Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
In order to try to simplify the complex, that gave birth to page 5 of The Hedgeye Process slide deck. As you can see here in The Chart (or picture really) of The Day, I expressed these 3 fulcrum points of the process with a picture of a Sierpinski Triangle.
Why? That’s easy. Having been on the buy-side as a both a Hedge Fund Analyst and Portfolio Manager for the first part of my career, I noticed something somewhat important: The Investment Landscape Has Evolved Tremendously…
Yes, I used tremendous in the title of page 4 of The Hedgeye Process deck before Trump did, bahaha
“Stock picking has given way to factor-picking and it’s our job as investors to embrace this sea change, rather than fight it”… with Old Wall “valuation” models and simple-one-factor Moving Monkey charts.
… So We Evolved Alongside It.
And alongside that daily, weekly, yearly, etc. Hedgeye Evolution I started using the futures & options markets as one of my BIG (hugely, tremendously, big and huge) BEHAVIORAL Psychology overlays.
I couldn’t care less at this point about what a human says markets “feel” like or where “it should be” based on some qualitative sentiment survey.
I really only care about A) where the market’s price is and B) where the volatility of the price (i.e. expectations of the future) is being priced relative to both The Quad and consensus market positioning (i.e. futures and options contracts).