“Come back bearing your shield or on it.”
-Plutarch
That’s what Plutarch taught us about what Spartan mothers would tell their sons when sending them off to war. Win or die trying. That’s a little different than sending little Johnnie off to private school in search of some future play-dates and participation awards.
As Harvard’s revered historian Graham Allison reminds us in his latest geopolitical strategy book, Destined For War, “before the Persian invasion of Greece in 490 BCE , Sparta had been the regions dominant power for more than a century.” (pg 31)
It’s been a long time since then… and countless asset managers have named their funds and stock picking strategies after the Greeks. It’s all supposed to sound hard core and inspirational. Love that. But I love the challenge of helping you generate alpha more.
Back to the Global Macro Grind…
For those of you who didn’t know, I got a new job 3 months ago. I got my old job back as the Director of Research @Hedgeye! Since I don’t really have extra hours in the day, this forced me to re-prioritize what it is I do here so that I can do the job right.
What does a day in this non-Spartan life look like?
- 430AM wakeup
- 430-600AM macro research grind (including Top 3 Things + @Hedgeye Risk Ranges)
- 600-700AM write the Early Look
- #Shower
- 745AM run the “Morning Research Meeting” with all my analysts
- 9AM host The Macro Show
After that I guess my job is to resume my CEO duties and all of that other fun stuff like being a Dad and a hockey coach. But, all the while, no matter what I’m doing unrelated to running the Research Team, I’m always thinking about the research and where we can improve.
Alongside our data science initiatives, one big new product we’ve been building @Hedgeye for the last 3 months is called the Top 10 Long/Short Hedgeye Ideas. We’ll launch that at 11AM EST today. It’s the best of the best from our 40-analyst research team.
Like most things we’ve created in the last 10 years of building the firm, this product/service is born out of client demand. The #1 thing a CIO, PM, etc. asks me for when I present our Global Macro Themes deck are “stock ideas” that fit what we foresee happening top-down.
What makes a good stock pick a great one? Well, from a Global Macro Risk Management perspective, we’ll review the basic concept of fishing where the fish are, identifying things like:
- GIP Model (Growth, Inflation, Policy) – is growth/inflation accelerating/decelerating in the country you’re picking in
- Asset Allocations & Sub Sector Exposures – once you have growth and inflation right within the country, do you have these right?
- Style Factors – Leverage, Beta, Short Interest, SIZE, Growth, Value, Yield, etc. – what is trending bullish/bearish?
Then, of course, if you want to be Spartan in your stock picking you should probably have an opinion on market-timing too:
A) What economic, market, and/or asymmetric catalysts are pending for your long/short idea? How can you use Mr. Market’s backboard to increase your probability of delivering alpha? Entry points matter. Being “early” is also called being wrong.
B) Where is the stock within its @Hedgeye Risk Range? Instead of chasing simple-moving-monkey averages, hard core stock pickers should also consider our 3-factor signaling model that includes PRICE, VOLUME, and VOLATILITY.
Finally, in conjunction with rinsing & repeating a vigorous research #process each and every day, you should consider what the buy-side thinks about your ideas. What do they think? How are they positioned? We have a great user base + #process for those factors too.
Altogether, there’s a lot for me to learn in re-engaging with our “bottom-up” long/short ideas. As a former analyst and PM, there’s also a lot I think I can teach. Do I think our Top 10 Long/Short Ideas can be better than anyone else’s? You’re damn right I do.
It’s ok to want to win. This is one of the most competitive businesses that the world has ever seen. The profits associated with winning at the highest level are monstrous. My team wants nothing more than for you to come back, year-after-year, bearing world class alpha.
If you’d like access to our Top 10 call at 11AM EST today, please ping . The plan is to host an update call every 4-6 weeks and add/remove ideas dynamically (in real-time) when opportunities to buy low and sell high present themselves.
Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND views in brackets) are now:
UST 10yr Yield 2.31-2.42% (bullish)
SPX 2 (bullish)
RUT 1 (bullish)
NASDAQ 6 (bullish)
VIX 9.04-12.26 (bearish)
USD 92.55-94.00 (neutral)
Oil (WTI) 56.18-59.00 (bullish)
Gold 1 (bearish)
Copper 2.97-3.09 (neutral)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
