[Week 43 of 2025] Prices, Power, and Persuasion

Welcome back to Price and Prejudice with a few musings from Week 43 of 2025.

The Crackpot Premium

Owen Lamont's recent piece begins as parody—discussing bets on perpetual motion, room-temperature superconductors, and the alien tourism—but reads, uncomfortably, like a plausible investment memo. It's one of these things where we laugh because it’s absurd, and then pause because it’s not entirely absurd anymore.

The real insight beneath the humor in a world where narratives move faster than earnings, predicting asset prices increasingly means predicting which fictions people will believe next, and for how long. While traditional analysts study balance sheets, modern traders study belief systems. To profit, one must not just identify mispricing, but anticipate what story the crowd will tell to justify it.

And that may be the hardest trade of all. Valuing fundamentals requires data; valuing delusion requires empathy. You must think not as a rational investor, but as a hopeful conspiracist: someone who can spot the next narrative that feels “too dumb to fail.” In that sense, the modern speculator isn’t a quant or a chartist but a cultural anthropologist, mining memes for market signals.

The Proxy Adviser That Wasn’t

This Financial Times article discusses Glass Lewis’s announcement that it will “move away from singularly-focused recommendations” and push clients toward customised voting policies. Interestingly, the article points out that roughly 80% of Glass Lewis’s clients already received customised advice long before the press release. In other words, the system we thought we understood was already pretty complex.

How we ended up here requires a short digression into the curious architecture of modern shareholder voting. In the heyday of dispersed individual owners, voting proxies felt like citizen participation. But as institutional ownership became dominant, the burden of thousands of ballots fell on mutual funds and asset managers. Proxy advisers such as Institutional Shareholder Services (ISS) and Glass Lewis stepped into the gap, and with the aid of a friendly SEC interpretation in 2003, we ended up with two firms effectively shaping votes across trillions in assets.

Naturally, the dominance of two players raises fears of homogeneity. But the article complicates that worry if most clients already receive tailored advice aligned with their own priorities. Rather than dictating uniform norms, the advisers function as translators, converting investor preferences into structured recommendations. That still leaves them powerful, but in a different way: not as ideological arbiters, but as intermediaries managing the diversity of institutional beliefs and preferences.

The Supply-Side of Alpha

For years, the hedge-fund fee debate was framed as a question of appetite: how much were investors willing to pay for skill? The pod-shop era has quietly inverted that logic. Fees no longer reflect the price of talent but the cost of keeping the machine running. As this article notes, Eisler Capital’s demise wasn’t the failure of performance but of arithmetic: its expenses swelled from 2% of assets to more than 12% once it joined the multi-manager arms race. The problem wasn’t that investors stopped believing in alpha; it’s that alpha itself became too expensive to produce.

At some point, the multi-strategy model turned into a high-frequency industrial complex. The pass-through fee, once a clever way to align incentives, became a conveyor belt for costs: technology, data, compliance, prime-broker financing, and the ever-escalating salaries of portfolio managers. In effect, the modern pod shop operates less like a hedge fund and more like a capital-intensive manufacturing plant. What determines pricing power now isn’t demand for returns, but the supply curve of talent and infrastructure.

Podcasts

• John Campbell, one of the most prolific finance scholars, discusses his new book on personal finance. One of his sharper observations from the podcast is that competition in financial products often has surprisingly little to do with price or return. Banks and asset managers compete on intangibles (advertising, aesthetics, the ease of an app, the illusion of personal service) because true price competition would erode margins. Campbell also notes a revealing asymmetry: customers believe loyalty should buy them better treatment, but firms view loyalty as proof of captivity. In this light, much of personal finance looks less like rational optimization and more like behavioral arbitrage, where firms profit from the attachment of its customers.