Ben Hunt | The Narrative Machine: Investing in a World of Tall Tales, Big Games, and Giant Cons
Hidden Forces
Demetri Kofinas
4.8 • 1.6K Ratings
🗓️ 22 July 2019
⏱️ 79 minutes
🧾️ Download transcript
Summary
In Episode 95 of Hidden Forces, Demetri Kofinas speaks with investor and author of Epsilon Theory, Ben Hunt, about the power of narrative and how it is used to shape and control our behavior as investors. This episode also includes a series of in-depth discussions about the long legacy of the 2008 financial crisis, identitarian narratives, three-body problems, the challenge of making accurate predictions, and 'The Great Bitcoin Epic.'
Ben Hunt's background and career path have been anything but ordinary. He received his Ph.D. in Political Science from Harvard, co-founded multiple tech companies, and managed his own billion-dollar hedge fund. When he isn't busy writing about market narratives or indeterminant models, you can find him tending to his horses, gathering a fresh basket of eggs, or engaging in other chores on his family farm in Connecticut.
The main themes from Epsilon Theory that we focus on in this conversation include the three-body problem, as well as Ben Hunt's writings on narrative and the power that comes from shaping how people think about the world. This leads to a variety of discussions about various market phenomena, including a unique, thoughtful, and illuminating conversation on bitcoin – its culture, the narrative of bitcoin, how that narrative emerged, how it has evolved, and how it informs the price of bitcoin. Below are time codes for this episode:
06:45 How Markets Changed After March 2009
10:33 The Story that Changed the World in the Summer of 2012
12:24 No Fundamentals for Markets Anymore
15:54 The Three-Body Problem
27:02 Past Performance is Not Indicative of Future Behavior
32:14 Turning Capital Markets into Political Utilities
34:45 Origins of Fed Communication
39:04 Forward Guidance and the Loss of Market Resilience
40:40 Informational Feedback at the Fed
43:50 Inflation vs. Deflation Narrative
46:26 The Role of Central Banks
49:11 Bear, Lehman, and the Banking Mafia
53:19 Shitcoin US Dollars
58:15 Facebook Libra and Censorship Embracing Coins
1:05:59 The New Bitcoin Narrative
1:08:01 Comparing Development Models for the Internet and Crypto
1:09:16 Culture of Bitcoin: Tech vs. Finance
1:14:13 Loss of Faith in Government
Producer & Host: Demetri Kofinas
Editor & Engineer: Stylianos Nicolaou
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Transcript
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| 0:00.0 | Today's episode of Hidden Forces is made possible by listeners like you. |
| 0:04.6 | For more information about this week's episode or for easy access to related programming, |
| 0:09.7 | visit our website at hidden Forces.io and subscribe to our free our give us a review. Each review helps more people find the show and join our amazing community. |
| 0:26.6 | And with that, please enjoy this week's episode. The What's up, up, everybody? |
| 0:48.0 | What's up everybody? |
| 0:50.0 | What you're about to hear today is only part of an over two hour long conversation that I recorded |
| 0:57.4 | last week with investor and self-ascribed dilettante farmer Ben Hunt. Ben has a very interesting career |
| 1:06.7 | arc. He got his PhD in political science from Harvard. He's co-founded multiple tech companies, and he managed his own billion-dollar |
| 1:16.0 | hedge fund. |
| 1:17.5 | He now spends most of his time farming, which we'll get into, and writing what has become an extremely popular website and newsletter called |
| 1:26.7 | Epsilon Theory where he focuses on trying to understand the narratives that are being created, refined, and repeated in the media and social |
| 1:38.2 | media and which drive so much of our perception of the world and our behavior as investors. |
| 1:45.0 | He's done two other interviews, one with Grant Williams for Real Vision in 2018, |
| 1:51.0 | and the other with Patrick O'Shaughnessay also from last year. |
| 1:55.0 | Both were excellent and I think complementary to one another. |
| 1:58.6 | And I didn't want to really repeat much of what was discussed in those and I think we accomplished that. |
| 2:05.6 | The main themes from Ben's work that we focused on were his use of the three-body problem |
| 2:10.9 | in physics and how it relates to markets and the illusion of pattern |
| 2:15.8 | and predictive power in historical data and also the power of narrative and how he |
| 2:21.8 | tries through his work to not only understand what people are |
| 2:26.0 | saying and thinking about the world, but how the media and society shapes how we think |
| 2:32.4 | about the world. And in that vein we discuss a number of |
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