George Soros has a great line that we’ve used a lot in Epsilon Theory notes. When he was asked how he could possibly have predicted what would h

Wage Inflation Isn’t Coming. It’s Already Here.

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2021-05-23 21:00:03

George Soros has a great line that we’ve used a lot in Epsilon Theory notes. When he was asked how he could possibly have predicted what would happen when he famously “broke the Bank of England” in 1992, he replied in that growly Hungarian voice: I’m not predicting. I’m observing.

It’s the perfect catchphrase for the modern, narrative -savvy investor. It’s the perfect catchphrase for the Three-Body Problem market, where there is no algorithm for predicting markets (no closed-form solution, in the lingo), but only tools for calculating markets. Where there is no Answer for successful investing. But there is a Process.

It’s a hard concept to wrap your head around, this difference between calculating the future and predicting the future, but it will change the way you see the world. And your place in it.

Seeing is believing, so here’s the chart of average weekly earnings (weekly earnings, not hourly!) for Americans in private sector jobs from 1963 through today, measured quarterly.