WEBVTT - Evercore ISI Ed Hyman: Masters in Business (Audio) 0:00:03.240 --> 0:00:10.440 This is Masters in Business with Barry Ridholts on Bloomberg Radio. Today. 0:00:10.480 --> 0:00:13.640 I have a very special guest, and I really mean it. 0:00:13.800 --> 0:00:17.080 We have a very special guest, Ed Hyman. He is 0:00:17.120 --> 0:00:20.560 the founder of I s I, Chairman of evercres I 0:00:20.800 --> 0:00:27.600 s I UM, a super highly regarded economic research firm. 0:00:27.720 --> 0:00:30.080 Let me let me share a statistic with you which 0:00:30.120 --> 0:00:34.880 is impossible. This is an impossible data point. So every 0:00:34.960 --> 0:00:40.920 year the UH, the institutional investor, puts out their survey 0:00:40.960 --> 0:00:46.400 of top strategists, analysts, economists. It's a run that that 0:00:47.040 --> 0:00:50.280 literally is voted on by people who are putting money 0:00:51.040 --> 0:00:54.320 UH to work, big big pension funds, big institutions, big 0:00:54.360 --> 0:00:57.720 neustrel funds. And these are the people they say are 0:00:58.040 --> 0:01:03.600 the most helpful, the the top ranked folks UH in 0:01:03.680 --> 0:01:07.199 the world of Wall Street research. And it's a great 0:01:07.240 --> 0:01:10.680 honor to be I I ranked number one in any 0:01:10.720 --> 0:01:14.840 given year. Our our guest today, Ed Hyman, has been 0:01:15.000 --> 0:01:20.560 I I ranked number one for thirty five consecutive years. 0:01:22.160 --> 0:01:26.080 That that's just a number that that is impossible. You know. 0:01:26.120 --> 0:01:28.360 I'm a big New York Knicks fan and and during 0:01:28.400 --> 0:01:33.840 the UM Patrick Ewing, Charles Oakley, UH, Anthony Mason John 0:01:33.880 --> 0:01:37.880 Starks era. It was always Michael Jordan's in the way, 0:01:37.959 --> 0:01:40.920 and and for six of let's call it ten years, 0:01:41.600 --> 0:01:44.480 Jordan's bulls, along with Scottie Pippen and the rest of 0:01:44.520 --> 0:01:49.560 the cast, prevented the New York Knicks from getting either 0:01:49.640 --> 0:01:54.160 to the finals or or winning the finals. And they 0:01:54.200 --> 0:01:57.520 came close to a couple of times. Uh Charles Smith 0:01:57.560 --> 0:02:02.000 fingerroll once um uh did a season for them, a 0:02:02.040 --> 0:02:07.360 bad finger role. But Michael Jordan's the greatest basketball player 0:02:07.360 --> 0:02:11.200 of all times, you know, won six championships and and 0:02:11.200 --> 0:02:16.040 and I think it was uh six championship um m 0:02:16.120 --> 0:02:20.560 v p s and maybe eight total uh nbah m 0:02:20.600 --> 0:02:25.800 v p s. Ed Himan for thirty five consecutive years 0:02:25.840 --> 0:02:32.040 has been I I ranked as the institutional world's top economists. 0:02:32.320 --> 0:02:37.360 That's just a streak that is unimaginable. I can't not 0:02:37.400 --> 0:02:40.919 only can I not conceptualize it. I can't ever imagine 0:02:40.960 --> 0:02:44.840 anyone finding themselves in a position to to top this 0:02:44.840 --> 0:02:47.320 this streak. And and think about how frustrating it must 0:02:47.360 --> 0:02:50.880 have been for all of the Looking around Wall Street, 0:02:50.880 --> 0:02:54.239 there are some really really good economists, some really savvy 0:02:54.360 --> 0:03:00.960 people who have a fantastic um handle uh on on 0:03:01.000 --> 0:03:04.160 the world of of economics and what's actually happening in 0:03:04.200 --> 0:03:08.320 the economy. They have perennially been you know, number two 0:03:08.440 --> 0:03:13.160 or worse to to Ed Hyman's UH top rank. It's 0:03:13.200 --> 0:03:18.760 an astonishing um feet you'll find this conversation really quite 0:03:18.960 --> 0:03:22.680 quite fascinating, quite interesting. Ed's a guy who doesn't do 0:03:22.760 --> 0:03:24.639 a lot of media, he said, he you know, went 0:03:24.680 --> 0:03:29.280 for about fifteen years where he did no media whatsoever. Um. 0:03:29.320 --> 0:03:33.280 This is something I'm I'm nothing if not tenacious and relentless, 0:03:33.320 --> 0:03:36.920 And eventually he succumbed to my charms and agreed to 0:03:36.960 --> 0:03:42.000 do our podcast. And I think you'll find his approach 0:03:42.080 --> 0:03:46.160 to looking at the world uh fascinating, not just from 0:03:46.160 --> 0:03:50.680 an economic perspective, not just how he views the world 0:03:50.760 --> 0:03:54.720 of of economics, but how he built a business which 0:03:54.800 --> 0:03:58.120 eventually was sold for north of four million dollars to 0:03:58.200 --> 0:04:00.960 have a corps with with the upside potential it's worth 0:04:01.000 --> 0:04:04.880 even more than that. But there's so much insight and 0:04:04.960 --> 0:04:09.160 so much wisdom uh in his experience and his perspective. 0:04:09.640 --> 0:04:12.800 I found it to be an absolutely fascinating conversation and 0:04:12.880 --> 0:04:15.360 I think you will also so. With no further Ado. 0:04:15.800 --> 0:04:19.800 Here's my conversation with ever Cores I ses Ed Hyman. 0:04:24.200 --> 0:04:28.520 This is Masters in Business with Barry Ridholts on Bloomberg Radio. 0:04:29.120 --> 0:04:33.240 My special guest today is Ed Hyman. He is the 0:04:33.279 --> 0:04:36.240 founder of I s I now the chairman of I 0:04:36.520 --> 0:04:40.360 s I ever Core. Mr Hyman has the unique distinction 0:04:40.440 --> 0:04:45.159 of being the number one rated economist on Wall Street 0:04:45.240 --> 0:04:50.040 by Institutional Investor. It's their poll of of big investors 0:04:50.080 --> 0:04:54.360 for the past thirty five consecutive years running, an absolutely 0:04:55.000 --> 0:04:57.640 astonishing feat. You may not have heard of him. Most 0:04:57.640 --> 0:05:01.520 of his clients are big institutions, hedge funds, pension funds, etcetera. 0:05:02.520 --> 0:05:06.520 But Ed is really well known on Wall Street, very influential. 0:05:06.560 --> 0:05:09.640 Let me just give a short version of your curriculum, Vita. 0:05:10.279 --> 0:05:13.200 You graduate with a bachelors and engineering from the University 0:05:13.200 --> 0:05:16.320 of Texas in nineteen sixty seven. Then you go on 0:05:16.400 --> 0:05:20.240 to get your m b a from uh the Massachusetts 0:05:20.240 --> 0:05:24.479 Institute of Technology in nineteen sixty nine, and finally you 0:05:24.600 --> 0:05:27.880 ended up forming I s I. In is that more 0:05:27.920 --> 0:05:30.320 or less correct? Left left the middle part out, but 0:05:30.360 --> 0:05:31.960 it's perfect. A couple of years in the middle, we'll 0:05:32.000 --> 0:05:35.400 get to well, welcome to Bloomberg. Thank you. So Ed 0:05:35.440 --> 0:05:37.400 and I have been talking about him doing the show 0:05:37.440 --> 0:05:40.600 for some time, and I'm really thrilled to have him here. 0:05:40.720 --> 0:05:43.280 Most people don't know who you are because you're not 0:05:43.320 --> 0:05:46.719 really all that public facing you. You you and your 0:05:46.720 --> 0:05:52.680 office face the institutional universe, right, So I don't. Our 0:05:52.720 --> 0:05:57.159 clients are all institutional investors, and so we don't really 0:05:57.200 --> 0:06:00.280 have a retail face, and so we have a very 0:06:00.320 --> 0:06:03.520 low profile. I also noticed that most of our clients 0:06:03.720 --> 0:06:07.960 have a low profile as well. So any event, uh, 0:06:08.120 --> 0:06:11.520 maybe I'm just not famous either, But well, you're famous. 0:06:11.560 --> 0:06:15.000 You're famous amongst people who manage billions and billions of dollars, 0:06:15.000 --> 0:06:18.360 So that's a very influential sort of fame. Let's let's 0:06:18.360 --> 0:06:20.320 talk a little bit about how you ended up on 0:06:20.400 --> 0:06:23.719 Wall Street. So you get an engineering degree. You didn't 0:06:23.720 --> 0:06:27.320 go the usual route. Most people in your role end 0:06:27.400 --> 0:06:30.640 up having a bachelor's in economics and neither get a 0:06:30.720 --> 0:06:34.880 PhD in economics or something comparable. You took a very 0:06:34.960 --> 0:06:37.760 different route. How do you go from a bachelors and 0:06:37.839 --> 0:06:41.880 engineering and an m b a To essentially creating the 0:06:41.920 --> 0:06:46.880 world of econometric modeling. So because I was an engineer. 0:06:47.160 --> 0:06:51.440 I knew I was mathematical, and M I t s 0:06:51.480 --> 0:06:55.839 Business School is one of two or three of the 0:06:55.960 --> 0:06:59.320 business schools that have a quantitative vent. So that's what 0:06:59.400 --> 0:07:03.880 I wanted to And when I got there, Uh, I 0:07:04.000 --> 0:07:10.360 had a research assistance job working with Ed Ku, who 0:07:10.400 --> 0:07:14.960 was a fairly well known economist and working on econometric 0:07:15.040 --> 0:07:18.720 models just by chance, and at M I T. They 0:07:18.760 --> 0:07:23.880 had developed the first time sharing computer where the data 0:07:24.120 --> 0:07:27.400 is often in one central place and you could access 0:07:27.440 --> 0:07:31.800 that data from off site spaces with a with a 0:07:31.840 --> 0:07:36.480 time shared computer. And so I spent uh really those 0:07:36.520 --> 0:07:41.000 two years at M I T immersed in doing econometric modeling, 0:07:41.960 --> 0:07:47.720 and then I did my master's thesis for a guy 0:07:47.800 --> 0:07:51.880 named Paul Kutner who's a fairly well known Both of 0:07:52.720 --> 0:07:56.840 Ku and Kutner have passed away working on forecasting commodity 0:07:56.880 --> 0:08:02.360 prices with with econometric models, and then later on I 0:08:02.440 --> 0:08:08.360 ran a commodity fund using econometric models to forecast pork prices. Basically. So, 0:08:08.360 --> 0:08:10.760 so these issues that you approach, do you look at 0:08:10.800 --> 0:08:14.160 these as engineering problems to be solved or are they 0:08:14.200 --> 0:08:19.520 really pure economics? Uh? I think they're they're economics. But 0:08:19.720 --> 0:08:25.440 in this case there market economics and and business cycle economics, 0:08:26.240 --> 0:08:29.480 and that's really what I think I do. At M 0:08:29.480 --> 0:08:32.960 I T. They had this first time sharing computer, and 0:08:33.000 --> 0:08:37.280 then uh Otto Eckstein, who was a professor at Harvard 0:08:37.559 --> 0:08:42.640 started a company called Data Resources, which did econometric modeling 0:08:43.000 --> 0:08:46.240 with time sharing computer, and I was lucky enough to 0:08:46.520 --> 0:08:48.920 go to work there, and that's really how I got 0:08:48.960 --> 0:08:51.640 into this. So that sequence of events is how I 0:08:51.679 --> 0:08:54.520 got where I am today. So your training, and we're 0:08:54.559 --> 0:08:57.680 talking M I T was sixty nine University of Texas 0:08:57.760 --> 0:09:01.080 Engineering with sixty seven. These were really the early days 0:09:01.160 --> 0:09:04.240 of this quantitative analysis, wasn't it. Well, this was this 0:09:04.320 --> 0:09:08.400 time sharing computer, was the first use of time sharing computer. 0:09:08.920 --> 0:09:14.800 They also had developed the Saber of airline ticketing system, 0:09:15.080 --> 0:09:17.920 which still exists, and that was still exists. It's a 0:09:17.960 --> 0:09:22.240 company down in Texas and that is still the sort 0:09:22.280 --> 0:09:25.679 of birthplace of time sharing computing, which is now every everywhere. 0:09:26.360 --> 0:09:31.160 That's where I got started doing uh time series analysis 0:09:31.200 --> 0:09:34.320 studying economic data. So it was fairly natural for you 0:09:34.360 --> 0:09:36.520 to then take because you were really one of the 0:09:36.520 --> 0:09:40.280 first people on Wall Street to say, hey, let's take 0:09:40.280 --> 0:09:43.880 this massive computing power that we're developing and apply it 0:09:44.000 --> 0:09:49.120 to modeling business cycles, modeling economics, modeling forecasting. This was 0:09:49.400 --> 0:09:53.280 not any great aha moment. It was just obvious, Hey, 0:09:53.320 --> 0:09:55.679 this is what these tools are here for, right And 0:09:55.720 --> 0:10:00.679 so I, Um, I was at Data Resources and Cyrus J. 0:10:00.840 --> 0:10:04.120 Lawrence was a client, and so I went to work 0:10:04.240 --> 0:10:09.240 for Cyrus J. Lawrence doing the economic forecasting but also 0:10:09.360 --> 0:10:14.440 building models the forecast industries like kept goods, autos, retail. 0:10:15.000 --> 0:10:17.600 And that's really how I got launched in the direction 0:10:17.720 --> 0:10:21.360 that I'm launched in now. So in the last minute, UM, 0:10:21.440 --> 0:10:24.520 we have one of the things you're sort of infamous 0:10:24.559 --> 0:10:28.760 for on Wall Street is despite all this computing power 0:10:28.800 --> 0:10:31.640 and despite the use of technology, you have a tendency 0:10:31.679 --> 0:10:34.360 to take a bunch of charts, mark them up with 0:10:34.400 --> 0:10:37.280 a sharpie, mark him up by hands, and then fax 0:10:37.320 --> 0:10:40.040 that out or today scan it and send it out 0:10:40.120 --> 0:10:44.640 as a PDF. Where did the idea for hand marking 0:10:44.720 --> 0:10:47.920 up charts and tables ever come from? So we had 0:10:48.040 --> 0:10:50.560 a morning meeting at Cyrus J. Lawrence and I would 0:10:50.559 --> 0:10:52.720 come in and mark us some charts and pass out 0:10:52.720 --> 0:10:55.400 to the sales guys, and they started singing out to 0:10:55.440 --> 0:10:58.480 the clients and the clients liked it, so we all 0:10:58.520 --> 0:11:01.920 have a thinked when you see something, if it's been 0:11:02.000 --> 0:11:05.839 marked on by hand, your eye goes right to it absolutely, 0:11:06.120 --> 0:11:08.240 and so that's where it came from, and it's still 0:11:08.320 --> 0:11:11.920 a good technique. I'm very ridult. You're listening to Masters 0:11:11.920 --> 0:11:15.040 in Business on Bloomberg Radio. My special guest today is 0:11:15.240 --> 0:11:18.040 Ed Hyman. He is the chairman of Evercres. I s 0:11:18.040 --> 0:11:21.640 I UM, and I just wanna I love this quote 0:11:21.679 --> 0:11:26.240 from Peter Lynch, he's the fame manager of Fidelities Magellan Funds, 0:11:26.480 --> 0:11:30.640 and he described you as much more practical than most economists, 0:11:30.640 --> 0:11:35.280 more interested in examining railroad card deliveries than Laugher curves. 0:11:35.360 --> 0:11:37.400 That was in his book One Up on Wall Street. 0:11:37.679 --> 0:11:41.479 So really the question is do you consider yourself an economist? 0:11:41.559 --> 0:11:45.160 Are you a strategist? How do you describe yourself? Well, first, 0:11:45.559 --> 0:11:48.400 I'm a practitioner, but you know, from my early days 0:11:49.200 --> 0:11:52.640 I was really going off in the economics area at 0:11:52.760 --> 0:11:55.439 M I T Than Data Resources and then at C 0:11:55.720 --> 0:11:59.240 at C. J. Lawrence. But I view myself really as 0:11:59.240 --> 0:12:04.560 a business side goal expert and a market cycle effects sinado. 0:12:04.800 --> 0:12:08.640 So that's really what I'm trying to apply the logics 0:12:08.720 --> 0:12:12.280 of economics too. Makes makes perfect sense to me. So 0:12:12.679 --> 0:12:15.000 let's let's get into that in a little detail, because 0:12:15.520 --> 0:12:19.160 over the past couple of years, especially during the financial crisis, 0:12:19.520 --> 0:12:24.400 the economics profession has come in for some some criticism. Um, 0:12:24.480 --> 0:12:27.080 so let's talk a little bit about the data you 0:12:27.120 --> 0:12:32.360 look at. You early in your career created a survey 0:12:32.400 --> 0:12:37.239 that went out to four hundred different companies in trucking, retailing, 0:12:37.320 --> 0:12:41.760 home building, manufacturing. How how did that come about? How 0:12:41.760 --> 0:12:45.560 did the idea for this regular survey of people in 0:12:45.600 --> 0:12:50.800 the real economy come about? So probably probably thirty years 0:12:50.800 --> 0:12:54.520 ago or more. Uh, there was a survey of retailers 0:12:55.480 --> 0:13:00.000 that came out once a week and very widely followed. 0:13:00.240 --> 0:13:02.080 And I saw that, and I thought, why don't we 0:13:02.120 --> 0:13:05.120 do that for many industries, not just retailing. So we 0:13:05.120 --> 0:13:08.360 started a retail survey, which we still have, and then 0:13:08.440 --> 0:13:11.880 we branched out and now we survey about thirty different 0:13:11.920 --> 0:13:17.520 areas and have really gone very wide feel. So, for example, 0:13:17.559 --> 0:13:21.120 as you mentioned, we survey trucking companies and asked them, 0:13:21.160 --> 0:13:23.760 how are your sales this week compared to what you expected? 0:13:24.760 --> 0:13:27.839 Same question every week to the same person. If the 0:13:27.880 --> 0:13:31.240 person is not there, Typically the the CFO. If they're 0:13:31.280 --> 0:13:34.440 not there, we used last week's reading, so there's no 0:13:35.000 --> 0:13:38.600 change in the survey due to somebody changing the answer. 0:13:39.160 --> 0:13:41.600 And so we've been doing that UH for a long time, 0:13:41.600 --> 0:13:44.520 and now we cover almost every single nook and cranny 0:13:44.559 --> 0:13:47.280 of the US economy. We also survey companies that do 0:13:47.320 --> 0:13:50.079 business in China and ask them how their sales are. 0:13:50.240 --> 0:13:53.280 So what do all these surveys ultimately end up informing 0:13:53.320 --> 0:13:56.760 you about? So I have UH, if you follow the surveys, 0:13:57.120 --> 0:14:01.160 you have an almost perfect knowledge of the US economy today. 0:14:01.640 --> 0:14:03.720 They're not the least bit predicted. We're not asking what 0:14:03.760 --> 0:14:06.079 do you think sales will be next week, next quarter? 0:14:06.240 --> 0:14:09.520 But you know what's happening right now in real time, 0:14:09.600 --> 0:14:14.800 in real time. The surveys are for revenue. So like 0:14:14.920 --> 0:14:18.480 our trucking survey got very strong, and part of that 0:14:18.520 --> 0:14:22.120 with price increases, they were getting rate increases. UH. So 0:14:22.200 --> 0:14:25.200 we catch capture both the miles driven and the and 0:14:25.240 --> 0:14:29.440 the rates. Our airline survey was very strong, UH, and 0:14:29.480 --> 0:14:31.680 now it's come off in part because fares have been 0:14:31.760 --> 0:14:34.680 under pressure. So it's a it's a it's a nominal measure. 0:14:35.360 --> 0:14:38.600 Each each of the surveys. So one of the issues 0:14:38.640 --> 0:14:41.520 that we always run into, at least with investor surveys, 0:14:42.000 --> 0:14:44.880 is whether or not people are actually telling the truth. 0:14:45.200 --> 0:14:47.560 You have an issue with that. Are CFOs pretty honest 0:14:47.600 --> 0:14:49.920 with you about what they're doing or do you run 0:14:49.960 --> 0:14:53.600 into a little wishful thinking here and again the I 0:14:53.640 --> 0:14:58.080 think we're getting the straight shot of the companies that 0:14:58.120 --> 0:15:01.520 do it, that participate with this UH do it for 0:15:01.560 --> 0:15:04.400 two reasons. One, they get to see the survey result. 0:15:04.720 --> 0:15:08.760 So if you're running a trucking company and somebody will 0:15:08.760 --> 0:15:12.400 tell you every week how twelve other truckers put together 0:15:13.520 --> 0:15:17.080 a consensus, you can tell if you're gaining or losing 0:15:17.880 --> 0:15:20.680 UH market share. Here's how you're doing relative to the 0:15:20.720 --> 0:15:22.600 rest of your You know what your answer was, you 0:15:22.640 --> 0:15:24.480 don't know, and you know what the overall is. You 0:15:24.520 --> 0:15:26.720 can you can get a feel for it. The second 0:15:26.800 --> 0:15:30.280 is we give them our economic research and so there 0:15:30.320 --> 0:15:32.960 we've gotten about three companies to work with us on 0:15:33.000 --> 0:15:36.640 a on a weekly basis. That that's really fascinating and 0:15:36.800 --> 0:15:38.760 that answers the question how did you get people to 0:15:38.880 --> 0:15:41.680 agree to do these You've you've given them an insensive 0:15:41.960 --> 0:15:45.040 and so because of that. Uh. I really don't think 0:15:45.320 --> 0:15:48.440 there's any incentive for them to game the system. We 0:15:48.520 --> 0:15:53.360 also do a survey, for example, of hedge funds, and 0:15:53.440 --> 0:15:59.040 we're trying to determine whether they're really extended or are defensive. 0:16:00.640 --> 0:16:03.880 Occasionally I worried that one of the participants might put 0:16:03.920 --> 0:16:08.240 in of a real fake number, fake number to try 0:16:08.240 --> 0:16:11.360 and make it look like people are really enthusiastic, are 0:16:11.400 --> 0:16:14.280 really pessimistic, and then trade against that. So he wants 0:16:14.280 --> 0:16:16.760 to influence the survey and then take the other side 0:16:16.800 --> 0:16:19.720 of the trade. I think about that occasionally. But so 0:16:20.240 --> 0:16:23.480 this really is in how traditional economics has been done 0:16:23.480 --> 0:16:26.760 in the past. Usually there's official government data and people 0:16:26.800 --> 0:16:30.440 take that and crunch numbers. You're really looking at the 0:16:30.600 --> 0:16:34.600 economy with the rubber meets the road, so to speak. Yes, 0:16:34.720 --> 0:16:37.720 but as as a constant job to look at what 0:16:37.760 --> 0:16:40.560 our surveys are saying and then compare it to what 0:16:40.600 --> 0:16:42.840 the government stats are saying, whether it's retail sales or 0:16:42.840 --> 0:16:45.600 GDP or housing starts. So you're always going back and 0:16:45.640 --> 0:16:49.880 forth to try and triangulate the best picture is their lead. 0:16:49.960 --> 0:16:52.960 Is there a lag? Do they often coincide? Uh? The 0:16:53.000 --> 0:16:57.840 surveys are definitely coincident. Sometimes the government data can be lagging, 0:16:57.960 --> 0:17:00.920 and it's and it's always lagging just because it comes 0:17:00.920 --> 0:17:04.520 out a month late or two weeks late. Uh So 0:17:04.920 --> 0:17:10.560 we're always working real time, and the gunment data is 0:17:10.600 --> 0:17:12.600 always with some sort of lag, could be a week 0:17:12.640 --> 0:17:15.800 for employment or two or three weeks for retail sales. 0:17:15.840 --> 0:17:18.200 That that has to be tremendously valuable to your clients. 0:17:18.640 --> 0:17:21.399 It's it's valuable to our clients. It's very valuable to me. 0:17:21.560 --> 0:17:24.320 It's I think it forms my sort of whole vision 0:17:24.400 --> 0:17:26.840 of what is happening on a current basis. So that 0:17:26.920 --> 0:17:29.600 leads me to my next question, how do you assemble 0:17:29.840 --> 0:17:33.200 your economic perspectives. One of the things that you did 0:17:33.240 --> 0:17:37.600 earlier in your career, when most of Wall Street was 0:17:37.680 --> 0:17:41.000 making monthly forecasts, you said, we get data weekly, let's 0:17:41.000 --> 0:17:44.080 do this on a weekly basis. What goes into into 0:17:44.119 --> 0:17:48.520 that process, So it's a little bit has followed the 0:17:48.560 --> 0:17:52.119 Internet the frequency you had first you had mailed, then 0:17:52.119 --> 0:17:57.680 you had facts, then you had email, and as that happened, 0:17:57.920 --> 0:18:00.159 you could go faster and faster. And also data is 0:18:00.160 --> 0:18:04.040 coming out faster, and so it's changed dramatically in the 0:18:04.119 --> 0:18:07.160 forty years I've been doing this, and so we went 0:18:07.680 --> 0:18:11.600 uh too, weekly, and then we went to daily, and 0:18:11.680 --> 0:18:16.520 so now every day is a complete immersion and you 0:18:16.520 --> 0:18:19.359 know what's happened, what the markets are doing, and we 0:18:19.440 --> 0:18:23.199 put out a piece every every morning. Uh and I 0:18:23.240 --> 0:18:26.240 can feel it. It's gonna go it's gonna go virtual 0:18:26.560 --> 0:18:30.520 or they'll be constantly continuous, not that far off in 0:18:30.560 --> 0:18:33.320 the distance, not that far from distance, and it almost 0:18:33.400 --> 0:18:37.960 is now. But it is more or less a daily phenomenon. 0:18:38.040 --> 0:18:40.639 I'm Barry Ridhalt. You're listening to Masters in Business on 0:18:40.640 --> 0:18:43.960 Bloomberg Radio. My special guest today is Ed Hyman. He 0:18:44.080 --> 0:18:46.480 is the founder of I s I and the chairman 0:18:46.920 --> 0:18:49.080 of ever Corps r s I, which is a very 0:18:49.160 --> 0:18:53.880 large research and asset management firm located here in Manhattan 0:18:53.920 --> 0:18:57.800 and offices pretty much all over. Let's talk a little 0:18:57.800 --> 0:19:01.920 bit about the institutional investor rankings. What what you've accomplished 0:19:02.000 --> 0:19:07.120 with that is is really unprecedented. Thirty five consecutive years 0:19:07.119 --> 0:19:11.439 from one to two thousand and fifteen and counting, you 0:19:11.480 --> 0:19:15.280 were the number one rated economist according to a poll 0:19:15.320 --> 0:19:20.719 of institutional investors. That that's Michael Jordan's plus Tiger Woods 0:19:20.720 --> 0:19:24.520 plus Derek Jeter rolled into one nobody has ever had 0:19:24.520 --> 0:19:28.400 at Look. Bill Miller's streak was what fifteen years, that's 0:19:28.480 --> 0:19:33.720 kids stuff. This is thirty five years. It's unprecedented. How 0:19:33.760 --> 0:19:37.159 on earth do you explain this? They? Well, first, I 0:19:37.200 --> 0:19:41.720 think Barry, I've been really lucky. Never it never hurts. 0:19:42.080 --> 0:19:46.359 So the space that I got into has been a 0:19:46.400 --> 0:19:50.040 space that has not been that competitive in terms of 0:19:50.080 --> 0:19:54.439 other people, you know, other economists in the in the space. 0:19:54.920 --> 0:19:57.400 So I've been I've been a little bit lucky. I've 0:19:57.440 --> 0:20:02.680 been very lucky in the places I've worked, uh, like C. J. Lawrences, 0:20:02.720 --> 0:20:06.720 which is really where it happened for me. Uh. And 0:20:06.920 --> 0:20:10.680 my mission always and our mission at ever Chorus I 0:20:10.920 --> 0:20:16.399 s I is to help our clients. That's that's what 0:20:16.680 --> 0:20:20.439 I want us to do. And that comes across clearly 0:20:21.280 --> 0:20:23.199 in the work that you get. And so everything I 0:20:23.280 --> 0:20:27.399 do is aimed at trying to help our clients, and 0:20:27.440 --> 0:20:30.240 that's what they respond to. So for example, if you 0:20:30.320 --> 0:20:34.320 have an idea, it doesn't help if they don't understand it. 0:20:35.040 --> 0:20:37.840 And so I spend a lot of time thinking about 0:20:39.160 --> 0:20:43.679 communicating the idea as well as conceiving the idea, and 0:20:43.800 --> 0:20:48.600 then we have forty salespeople, uh that or my megaphone 0:20:48.720 --> 0:20:52.200 and megaphone for our other analyst, and so that combination 0:20:52.560 --> 0:20:56.560 gives us a very loud signal in the in the community. 0:20:56.640 --> 0:20:59.040 Do you spend a lot of time making sure those 0:20:59.080 --> 0:21:03.320 salespeople really understand your thoughts, your thought process, and and 0:21:03.520 --> 0:21:06.560 what you're trying to communicate to the clients. So we 0:21:06.680 --> 0:21:10.159 have a terrific group of salespeople and they are my 0:21:10.800 --> 0:21:15.919 forty biggest accounts, each one of them. And so every 0:21:16.119 --> 0:21:21.040 morning at seven o'clock, seven fifteen, I start meeting with 0:21:21.119 --> 0:21:25.639 them and our other forty research teams to try and 0:21:25.880 --> 0:21:28.760 tell them what I'm thinking. And other analysts do as well, 0:21:29.200 --> 0:21:31.440 And so that's what you have. If you cannot get 0:21:31.720 --> 0:21:34.719 your salesman to understand what you're saying, what you're thinking, 0:21:34.800 --> 0:21:37.960 what you're trying to get at, then the clients aren't either. 0:21:38.440 --> 0:21:41.040 And so that's that's your first line. And we do 0:21:41.119 --> 0:21:45.720 that every single morning, every day. Seven How long does 0:21:45.760 --> 0:21:48.800 that that morning conference last at last till till eight? 0:21:49.160 --> 0:21:51.720 So you're you're I'm up on goodly early. You have 0:21:51.840 --> 0:21:54.920 to also be up at a ridiculous a right, right, 0:21:55.119 --> 0:21:58.399 So we start, uh my team comes in at around 0:21:58.480 --> 0:22:05.840 six fifteen and I start really at around five, um, 0:22:05.840 --> 0:22:10.760 watching Bloomberg and getting up on the news and what's happening. 0:22:12.000 --> 0:22:16.120 Then I read a dozen newspapers and by I meet 0:22:16.160 --> 0:22:20.960 with our team to launch. We have very similar schedules. UM, 0:22:21.119 --> 0:22:23.440 only I'm not doing the meeting at seven fifteen. That 0:22:23.440 --> 0:22:28.159 that's uh, that's really significant. So beside yourself, who are 0:22:28.200 --> 0:22:30.439 some of your favorite economists? Who who do you like 0:22:30.560 --> 0:22:36.840 to look at their economic work? So they Um, the 0:22:36.880 --> 0:22:39.600 person that probably had the most influence on me was 0:22:39.840 --> 0:22:43.400 Milton Freeman. And he's not putting out economic work now, 0:22:43.920 --> 0:22:50.600 but he I I was at a presentation he gave 0:22:50.640 --> 0:22:53.840 an M I T. When I was twenty three, and 0:22:53.880 --> 0:22:57.439 he had a debate with Paul Samuelson and I just 0:22:57.480 --> 0:23:02.000 fell in love with Freeman two Giants to Giants and uh. 0:23:02.160 --> 0:23:05.880 So he had a big influence on me. Uh. And 0:23:05.920 --> 0:23:10.000 then Otto Eckstein, who I mentioned of, hired me right 0:23:10.000 --> 0:23:12.240 out of M I T. And he had a huge 0:23:12.320 --> 0:23:16.760 influence on me. He was very clear thinker, very hard working, 0:23:17.520 --> 0:23:21.840 very good communicator. Uh and and he really influenced a 0:23:21.880 --> 0:23:24.479 lot of what I think now. So those are two 0:23:24.560 --> 0:23:27.320 of the legends of economics, and what about the next 0:23:27.359 --> 0:23:31.080 generation of strategists and economists coming up? Anybody you look 0:23:31.119 --> 0:23:33.280 at in the let's call it the under forty set. 0:23:33.840 --> 0:23:37.480 They so this sort of a drought right there. So 0:23:37.640 --> 0:23:42.200 there was a time when there were all these fabulous strategists, uh, 0:23:42.280 --> 0:23:47.119 like Byron Ween and Barton Biggs, Steve Galberth, Henry McVeigh 0:23:47.240 --> 0:23:51.280 and Uh, now there's some great strategists France Wat Trahan. 0:23:52.119 --> 0:23:58.800 Uh is you worked with us and now has another firm. Uh. 0:23:58.920 --> 0:24:01.679 And we're we have in our shop Dennis de Buscher, 0:24:02.359 --> 0:24:04.880 who I have great hopes for. He's He's my up 0:24:04.880 --> 0:24:09.800 and comer strategist. I'm Barry Ritults. You're listening to Masters 0:24:09.800 --> 0:24:12.520 in Business on Bloomberg Radio. My special guest today is 0:24:12.720 --> 0:24:16.040 Ed Hyman. He is the number one ranked economist in 0:24:16.080 --> 0:24:21.480 the Institutional Investor Survey of Large Institutions and currently the 0:24:21.560 --> 0:24:24.160 chairman of ever Corps. I s I. Let's talk about 0:24:24.200 --> 0:24:27.080 what it was like building I S I. But before 0:24:27.119 --> 0:24:30.080 we start, I have to read a quote here and 0:24:30.119 --> 0:24:33.360 it reflects directly to what you said in the earlier segment. 0:24:33.640 --> 0:24:35.240 So while we were looking up a lot of the 0:24:35.280 --> 0:24:39.000 details on your background. There was a blog post by 0:24:39.000 --> 0:24:41.600 a client of yours and this is a couple of 0:24:41.640 --> 0:24:44.320 years old, and this person writes they are a long 0:24:44.440 --> 0:24:47.199 term research client of Ed Himan. I s I and 0:24:47.320 --> 0:24:51.200 here's why he is consistently the number one ranked economic 0:24:51.359 --> 0:24:54.520 researcher on Wall Street. He sticks to his core mission 0:24:54.520 --> 0:24:59.719 of providing high quality and independent research. He helps portfolio 0:24:59.760 --> 0:25:02.680 man ers makes sense of the world. He sorts through 0:25:02.720 --> 0:25:07.480 the reams of economic data and government surveys to provide 0:25:07.560 --> 0:25:11.520 a real time analysis of what's happening. He provides a 0:25:11.680 --> 0:25:16.240 very high level of client service. He is independent and unconflicted. 0:25:16.640 --> 0:25:21.600 He never pushes a product discuss. So, as I mentioned, 0:25:21.920 --> 0:25:25.440 I view my career as being a continuum, starting with 0:25:25.560 --> 0:25:28.159 my work at M I T. Then I had the 0:25:28.160 --> 0:25:31.240 good fortune working with Data Resources c J. Lawrence, and 0:25:31.280 --> 0:25:35.600 all these were really high quality experiences for me. And 0:25:35.640 --> 0:25:38.880 then CJ. Lawrence was brought by Dorge Bank, and that 0:25:38.960 --> 0:25:41.800 was a discontinuity and what I was trying to do, 0:25:42.160 --> 0:25:44.760 And so a group of us left and started ies I. 0:25:45.320 --> 0:25:48.320