The latest weekend note by Eric Peters, CIO of One River Asset Management, is his latest masterpiece in lyrical, stream of consciousness, financial analysis, and can be broadly divided into to broad parts: his latest take on financial markets analyzing the build up of disequilibrium which eventually culminates with discrete "flushes" that reset the system; how bold investors inevitably give up on financial sense and logic long (or just) before said flush takes place, and what this upcoming Minsky Moment could mean for the future. We have excerpted from this section in the current note, as for the remainder of his weekend observations - which deal with tectonic macro and geopolitical shifts - we will follow up in a subsequent post.
Anecdote: "The most common example is a ball sitting atop a hill," she said, polished accent, hint of condescension. "Locally stable, but one nudge and it's all over."
She drove terribly fast, discussing Minsky Moments; the idea that persistent stability breeds instability. "Naturally each cycle is different in key respects, and that's because you're far better at preventing past problems from recurring than new ones from arising."