Meta Information
Epsilon Theory
October 15, 2020·8 comments·Money
The real insider advantage isn't what officials say in private meetings. It's knowing that what they're saying publicly contradicts what they actually believe. During the early pandemic, White House advisors expressed one level of concern behind closed doors and claimed containment in public, and that gap between the two became the most valuable information in the market.
- The information asymmetry that mattered wasn't the substance of what was discussed in those private rooms. It was the knowledge that the public statements about COVID's economic impact were fundamentally dishonest.
- Hedge fund managers who learned about the private briefings didn't need the details of what officials feared.They needed to know that officials were afraid at all, while publicly claiming control.
- This type of edge, meta information, has become the dominant source of alpha in modern markets. The grift is the wink, not the words.
- Getting access to this kind of information requires proximity to power and participation in the influence-peddling ecosystem. Retail investors and most professionals are structurally locked out.
- The question becomes whether legal market edge in the current system demands that investors either accept moral compromise or accept disadvantage. There may be another way, but it's unclear what it looks like.
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Comments
If any sort of company should be good at metagame, “social media” companies should. That they seem to be pandering to the party they expect to be gaining power says a lot about how much they more fear regulatory scrutiny.
*more they fear… Sigh.
Ben, I love this article, the layman’s concept of metagame is great. I also can’t help but notice that it’s promoting ET Pro (both directly and in the linked article “The Epsilon Strategy”).
I’m a loyal subscriber to ET – but ET Pro is not in my budget right now. So I’m curious, how much more time/focus by you and Rusty is spent on ET Pro subscribers vs regular ET?
I am more inclined to believe that in their vast accumulation of social / personal information, they realized that the state is light-years ahead, and started operating out of fear of becoming the next Snowden / Assange. Their good early intentions of supporting a political side, for the same reason as having office scooters and ping pong, paved their pathway. Taking the bit in their mouth, they made themselves every bit as useful as any propaganda machine or defense contractor.
The current administration has been relatively adept at grabbing one side of reigns for now. And no matter who else is holding on, that’s all you need to turn a horse. Must be frustrating to know so much about so many, likely including very dark secrets about very powerful people, yet be unable to use it to gain personal autonomy.
It’s all one research/publishing effort, and there’s no budget for time/focus on the different offerings. We’re a registered investment advisor, and so we cannot legally publish much of our market and security-specific research to a universal audience. Also, that market and security-specific research is something that people are willing to pay more money for.
We are not communists.
Thank you Don Vito…after all WE are not communists…
Of course, one of the suppositions of the NYT article is that everyone doesn’t know that every single time Kudlow gets on CNBC he is 100% full of shit.
S&P 500 Futures gapped down 100 points into the open on February 24th. Cash market followed. What time was the White House briefing? I’m not sure the hedge funds needed to be tipped, the exponential rise into the February high was very similar to the January 2018 run and rising VIX was stopping out futures positions in volatility targeting funds. The initial sell-offs were structurally identical. VIX inversion after new highs starts robotic selling. A correction was due. I was going to sell on the open on Feb 24 & still sold despite the gap down.
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