Hyman argues that independent research is happier in a smaller organization where it is the central focus. In large firms it can lose independence and be treated as a cost, while a research-only firm must make the work valuable enough to support the business.

ISI concentrated on research rather than treating it as one activity among many.
Regulatory separation and the financial crisis helped independent firms recruit strong analysts.
Hyman believes organizational size can change research independence and energy.
A research-led firm earns directly from the quality and usefulness of its research.

“research UH is happier in a smaller unit where it is the focus of the unit”
Ed Hyman · 31:25

“We make money because we have to, that's our only business.”
Ed Hyman · 31:51

#independent research#organizational design#wall street#business model

Hot Take1:10:31

The Bond-Market Risk Hyman Checked Every Morning

Hyman's immediate concern was a discontinuity in a bond market where dealers held far less inventory than before the financial crisis. He watched German bond yields each morning because a rapid move could reveal thin liquidity and transmit quickly into US yields.

Dealer bond inventories had fallen to a fraction of earlier levels.
Thin markets raised the possibility of abrupt price and yield moves.
A rapid doubling of the German yield illustrated the discontinuity risk.
Hyman observed German and US bond yields moving closely day to day.

“The market is very thin, and that's liquidly crisis that people have been talking about now for months.”
Ed Hyman · 1:11:00

“that's a risk that I watched every every morning.”
Ed Hyman · 1:11:23

#bond liquidity#german bonds#fixed income#market risk

Explainer· 6

Explainer37:45

How Employee Ownership Aligned the Evercore ISI Deal

Hyman describes a five-year deal in which ISI shares vest into Evercore stock according to performance. With employees owning half of ISI and many partners participating, the structure aligned the seller, buyer, and staff around performance and retention.

ISI shares vested into Evercore over a five-year period.
Performance metrics affected the value realized from the transaction.
Employees owned half of ISI before the deal.
A multi-year vesting plan addressed the risk that newly wealthy staff might leave.

“Everybody's incentivize, everybody's incentives are lined up perfectly to make the thing work.”
Ed Hyman · 38:51

“what I've take the deepest pride in is that the employees on half the company”
Ed Hyman · 39:36

#employee ownership#incentives#acquisitions#retention

Explainer56:17

Why the Fed Could Let Its Bond Portfolio Mature Naturally

Hyman says the Federal Reserve could allow quantitative-easing assets to mature over five or six years rather than selling them rapidly. He also argues that gridlocked fiscal policy made monetary policy and Federal Reserve communication much more prominent.

The Fed's fixed-income holdings had an average duration of roughly six years.
Natural maturity offered a gradual path to reduce the portfolio.
Limited fiscal-policy room shifted more economic responsibility to monetary policy.
Future rate decisions and balance-sheet runoff would remain a constant market discussion.

“they can and will I think let it run off naturally over the next five or six years.”
Ed Hyman · 56:37

“we don't have many degrees of freedom when it comes to fiscal policy.”
Ed Hyman · 57:08

#federal reserve#quantitative easing#monetary policy#balance sheet

Explainer1:01:48

Why Hyman Thought US Wages Were Starting to Accelerate

Hyman links wage acceleration to unemployment falling below roughly five and a half percent and points to rising employment-cost and earnings measures. He argues that stronger wages would improve household sentiment as well as retail spending because many people had experienced little real pay growth.

Past wage acceleration occurred after unemployment moved below about 5.5 percent.
The employment cost index and average earnings measures had both risen.
Minimum-wage announcements were additional signs of a tighter labor market.
Higher wages could improve both spending and how the recovery felt to households.

“in the past, wages have accelerated when unemployment has come below five and a half.”
Ed Hyman · 1:02:39

“if wages pick up. It'll make the economy feel better in addition to just making retail sales better.”
Ed Hyman · 1:04:03

#wages#labor market#employment#consumer spending

Explainer1:07:36

China's Three Simultaneous Structural Problems

Hyman identifies corruption, environmental damage, and an investment-heavy economic model as China's three major concurrent challenges. The difficulty was not any one issue alone, but attempting to fight corruption, repair environmental harm, and rebalance away from extreme investment at the same time.

Hyman describes corruption as systemic rather than isolated.
Air and water pollution created a substantial environmental burden.
Investment had risen to an unusually large share of GDP.
China had to pursue institutional reform and economic rebalancing simultaneously.

“they have corruption, and that's trying to grout that out, and that's endemic, systemic corruption throughout the whole country”
Ed Hyman · 1:08:51

“they're trying to rebalance the economy, fight corruption, and fight environmental issues all at once.”
Ed Hyman · 1:10:10

#china#corruption#environment#investment

Explainer1:24:00

How Passive Investing Squeezed Trading-Funded Research

Hyman connects falling trading volume to poor active-management results and flows from active funds into passive products. Because research was paid largely through trading commissions, fewer transactions made the economics harder across the sell-side research industry.

Active managers traded less after years of weak relative performance.
Money moving into passive funds generated less stock-level trading.
Equity trading volume had fallen markedly from its earlier level.
Lower commission activity reduced the pool available to pay for research.

“money has been flowing from active to passive, which generates less trading in that space.”
Ed Hyman · 1:25:09

“it just made it a much more difficult environment for everybody in the business.”
Ed Hyman · 1:26:34

#passive investing#trading volume#research economics#commissions

Explainer1:29:52

Why More Smart Investors Can Mean Less Alpha

Hyman attributes weak active-management results partly to the sheer number of capable competitors seeking the same opportunities. Drawing on Charlie Ellis, he says their efforts can cancel one another out, while asset allocation may still add value that stock-level alpha comparisons miss.

A larger field of skilled competitors makes investment outperformance harder.
Competition can arbitrage away opportunities available to active managers.
Traditional alpha comparisons may overlook successful asset allocation.
Portfolios can add value through mixes of equities, bonds, private equity, and real estate.

“when there's so many really smart people out there, they all just end up canceling each other.”
Ed Hyman · 1:30:20

“people have been more successful doing asset allocation, which doesn't show up in generating alpha or not.”
Ed Hyman · 1:30:49

#active management#alpha#competition#asset allocation

Story· 1

Story06:18

How Engineering Led Ed Hyman Into Econometric Modeling

Hyman's engineering background drew him to MIT's quantitative business program, where a research assistantship immersed him in econometric modeling and time-shared computing. He later applied the same tools to commodity prices, business cycles, and industry forecasts.

Hyman chose MIT because its business school had a quantitative bent.
A research assistantship with Ed Kuh introduced him to econometric models.
MIT's time-sharing system made centrally stored data accessible from other locations.
He later forecast commodity prices and industries using econometric models.

“because I was an engineer. I knew I was mathematical”
Ed Hyman · 06:41

“I spent uh really those two years at M I T immersed in doing econometric modeling”
Ed Hyman · 07:31

#econometrics#engineering#mit#career

Tool· 1

Tool10:21

Why Hyman Still Marks Important Charts by Hand

Hyman began marking charts for morning meetings at C. J. Lawrence, and salespeople sent them to clients after seeing that the format worked. He argues that a handwritten mark directs the reader's eye immediately to the important evidence.

The practice began as a way to prepare charts for internal morning meetings.
Salespeople distributed the marked charts after clients responded well.
Hand annotation creates a simple visual attention cue.
Hyman continued using the technique despite newer distribution technology.

“if it's been marked on by hand, your eye goes right to it”
Ed Hyman · 11:02

“that's where it came from, and it's still a good technique.”
Ed Hyman · 11:06

#charts#visual communication#research#annotation

Takeaway· 3

Takeaway41:49

Why Rapid Growth Can Crowd Out Mentoring

Hyman says ISI did not mentor well while it was growing rapidly and hiring already established analysts. He also suggests that mentoring becomes harder inside very large organizations, while Evercore's stronger program prompted a new career-development effort.

Fast organizational growth consumed attention that could have gone to mentoring.
Hiring established analysts reduced the immediate need to develop them internally.
Organizational scale can make personal mentoring more difficult.
Evercore ISI responded by launching a career development committee and program.

“I don't think we've done a good job of mentoring. Really, we've because we've just been pushing”
Ed Hyman · 42:34

“we are now launching a career development Committee and a program specifically aimed at mentoring people to give people a path forward.”
Ed Hyman · 43:09

#mentoring#talent development#growth#management

Takeaway47:28

Escape the Fluorescent View by Seeing Economies on the Ground

Hyman values travel because direct observation and conversations with local companies and investors change his perspective. He agrees with Ritholtz that staying behind a desk can produce a distorted view that misses strong activity in places outside the usual financial centers.

Hyman visits investors and companies during annual travel to China.
Direct observation supplements charts and reported data.
Local conversations revealed strength in cities not usually treated as obvious boom areas.
Desk-bound analysis can become detached from current business conditions.

“I'm definitely a hands on observer of the condition”
Ed Hyman · 48:01

“We call it a fluorescent view of the world. And it's not very accurate”
Barry Ritholtz · 49:19

#field research#travel#economic observation#local economies

Takeaway1:14:02

Why Hyman Kept Applying Moneyball to His Own Business

Hyman calls Moneyball unusually universal because its lessons about finding overlooked value apply well beyond baseball. He says Evercore ISI offered many situations where the book's way of thinking could be transferred into research and business decisions.

Hyman repeatedly thought back on Moneyball and The Big Short.
He valued Moneyball for its transferability rather than only its baseball story.
The book supplied patterns he could recognize inside Evercore ISI.
Hyman reads work-related books as an input to his professional thinking.

“I do find money, money Ball and the Big Short by Michael Lewis to be books I think back on frequently.”
Ed Hyman · 1:17:00

“you see many many examples of where you can apply Moneyball. That's what made it so fascinating. It was so universal.”
Ed Hyman · 1:17:46

#moneyball#reading#business lessons#decision making

Frameworks in this episode

Business-Cycle Recession Clock

Go Fast, Work Hard, Stay Flexible

Nominal GDP Bond-Yield Anchor

Real-Time Survey Triangulation

Sales-Team Clarity Test

Insights & moments

◆Hot Take· 2

Research Thrives When It Is the Business, Not a Cost Center