October 16th, 2020

The Narrative Machine

"Why am I seeing this? Why am I seeing this now?"  

Have you ever been overwhelmed with the amount of information at your disposal?

If not, have you ever taken a step back and noticed a vast amount of narratives around a single concept or topic? At some point in life, you are bound to come across a variety of options to choose from.

The real question is, which one do you trust or choose? Should we look at all of them or only follow a few?

The idea that mainstream media could, to some degree, pursue the agenda of powerful groups might have been dismissed as conspiracy theory in the past. However, over the years much has changed in how we perceive and interpret the flood of news and data-bits that compete for our attention each day, forcing us to seek out ways to distill the noise in search of something closer to the truth.

In 1975, Ray Dalio struck just the right chord at just the right time with his metaphor of an Economic Machine – the idea that macroeconomic reality across time and space could be understood as a cybernetic system, with rules and principles and behaviors stemming from those rules and principles.

Today, Ben Hunt proposes The Narrative Machine – where macroeconomic reality is still understood as a cybernetic system, but where the translation of “reality” into actual human behaviors and actual investment outcomes takes place within a larger Machine of strategic communication and game playing. It serves as an extension of the Economic Machine to succeed in this time and this place.

Unless you’re an Aristotle or an Einstein, advancement and extension of theory doesn’t just happen by sitting in a room and thinking it up. You need new data. You need better data. You need a new way of looking at the data. Take some time and think about how you look at data when it comes to investing and the financial world.

In the financial world, it often seems like you are told what to believe in rather than being given the tools to think for yourself and make your final decision. Ben suggests that Quid, a private company based in San Francisco that has developed a technology for network visualization of unstructured texts, is a great resource for creating our own beliefs and making our own decisions.

Why is this important? The power source of common knowledge is not the crowd seeing an announcement or a press conference. The power source of common knowledge is the crowd seeing the crowd seeing an announcement or a press conference. The power of a crowd seeing a crowd is one of the most awesome forces in human society. It topples governments. It launches Crusades. It builds cathedrals. And it darn sure moves markets.

The key to winning is to listen to all of the signals emanating from all the Missionaries in the world, human and otherwise, as they are mediated through the Big Four channels (Wall Street Journal, the Financial Times, CNBC, and Bloomberg), and calculate the impact of these signals on investor estimations of all other investor estimations before the actual decision-making process occurs. Next time you watch the news or keep track of stock announcements or alerts, take it with a grain of salt and take it from multiple sources rather than one.

vig.io Narrative Machine
TagsMacroAIAlgorithmsNatural Language ProcessingDeep Learning Q-LearningNarrative
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