? But even taken on its own terms – hey, let’s talk about 2020 performance going into June, 2021 – this is just a complete crock.

Chamath describes his fund’s performance as “gross IRR” over aggregated multi-year

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The Diversification Problem

May 26, 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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Bitcoin! ™ Can’t Unring the ESG Bell

May 25, 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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Homeschooling Resources on ET Forum?

May 25, 2021

I think a homeschooling VMPT is a natural for the ET Forum!

On last week’s Office Hours conversation, ET Pack member Dan W. brought this up:

I would love to have a conversation about the state of public education in the US right now. My wife taught in public schools for ~10 years before deciding she wanted to stay home with our children (and homeschool them, something ET deserves a lot of credit for). Over the past year, several friends have reached out to us because they’re suddenly contemplating either homeschooling or… something different. It’s kind of heartbreaking – people in our circle are desperately looking for some kind of option that doesn’t seem to exist at present. I am not that interested in the politics of public education, but very interested in pack-sourcing

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Why Am I Reading This Now?

May 25, 2021

Pack member Rob H. brought this up at last week’s Office Hours, and it deserves its own thread (as well as some attention from the Narrative Machine).

I think the most interesting part of the burgeoning UFO/UAP narrative is that it is clearly being driven by the Defense Dept.

I also think the only things DOD truly cares about today are China and budgets.

Why am I reading this NOW?

[embedded content]
— Ben Hunt | May 23, 2021 | 9:12am

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Inflation as Ad Campaign

May 25, 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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Many People Are Saying … Bitcoin is Art

May 25, 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: With Enemies Like This

May 21, 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.

Every item in this email is a discussion thread on 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.

The Eye of Sauron – by which I mean the panopticon gaze of the US Treasury Department – continues to expand its purview over crypto.

Prior Treasury-proposed crypto surveillance was focused on “money transmitters” – banks and exchanges and brokers … any business where money IS their business. These new proposals take those same

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Bullish, Bearish, Expensive, Cheap

May 19, 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 Zeitgeist – May 14, 2021

May 14, 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.

Every item in this email is a discussion thread on 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.

Ransom Paid

From a Bloomberg article on Thursday:

Colonial Pipeline Paid Hackers Nearly $5 Million in Ransom

“Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday, contradicting reports earlier this week that the company had no intention of paying an extortion fee to help restore the country’s largest

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Wage Inflation Isn’t Coming. It’s Already Here.

May 13, 2021

George Soros has a great line that we’ve used a lot in Epsilon Theory notes. When he was asked how he could possibly have predicted what would happen when he famously “broke the Bank of England” in 1992, he replied in that growly Hungarian voice: I’m not predicting. I’m observing.

It’s the perfect catchphrase for the modern, narrative-savvy investor. It’s the perfect catchphrase for the Three-Body Problem market, where there is no algorithm for predicting markets (no closed-form solution, in the lingo), but only tools for calculating markets. Where there is no Answer for successful investing. But there is a Process.

I’m not predicting. I’m observing.

The Three-Body ProblemIt’s a hard concept to wrap your head around, this difference between calculating the

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