The Unbeatable Ed Hyman
For four decades, Ed Hyman has been unrivaled among Wall Street economists. Is his reign nearing its end?
It is a truth universally acknowledged that Edward S. Hyman Jr. is Wall Street’s greatest living economist. And a nice guy too. The former has been documented every October since 1976 in Institutional Investor. The latter, most recently by everyone interviewed for this article.
After a total of 40 years as the No. 1 analyst in economics on the All-America Research Team, another four in second place, and a single appearance as a runner-up, you might wonder when enough will be enough for Ed Hyman, who is now 75. I was tasked with finding out how much longer he plans to stay in the game. That would be a great scoop. Might he be architecting a graceful exit sometime soon?
The answer is no.
That settled, the assignment to profile Hyman took a different direction.
While discussing Hyman’s unrivaled success with another veteran of the All-America Research Team, that analyst brought up the flip-side of the Evercore ISI chairman’s record run at No. 1: In the last 41 years, not a single economist from Morgan Stanley or JPMorgan or Bank of America or UBS has managed to make, even for one brief shining moment, the First Team for economics. In fact, in the last dozen years, first and second place have been locked up by the same two people: Hyman and his former C.J. Lawrence/ISI compatriot, Cornerstone Macro’s Nancy Lazar. (More about Lazar later.)
A Goldman Sachs analyst held the No. 1 position before Hyman captured it in 1980; that analyst disappeared from the ranking soon after. In the most recent decade, Goldman’s Jan Hatzius and Deutsche Bank’s Torsten Slok are the only representatives of full-service investment banks who have come anywhere close to breaking into the winner’s circle. Hatzius was voted a runner-up in 2020, 2017, and 2013 and placed third in 2011 and 2010. Slok held steady on the Third Team from 2012 to 2017, but is now out of the picture; in August, he left Deutsche Bank after 15 years for Apollo Global Management.
Bottom line, the sanctum sanctorum of Wall Street economists has been pretty much devoid of big-name banks.
And then there’s Hyman.
He’s about the last economist in the universe anyone would ever consider calling a dismal scientist. He’s neither.
So how does he do it? The logical place to start this investigation was with the investors who voted in the All-America Research Team survey over the last 45 years. This was readily accomplished by reading every economics category write-up since Hyman’s 1976 debut.
Online versions of the All-America Research Team, now in its 49th year, go back only to 2001. It took three days to get permission to enter the deserted Institutional Investor offices, just east of Times Square, where the archives reside. There, Eric, Lorenzo, and Sean — the skeleton maintenance crew holding down the fort during the pandemic — helped me locate and pull out the 25 bulky, bound volumes of back issues, load them, six at a time, onto a library cart, and push them into the lunchroom. There, I had my first “meeting” with Hyman.
I found him admired as an analyst who is “low key,” “unpretentious,” and “easy to follow.”
He’s lauded for being “open and friendly” and producing “crystal-clear analysis.” He’s applauded equally for making correct calls and for being “quick to see his mistakes, fast to correct them, and humble about owning up.”
There’s also his lavish devotion to clients, to the extent that one investor quips, “I feel like a waffle with syrup being poured over me.”
Hyman is accessible and even answers his own phone. At least that was the case in 1983, his fourth year on the First Team — a year when Salomon Brothers economist Henry Kaufman, the famous “Dr. Gloom,” was moving markets, dominating global headlines, and even inspiring a Lee Lorenz New Yorker cartoon. Kaufman was relegated to the Third Team that year.
Then there’s the wow factor. Hyman not only reliably delivers cogent, relevant, and well-organized materials (a mashup of news clippings, charts, and interpretive analysis), but he also has long annotated these with helpful circles, arrows, and directed comments, such as, “WOW.”
That he’s not necessarily the most accurate forecaster is a nonissue. Investors shrug this off in light of everything else he delivers. His ability to “pinpoint a problem, zero in on it, and explain it coherently” offsets missing the mark here and there. As one fan explains, “Ed’s work is so readable and his comments so sensible, it doesn’t matter to me if his conclusions aren’t correct.”
These investor appreciations are just the tip of the iceberg, taken from the first ten years that Hyman graced the All-America Research Team. They echo through the next 30 and fully illustrate what Hyman professes has been, and always will be, his “single underlying passion” — helping clients.
“Everything comes from that. If you can do that, all sorts of things open up,” Hyman promises. What exactly might those things be? Respect for his work and an undying loyalty when the All-America Research Team voting polls open.
Instead, I get a paler Hyman and no swaying palms. He’s back in New York and, as advertised, attentive, friendly, and upbeat. I’d been warned that beneath that laidback demeanor he’s ultra-focused. At one point, when he makes a comment, I look away as I type it in.
“I see you rolling your eyes,” he tells me. Attention to detail, indeed.
We start at the relevant beginning, how in 1967 he came north from somewhere deep in the heart of the Lone Star State, a mechanical engineering degree from the University of Texas in hand, to enroll at the MIT Sloan School of Management. “It was a logical choice because it was quantitative,” Hyman explains.
At Sloan, he secured a research assistantship supervised by economics professor/econometrics pioneer Edwin Kuh. This entailed retrieving economic data from a central computer via a bespoke program that Kuh commissioned to produce forecasts for housing, capital spending, unemployment, production, and the like. The software, Timeline Reactive OnLine Laboratory, was known as . . . TROLL. No relation to what we think of today when linking “computer” and “troll.”
After Hyman received his MBA in 1969, Kuh dispatched him across Cambridge to meet Harvard economics professor Otto Eckstein, who had recently partnered with Donald B. Marron (of Mitchell Hutchins/PaineWebber/UBS fame) to start Data Resources Inc., an early distributor of time-shared econometric forecasting data and models for businesses. Hyman was hired as an economic analyst, assigned initially to do essentially the same work he’d done for Kuh.
“It was a perfect fit,” Hyman says.
According to Hyman, “It was Otto’s idea to bring in people like me and then send us out to meet with DRI clients so we’d get hired by the clients.”
Which is precisely what happened. In 1972, C.J. Lawrence managing partner James E. Moltz made Hyman an offer — one the young analyst at first thought he might be able to refuse, or leverage.
But when Hyman told Eckstein, there was no salary match forthcoming. Instead, Eckstein’s reaction was, “This is great! Let me take you to lunch!”
Which he did — down the street at Friendly’s. “Where?” I ask. Hyman laughs as he repeats what I didn’t catch. “Friendly’s!”
In his early days on Wall Street, Hyman’s signature style began to emerge. Moltz — now chairman of a C.J. Lawrence redux serving high-net-worth individuals and families — recalls how swiftly Hyman “got to know our customers well and developed relationships with them.”
Says Moltz, “He developed unique, carefully crafted, increasingly popular economic updates” — the ones with the circles, arrows, and “WOW”s, as well as the occasional “WHEW!” “A FIRST!” “WATCH THIS!” “SELLING WELL,” and “BIG SURPRISE!” handwritten in all caps. For four decades, the cover page of Hyman’s weekly update has featured a bifurcated front page where he lists the “GOOD NEWS” on one side and the “BAD NEWS” on the other.
“How to Invest in a Slow-Growth Economy,” a February 1975 report co-authored by Moltz, Hyman (then vice president of portfolio strategy), and director of research Bruce Benedict, is a relic of the era, typewritten on an IBM Selectric. “Edward S. Hyman Jr.” is credited in a short biography as responsible for the firm’s computer-based investment research efforts.
The first of Hyman’s 26 pages (of a total of 38) features a bearded, solemn Hyman gazing off into the distance. Of his allotted pages, just six contain expository text. The balance is a collection of bulleted notes, charts, graphs, and four-to-six-line summaries.
Hyman’s gift, evident early on to Moltz, was figuring out “how to make the economy come alive.” Clients didn’t have to “plow through pages of discourse,” Moltz adds, which evolved into a powerful competitive advantage. And Hyman demonstrated flexibility. “Economists by nature have strong views,” Moltz maintains. “These ideas are generally well founded, but then their authors hold on to them, reluctant to change their minds. By contrast, Ed is perfectly open about saying, ‘Oops, I was wrong on this.’”
This characterization illustrates one of several principles that Hyman abides by, and shares in our interview. “A great analyst has to want to be correct, to have the right view based on facts,” Hyman says. “But when those facts change, it doesn’t faze me a bit to change the conclusion.”
Hyman’s view: “If you want to do better than other people, you should try to know more than they do.”
Moltz considers this propensity to fastidiousness a significant asset. “Ed is extremely organized and disciplined,” Moltz says. “He maps out his day. He has a head for detail that benefits not just his work product but his social relationships.”
Moltz recalls appreciatively how he could always count on Hyman to remember a client’s name in any chance encounter — no matter how long it had been since they’d crossed paths. “He consumes information, of all sorts, and a lot of it,” the C.J. Lawrence veteran adds.
When Paul Volcker left the Federal Reserve in 1987, Moltz got a call. The former Fed chairman wanted to make sure he would continue to receive Hyman’s economic reports.
C.J. Lawrence survived 1975’s May Day, the infamous switch from fixed- to negotiated-rate commissions that took down boutiques to the right and left of the firm. By the early 1980s, Hyman had become part of a storied triumvirate that included energy guru Charles Maxwell and generalist Stanley Salvigsen. A 1981 C.J. Lawrence profile in The New York Times zeroed in on Hyman’s stock in trade, extolling “the simplicity with which he makes a complex subject understandable” and his legendary personal touch — the same modus operandi that first elevated Hyman to the top of the All-America Research Team five years earlier.
At the end of the interview, “the clean-cut . . . cordial, solicitous” (and beardless) Hyman pulls out the October (reported as November) 1980 issue of Institutional Investor, showing off his inaugural No. 1 profile.
In early 1991, Hyman told Moltz the time had come to make his move to set up his own shop.
On April Fools’ Day 1991, Hyman and his research partner, Nancy Lazar — the two by then were an established Nichols and May dynamic duo — opened the doors to International Strategy & Investment Group. Over the next two decades, Hyman and Lazar built ISI into an independent research powerhouse. The firm established offices in nine locations around the globe and expanded the employee roster to over 200.
Spoiler alert: Lazar parted ways with ISI in 2013, joining forces with three other current or previous ISI employees to form Cornerstone Macro, which was soon enough not insignificantly populated with even more ISI alumni. On the current Cornerstone website, I tallied 18 employees (of a total of 57) citing ISI positions in their biographies: economists, strategists, policy analysts, and salespeople, the last category perhaps the sharpest serpent’s tooth of all. An account published in 2016 has an even higher ratio: 29 out of 52.
My powers of persuasion failed to entice anyone to discuss the Cornerstone affair on the record. The closest I got were a few cryptic, unattributable comments: that it was “totally novel that Ed and Nancy worked for so long together”; that the split developed from a “difference of opinion” on respective visions for ISI.
Meanwhile, All-America Research Team voters rewarded Lazar for her contributions, granting her first a Third Team position in 2008, then a Second Team spot in 2009. This gave ISI a one-two lock on the economics category, one that was repeated over the next four years. In 2013, credit for Lazar’s win went to Cornerstone. Lazar again placed second in 2014. In 2015, she topped the category, breaking Hyman’s streak of 35 straight wins.
The next year, the natural order was restored: Hyman recaptured first place with Lazar in second.
Lazar declined requests for an interview.
Trennert is a rich source of Hyman lore, observation, and analysis. He did two tours at ISI, breaking to attend business school (a career move Hyman unsuccessfully attempted to discourage). He returned in 1997 jonesing for a strategist role but agreed to pay dues by taking charge of a new product, initially referred to as the “Beige Book” and today prosaically titled the “Company Survey Report.”
This was — and still is — just that, a compendium of status reports collected weekly directly from a list of companies, initially via telephone. It may have been mocked as “meatball economics,” but it was a hit from the start, unique and useful, once again demonstrating Hyman’s innovation and insight into what his clients needed. Today, 30 different industries are surveyed, resulting in a substantial body of information reflecting “an almost perfect understanding of the economy,” beams Hyman. Even better, “It’s been a huge part of our success.”
Trennert left ISI in 2006 to co-found Strategas, where he is chairman and chief executive officer. He characterizes this as an awkward but amicable separation. He left without encumberment — even 15 years after its founding, ISI employees had no contracts, no equity at stake, and no nondisclosure agreements. “Ed’s a free-market kind of guy,” Trennert remarks.
Trennert is effusive in reeling off what makes Hyman so effective: His love of the financial markets, an incredible work ethic, a boundaryless professional and personal life, and a determination to maintain the physical and mental stamina necessary to withstand the grueling demands of the job. In sum: “Ed is playing for keeps.”
I neglected to ask if Trennert had been taken to Friendly’s for lunch.
Another appreciative ISI veteran is Francois Trahan, recently departed from UBS, who served as ISI’s executive managing director, chief investment strategist, and head of quantitative research from 2007 to 2010.
Trahan’s first encounter with ISI was as an analyst at BCA Research in Montreal in the mid-1990s. The firm had an exchange agreement with ISI that stirred up a considerable amount of envy among his colleagues. “What they didn’t appreciate,” Trahan recalls, “was that Ed Hyman revolutionized research by demonstrating how a single chart can be more powerful than three pages of text.”
Trahan was ISI employee No. 101. “We wore our number like a badge of honor,” he recalls. “I have a different vibe to my career and my work because of Ed.”
It was Trahan who marveled at the fact that not a single major investment bank has been able to unseat Hyman. “It’s insane,” he says, that dozens of economists have been passing unranked through each of these firms for so many years.
Trahan was named to the All-America Research Team Hall of Fame in 2016 after achieving the No. 1 position in Portfolio Strategy for ten of the previous 11 years. “A lot of us owe our success to Ed,” he says. “I adopted his style long before I worked at ISI. I don’t get why so many people fight it.”
Along with the rest of the research community, Trahan has a few miles to go before he catches up with Hyman’s leading position on this spinoff honoring the All-America Research Team’s best of the best. So does Hyman’s closest rival on the Hall of Fame, Bank of America Merrill Lynch paper and packaging expert George Staphos. With 21 appearances on the First Team, Staphos is not exactly closing in on Hyman’s record 40 — a tally that will undoubtedly increase if Hyman has his say.
“I kid about this, but I always thought, and still do, that Ed’s uncommon common sense and understanding of things relevant was the result of his lacking an economics Ph.D.,” observes Allen Sinai, an Eckstein acolyte who crossed paths with Hyman for one year at DRI. “Ed is everything an academically trained economist is not,” says Sinai, now chief global economist and strategist at Decision Economics. “He is decisive, he’s not stuck in the weeds, and he communicates exceedingly well.”
According to James Grant, founder and editor of Grant’s Interest Rate Observer, Hyman presaged the present-day zeitgeist of post-boomer generations that eschew long-form anything. “Ed’s been way ahead of the curve in presenting ideas at a glance,” he submits. “And it’s not a shallow glance.” Long before Facebook’s Sheryl Sandberg coined the phrase “short-form snackable content,” Hyman was delivering just this. “Ed Hyman is an enduring institution,” adds Grant. “He’s survived all sorts of things and I expect he will continue to.”
Simply put, Hyman is “in a class of his own, and by a wide margin,” says Edward Yardeni, president of strategy and asset-management advisory Yardeni Research. A Yale economics Ph.D., Yardeni trailed Hyman as the No. 2 economist on the All-America Research Team ten times between 1986 and 1998.
“I’ve never known anyone so obsessed, so focused,” Yardeni contends. “His survey is innovative, and his circles and arrows save time.” Had Yardeni ever considered taking a Sharpie to his own reports? “Not my style,” he replies. “It’s hard to be Ed Hyman if you’re not Ed Hyman.”
“I really love what I do. Nobody can do something they don’t like to do for this long,” Hyman says. In a ‘”Web Extra” video filmed May 15 as a partner piece to his WealthTrack interview, Hyman candidly states that the pandemic hasn’t fundamentally changed the way he and his team work — or his own future plans. At this juncture, he says, “I’m sure I’m in my last job. I’ll keep doing what I’m doing . . . as long as I care to, and as long as I’m healthy.”
I’m curious to know if Hyman credits his success to his mantra of client focus and his obsessive compulsion to demystify complex concepts by communicating effectively and efficiently. Or has it been his ability, agility, and willingness to pivot, even recant and revamp, that’s been key?
Hyman asks if I’m familiar with the story of the hedgehog and the fox. It rings a bell, but as I fumble to look it up, he’s already helpfully explaining that it’s a parable of two different kinds of thinkers. (Actually, it’s a fragment from the work of a Greek poet revived from obscurity when it was used as a framework for an essay by Oxford philosopher Isaiah Berlin, not to be confused with Irving Berlin.) “The hedgehog has great and brilliant ideas that he clings to,” Hyman tells me. “Then there are those who zip around from one idea to the next.”
“I’m a gatherer,” Hyman adds. “I gather ideas and try to decide which ones I like. I talk to a lot of people, all the time, all over the world, trying to make sense of what’s going on.”
Independent confirmation of this comes from C.J. Lawrence chief executive officer Bernhard Koepp. “One thing Ed does better than anyone else is inflection points,” Koepp says. “He’s able to identify transitions and isn’t stuck in a narrative. He is constantly searching for evidence, every day dipping the litmus paper, taking a read.”
Yup, Hyman’s a fox.
Switching gears, I ask Hyman how his tennis is going these days. Not all that good, apparently; his shoulder has been bothering him. He’s modest about his golf game.
“Truth be told,” Hyman says, “I only do one thing really well: work.”
One of the calls I made when I first started on this story is returned just as I’m finishing up. It’s Gary Wenglowski, the Goldman Sachs economist who from 1977 to 1979 was the All-America Research Team first-teamer, with Hyman nipping at his heels. Once Hyman reached No. 1, Wenglowski slipped to No. 2. Then he rusticated to third. Then he disappeared.
I tell him I’m writing a profile of Hyman and ask if he has any comments.
“He’s still doing this?” Wenglowski says, clearly shocked.
Wenglowski, it turns out, left Goldman in 1986 at age 44 and never looked back. His view: “The only thing better than being first on the All-America Research Team is being retired.”