Brainstorms: When do we enter "the end game"

The final place everything leads

Rule 101 Of Marketing:

I work in the active management space of capital markets, not marketing. However, I know a lot of marketing guys who are skilled at crafting narratives for investment products. If you think the crypto shillers on Twitter are skilled marketers, you have yet to meet the wholesalers who come in and lay out a perfectly crafted narrative for an average investment product.

Rule 101 of marketing: Talk about tails!

What are tails? Tails are the extreme events that take place on the far end of the distribution of probabilities. For example, if 99 times out of 100 you make money on an investment, that 1 time you lose money is a tail. Just start to pay attention when people are selling you something how they make the tails seem much bigger than they actually are.

What is the biggest narrative out there today used to sell investment products? “THE END GAME.”

The End Game:

I cannot tell you how many times I have heard people talk about how we are heading towards “The End Game” where this single investment product is going to be the only liferaft to safety.

In my experience, it is very dangerous to think about our current state as moving toward some ultimate end game where every financial asset will be “reset” in some manner. There is such a high degree of uncertainty due to path dependency that it is virtually impossible to benefit from having such a view even if the view does end up playing out.

Government debt, fiscal spending, valuations, geopolitical risk, the US as the reserve currency, and insert whatever headline is used as an excuse to justify the purchase of a specific product. All of these inputs have a very dynamic nature to them. I think people forget that our job in the industry is to manage the uncertainty, not pretend like we know the future.

Marketing is meant to give you the feeling of certainty about a decision, risk management is meant to embrace uncertainty. Let me just say, that no one wants to have the feeling of uncertainty with their capital, this is why traders get paid such a high premium. I don’t know if the money I manage will be up or down tomorrow but I am compensated for accepting this uncertainty. Most people can’t handle the idea that they might lose some money in the future. They would rather entrust their capital to someone who gives them the feeling of certainty, regardless of whether there is a higher or lower probability of them making/losing money.

The ideal scenario is where you can entrust your capital to someone who knows how to manage the uncertainty of the future correctly. The goal is to be confident in an individual or group of individuals adapting to various future scenarios.

Adaptability is the tool by which you manage the uncertainty of the world.