Frames, Weights, and the Blends We Live In

Last week, we made weights explicit. Every portfolio reflects a set of probabilities across possible futures—whether those weights are chosen deliberately or inherited from the market.

But that raises a more basic question: what exactly are we weighting?

The Market Stories We Tell Ourselves

Markets run on stories.

“AI will drive a productivity boom.” “Inflation will stay sticky.” “Central banks will pivot.”

Every day, investors hear some version of these narratives. They appear in research notes, television interviews, newsletters, and long threads on social media. They help us organize our thinking about what might happen next.

But narratives have a limitation. They bundle together several different things at once: assumptions about how the world works, probabilities about what might occur, and implications for markets. All of that gets compressed into a single statement.

The result is intuitive, but fuzzy.

Two investors might agree that “AI will transform the economy” while imagining very different timelines, magnitudes, or market consequences. Another investor might disagree entirely—not because they reject the story, but because they assign different odds to it unfolding.

The goal is not to eliminate narratives. They are the raw material of market thinking. The goal is to separate their components.

Contrarian Thinking Is About Weighting, Not Prediction

Contrarian investing is often misunderstood as predicting something radically different from everyone else. In practice, it’s usually simpler than that. Investors are often working with the same basic set of Frames, but assigning different weights to them.

Suppose the market consensus roughly looks like this:

• Soft landing: 60%
• Recession: 20%
• Reacceleration: 20%

A contrarian investor might not reject any of these possibilities. They might simply believe the probabilities are mispriced:

• Soft landing: 40%
• Recession: 40%
• Reacceleration: 20%

The Frames themselves haven’t changed. The weights have. Yet that shift alone can lead to very different positioning. In that sense, markets are less a debate about what could happen and more a debate about how likely each possibility really is.

Turning Narratives Into Frames

A Frame is simply a clean version of a narrative. Instead of saying, “AI will change everything,” you might express the idea as several possible worlds:

• Productivity accelerates meaningfully within five years
• Productivity improves slowly but unevenly
• Productivity gains disappoint

Each of these statements is more precise than the original narrative. They can be debated, compared, and eventually tested against what actually happens. Most importantly, they sit alongside one another. Rather than declaring a single future, they describe a set of plausible futures. This is the essence of framing. Narratives become structured possibilities.

Markets Already Weight Frames

Markets, of course, don’t wait for us to formalize this process.

Prices already reflect a blend of possible outcomes. At any moment, the market is implicitly weighting different Frames about growth, inflation, policy, and risk. Those weights represent the market’s current consensus. When a dominant Frame becomes more convincing, prices tend to move in its direction. This is one form of momentum: the market reinforcing the narrative it already believes.

But consensus is only one set of weights. Different investors can look at the same collection of Frames and assign different probabilities to each one. That difference is where views emerge.

Directional Blends

Once narratives are translated into Frames, there are two ways to think about direction.

The first is at the Frame level. A single narrative can be expressed as different directional outcomes—the bull case, the bear case, and the mixed case. We describe these as tailwind, headwind, and crosscurrent Frames. These are individual scenarios, not combinations. They are different possible expressions of the same underlying idea.

The second layer comes from weighting. Once multiple Frames exist, you can assign probabilities to them. Those weights determine how much each possibility matters to your overall view.

Return to the macro example above. An investor who has shifted weight toward recession, 40% versus the consensus 20%, isn’t just holding a different opinion. They are living in a different blend. Even if the soft landing remains their modal outcome, the environment they’re navigating feels more like crosscurrents than tailwinds.

That’s what a blend captures: not a single scenario, but the balance of forces across all of them. Sometimes the weighted Frames mostly align, reinforcing a clear tailwind or headwind. Other times they offset each other. This is where the environment investors actually experience comes from; not a single Frame, but the composite of many.

Why Blends Matter

Investors rarely respond to a single Frame in isolation. What ultimately matters is the balance of forces. Blends provide a way to summarize a complex scenario set without pretending the future is simple. They allow investors to acknowledge multiple possibilities while still describing the overall environment in intuitive terms. In more formal language, they help fatten the tails of expected outcomes.

The next question is a practical one: once you know your blend, how does it change what you actually own?

That’s where we’re headed next.