• Global ‘Black Hole’ Risk Rising: A Discussion With Danielle DiMartino Booth

    Former Fed advisor Danielle DiMartino Booth discusses key economic developments and the outlook for Fed rate cuts with Hedgeye CEO Keith McCullough.

“I think the next century will be the century of complexity.”
-Stephen Hawking 

If you want an awesome “long-term” forecast, that’s one that both I and the author of Scale, Geoffrey West, agree with. As West goes on to explain from a “big picture” perspective:

“We urgently need a science of complex adaptive systems to address the host of extraordinarily challenging societal problems we face.” (pg 20)

One of the biggest problems our profession in particular still faces is Wall Street’s inability to proactively predict both economic slow-downs and market risks. There’s tremendous opportunity in that.

Instead of making another call on the 10yr this morning, I have the last 10 years on my mind. Tonight we’ll be celebrating our firm’s 10th Year Anniversary in Connecticut.

If you’re always grinding on building the front-end of a growth company, what you generally don’t do is wake-up every morning thinking about 3, 5, or 10 years ago.

Hopefully, if you’re as adaptive and dynamic as the complex system in which you operate, you’re incorporating all of the long-term lessons learned along the way… but, at the same time, courageous enough to disrupt in new ways on a daily basis.

For a decade now, I’ve been disrupting that Old Wall and liking it.

If I’m disrupting you, your friends, or your positioning at the top of the risk management morning, I like that too. Someone has to make you think. If it makes you think that I’m completely wrong, that’s awesome. Go make tons of money with that view.

If what my teammates and I do is make you think about your premise and/or, more importantly, your #process, even better. That’s what we’re really after: learning and growing alongside our clients as opposed to pandering to what they want to hear.

The aforementioned quote and book was recommended to me by both a friend and a client.

He wasn’t my friend or client before I started Hedgeye. In fact, he thought I was completely full of you know what in that first new client prospect meeting that I had with him in Chicago.

Could I blame him? Here’s a guy my age who was about 10 years into this himself at the time. He was a relatively young PM. And, to date, had plenty of Old Wall econs and strategists come by his office to opine about hot tourist spots.

Then there’s me sitting across the table from him talking about looking at portfolio risk management from the lens of complexity and/or chaos theory. His sincere distrust of Old Wall research had him ask me all of the right questions.

10 years later, he’s sending me a book written by the former President of the Santa Fe Institute.

Geoffrey West was the President of the Sante Fe Institute from 2005 to 2009. I came up with the Hedgeye idea in late 2007 and formally organized the holding company as Research Edge LLC in early 2008.

As I was studying Santa Fe’s approach I came to realize that I’d been paid way too much money from 1999 to 2007 for not knowing what I didn’t know about economies or how they collided with market risks and returns.

Thanks to multi-factor, multi-disciplinary thinkers like West and his colleagues, my real education finally began.

And, fortunately, ever since, I’ve been blessed with the opportunity to work alongside all of my teammates and all of you… taking in all of your criticisms and compliments, all at once. I’ve never learned faster. Thanks to all of you for that too.

Best of luck out there today,

Keith R. McCullough
Chief Executive Officer

Why We Built Hedgeye: A Note from CEO Keith McCullough - post announcement image