Stocks, commodities, real estate, and foreign currencies are all crashing again this morning. No, they aren’t going down – they are crashing. Whether it’s the Russian stock market trading down -13% or the South Korean Won moving to -27% for the year to date, it’s all one and the same in this complex global economic system of macro factors. It is global this time, indeed. Cash remains king.

By month’s end, it will have been 1 year since I left Carlyle’s hedge fund. Time flies when you’re having fun.

October 2007 was the last month that I worked in New York City for someone else. On the day of my departure, I walked down 5th Avenue and bought a new pair of shoes. My son was due to be born in the coming week and it was time to start my new life. My days of trading a “book” for a hedge fund were over. I left my old shoes in their office to symbolize as much. My last “call” on the global market, and the industry in general, has turned out to be right.

Leaving any firm in NYC can be very impersonal. You take the elevator downstairs, open the door to New York’s finest taxi cabs honking at one another and that’s your goodbye. As I walked to Grand Central Station that night, I said to myself, goodbye and good luck.

My last month of trading on Wall Street was a profitable one. It was October, and my shorts had already started working. It’s no secret that I had an unprofitable Q3 of 2007. I’d had a huge run in the 8 years prior, and my short term luck had run its course. You can ask my team about it – my best analysts from Carlyle now work at SAC and Ziff. I had no excuses. I was a few months too early. I was too bearish to earn a myopic weekly return. That down quarter was all my fault, no one else’s.

The good news for me is that I haven’t had many “bad quarters” and that one in particular was only down low single digits. At the time, I was told that I was being “too macro”, and I suppose that was a sign of the global market top in and of itself. That’s not telling you much other than what it is that people say about me when I am not in the room. It is what it is. Numbers don’t lie, people do.

Since late 2007, many of you have seen every “Trade” and every “Trend” that I have “called” and acted on. Transparency and accountability were the principles I cared to espouse, so that’s what I set out to do. I started ranting on my ‘MCM Macro’ blog ( in Q4 of 2007, and those views are still open to the public to audit. On Tuesday April 1, 2008, I submitted a performance report for MCM of +2.15% (the S&P 500 was -10% and the NASDAQ -14%), and my new Partners and I proceeded to open the doors of Research Edge LLC’s office in New Haven, CT. Since November of 2007, my portfolio has made money every quarter. Well ahead of last week, I had been calling for a market crash. Last week, the S&P500 was down -9.4%, and I was +0.28%.

Unfortunately, this business pays a higher multiple for accuracy than it does principles. We’re seeing the ugly side of that “Trend” now. It was unsustainable. Now it’s time to re-build the trust in client relationships that Wall Street lost. Work ethic and handshakes are important to us. We think they are to other people too.

This morning is the last “Early Look” that we will be issuing to Institutional Research Edge subscribers for free. Our Hedgeye subscribers will continue to get the “Early Look” note via email. Feel free to pass this along to your friends (they can sign up at We feel an obligation to help you protect and preserve your family’s hard earned capital during times like these. We are here for you, feet on the floor, bright and early every morning.

For our Research Edge Institutional clients, we are launching ‘Research Edge Macro’ tomorrow. Having never been a “scribe”, and needing to earn my stripes every day, I felt that the right thing to do was work for the market for 2 quarters for free. While I still do not plan on paying myself any time soon, I do feel that our paying clients are due the exclusivity of our service. We have 20 people working on our team now. We are hiring. This isn’t about me. This about my team being better than I could ever be on my own.

In two short quarters, we have already broken through the 100 Institutional client milestone, and we have visibility on getting to 200 in the coming months. Most of our clients have given us praise for “being right” year to date, and for that I am very humbled and grateful. Getting a thank you in this business is a wonderful feeling.

So let me take this opportunity to thank all of you. Most importantly, thank you to all of you who believed in us, and are so kind as to cross pollinate your research edge with ours. Without having the opportunity to work for you, we couldn’t be wearing these new shoes with so much pride.

The best way to predict our future together is to create it. We’re looking forward to the journey,

Keith R. McCullough