This note was originally published December 31, 2013 at 10:28 in Macro
For those that haven’t met me yet, my name is Josh Balch and I’m the newest member of the Hedgeye team. As we look into the uncertainties of 2014, I find myself looking back at 2013 and reminiscing on the past.
At this time last year, I was playing hockey for Yale and never would have been able to predict with high conviction that we were going to win the school’s first Division 1 NCAA Men’s Hockey National Championship. While members of our team all had confidence and believed in each other, we also knew it was a daunting task which had not been completed by an Ivy League school since Harvard’s 1989 team.
While there is no way that we could have predicted Yale’s 1st NCAA hockey title or other even more unpredictable events from 2013, we can look forward to waking up every morning and working our butts off in order to help risk manage what Mr. Market has awaiting us in the New Year. At this time last year we were one of few research firms walking into 1Q13 as US Growth bulls and Inflation bears. This came to fruition as investors who were long growth (equities) and short gold, bonds, and MLPs found themselves having a very successful year with LOW YIELD STOCKS (up +46.9% YTD) outpacing HIGH DIVIDEND YIELD STOCKS (up +18.2% YTD) by >2.5X.
So, what will happen in 2014 to drive global markets?
As our CEO Keith McCullough wrote in a recent Early Look, “The best prediction we can make is to proactively prepare ourselves to ‘Embrace the Uncertainty of the Game.” In the spirit of preparation for 2014’s market game, we will be presenting our new 1Q14 Macro Themes in early January to ensure that you are proactively prepared.
In light of reminiscing on 2013, here are some of my favorite Early Look quotes from this year. Thank you for your service and we look forward to another memorable year.
Hedgeye Risk Management
“If money is your hope for independence you will never have it. The only real security that a man will have in this is a reserve of knowledge, experience, and ability.” -Henry Ford
“The mass of the American people are most emphatically not in the deplorable condition of which you speak.” -Theodore Roosevelt
“Time destroys the speculation of men, but it confirms nature.” -Cicero
“History tells us that the threat to prosperity is not debt but socialism.” -George Gilder
“All progress comes from the creative minority.” -George Gilder
“My reading of history convinces me that most bad government results from too much government.” -Thomas Jefferson
“We had invested very heavily over a very long period of time in the education of quality leaders.” -John Allison
“Anyone who isn’t confused doesn’t really understand the situation.” -Edward R. Murrow
“Unlike an inexorable, Newtonian “great machine”, the economy is not a closed system.” -Geoger Gilder
“Much of the profession is empirically bankrupt because it is no longer taught economic history.” -Charles Kindleberger
“The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital . . . the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” -President John F. Kennedy
“Ignorance more frequently begets confidence than does knowledge; it is those who know little, not those who know much, who so positively assert that this or that…”-Charles Darwin
“It’s imperative that the Fed begins to taper.”-Larry Fink
“If making money is a slow process, losing it is quickly done.”-Saikaku Ihara
“The great thing in the world is not so much where we stand, as in what direction we are moving.”-Oliver Wendell Holmes
“The Fed is the greatest hedge fund in history.” -Warren Buffett
“Insanity: doing the same thing over and over again, and expecting different results.” -Albert Einstein
“The great thing about fact based decision is that they over rule the hierarchy.” -Jeff Bezos
“To others, being wrong is a source of shame; to me, recognizing my mistakes is a source of pride.” -George Soros
“Money is one of the shatteringly simplifying ideas of all time; it creates its own revolution.” -Paul Bohannan
“Before I went to jail, I was active in politics as a member of South Africa’s leading organization – and I was generally busy from 7 A.M. to midnight. I never had time to sit and think.” -Nelson Mandela
“The market is smarter than you will ever be, with its combined knowledge of all participants. Pay attention to the signs. Be quick to admit that you’re wrong. Don’t be afraid to miss something.” -Yra Harris, Praxis Trading
“Success is stumbling from failure with no loss of enthusiasm.” -Winston Churchill
“The greatest barrier to success is the fear of failure.” -Sven Goran Eriksson
“The greatest obstacle to pleasure is not pain; it is delusion.” -Lucretius
“Any society that would give up a little liberty to gain a little security will deserve neither and lose both.” -Benjamin Franklin
“A government’s first job should be to protect its citizens. But that should be based on informed consent, not blind trust.” -The Economist
“This story illuminates, as only great history can, not only the past but also the present.” -Richard Holbrooke
“One main factor in the upward trend of animal life has been the power of wandering.” -Alfred North Whitehead
“You hold in your hands, the future of the world.” -Raymond Poincare