ICYMI | Joe Calhoun & Keith McCullough: “Don’t Be Reliant On Your Forecasting Ability”

10/15/21 01:41PM EDT

Dear Hedgeye Nation,

We just hosted nine of the sharpest investing minds on HedgeyeTV for a 3-day bonanza of world-class interviews. During our semiannual Hedgeye Investing Summit, Hedgeye CEO Keith McCullough was joined by Joe Calhoun (Founder & CEO of Alhambra Investments).

Below is a brief excerpt and transcript from the interview. You can access the entire hour-long interview, as well as the 8 other financial market webcasts, by registering here.


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In this clip from the final day of Hedgeye’s Investing Summit, Hedgeye CEO Keith McCullough teams up with Joe Calhoun (Founder & CEO of Alhambra Investments) to break down the pitfalls of “all-or-none” investing and succumbing to the narratives of Macro Tourism.

“Look, if the first step in your investment process is reliant on your forecasting ability, you are in trouble from the get-go,” Calhoun implores. “It’s not about knocking the ball out of the park on a daily basis. It’s not about having big years. It’s about constantly knocking out that return every year so that you can draw the money out of your portfolio that you need without worries about running out of money.”


Calhoun: Look, if your investment process is the first step is reliant on your forecasting ability, you're in trouble from the get go. Right. It's what you said about all or not investing.

McCullough: And I called there's macro tourism, which we can get into, which is the CNBC, the Twitter part. But the or none, like the incentives on all or none, Joe, are huge. I mean, you can I know people that have worked in the hedge fund business for quite literally three to five years are worth a hundred million bucks or more. All they had to do is make one big call. They didn't have to show that they have a repeatable process across cycles till they're six feet under or on the wrong side of the grass. That's what you and I have to do.

It's it's actually pretty challenging thing to do. But it's it is easier, I think, and more accessible for people to come up with the milkshake theory over here or this over there. And if I get that right, you know, then they can make a lot of money in a short period of time.

But that's not you and I. It sounds like we don't have those goals.

Calhoun: Look, I'm blocking and tackling, man. Look, I'm trying to work for people here. You know, our client base is pretty conservative. You know, we're there people.

There's regular folks, man. They're they've saved their money. They've done the right things. And they're trying to make sure they don't screw this up. And they're going into retirement a lot of times. Vast majority of our clients are either pre retirees in their late 40s, in their 50s or retirees.

They've already retired. To me, what those people need and I think people are starting to get this, what they need is consistency. Yeah. It's not about knocking the ball, you know, out of the out of the park on a on a daily basis.

It's not about having big years. It's about consistently knocking out that return every year so that you can draw the money out of your portfolio that you need without worrying about running out of money. So consistency and I preach this all the time.

This is what we're aiming for is consistency. And I think that's the unique thing about our approach, about our strategic approach, is it has been very consistent. You know what? It's never the best performing thing. It's also never the worst performing thing.

So I want that consistency. And I think that's what our clients want and that's what we aim for, which means you don't make big bets.

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