Reality Based Analyzes

John Neuhauser has over twenty years of experience with private institutional funds.     His responsibilities include investment strategies, which incorporate: bankruptcies, high yield, distressed, arbitrage, PIPES, currency, commodity, and equity investments.    

He is a contrarian investor, writer, leads a cadre using xAI Grok to interconnect Heisenberg’s Uncertainty Principle & Reflexivity into Applied AGI, finance/economics historian, and lecturer.     Mr. Neuhauser is the editor and publisher of The Risk Observer® which highlights unusual investment opportunities and geopolitical trends.    

John Neuhauser’s professional experiences include being an analyst at OTA Limited Partnership and a principal at SDS Capital Management.     He was a special situations analyst with a private partnership which included a Quota Fund and the investor Yale University Endowment.     Mr. Neuhauser began his career as a research assistant for the renowned economist A. Gary Shilling.    

After founding The Risk Observer®, he wrote the 600+ page research volumes:  Opportunities Revealed, Obfuscations Exposed.     There is life outside of the office; his interests also include hiking, swimming, music, as well as film, antique circus and carnival posters.    Mr. Neuhauser earned an MBA, in Finance, from New York University’s Leonard N. Stern School of Business and an AB, in Economics, from The College of William and Mary in Virginia.    



A Personal Note To Subscribers, Colleagues, and Friends…    

My goal here is to help readers focus on reality.    

Any policy or decision makings, indeed particularly investing, have a lot to do with common sense, personal observations, and, most important, the ability to recognize and understand reality.    I suggest that those interested in economics, finance, and geo-politics   -   indeed, with regard to any situation   -   make efforts to also critique the obfuscation of facts and always ask one’s self:   “Ciu Bono?”,  a Latin phrase from Cicero:   “To whom for a benefit?”     

Much of my work involves a type of application of the Heisenberg’s Uncertainty Principle.    It tells us that there is fuzziness in nature, a fundamental limit to what we can know about the behavior of quantum particles and,  therefore,  the smallest scales of nature.    Unlike Isaac Newton’s clockwork universe, where everything follows clear-cut laws on how to move and prediction is easy if you know the starting conditions, the uncertainty principle enshrines a level of such fuzziness into quantum theory.    

I apply the notion of the Heisenberg’s Uncertainty Principle both to everyday life and financial analyzes.    

There are two sentiments which might be considered conceptual subsets of the Heisenberg’s Uncertainty Principle which I also apply to both everyday life situations and my professional work.    

First, “The Observer Effect”.    This is the theory that simply observing a situation or phenomenon necessarily changes that phenomenon.     In this regard, I believe that it is best to attempt to remain invisible to whatever experiment is at hand.    

Second, “Reflexivity”.    This is the theory that a two-way feedback loop exists in which investors’ perceptions affect that environment, which in turn changes investor perceptions.    

Reflexivity theory states that investors don’t base their decisions on reality but their perceptions of reality.    The actions that result from these perceptions have an impact on reality, or fundamentals, which then affects investors’ perceptions and thus prices.    The process is self-reinforcing and tends toward disequilibrium, causing prices to become increasingly detached from reality.    And as I stated on the beginning, reality based analyzes are beneficial.    

This theory runs counter to mainstream economic theory.    The mainstream economic theory states that economic participants are on the whole rational and that they make decisions that in the aggregate amount to good choices.    It also holds that free markets are effective at balancing supply and demand, at pricing assets correctly, and that they are self-correcting, resulting in equilibrium.    Thus, at equilibrium, market prices reflect fundamentals, but do not change fundamentals.     I believe that mainstream economic theory obfuscates the true nature of the speculative world.    

I wish my readers the best of luck in all of their endeavors.      


Cordially,


John Neuhauser
The Risk Observer®