21st Century Investing Strategies From Dmitry Balyasny

27:18And if you have something that says, Trader XYZ lost$50 million, and that's like, wow, that sounds like a giant number. But you have to remember, we're managing$28 billion. That's a normal drawdown in a bad week. Yeah, I mean, a typical portfolio manager might be managing a couple billion in gross market value. So that's 2.5%, which is not good, but it's not a disaster. No, like that's kind of the fluctuation that you're going to get, right? And so from a hiring standpoint, it's the same thing. If you're hiring a trader with a$50 million pay package, for example, one, that pay package is composed of lots of different things.

27:56It's not just, you know, here's$50 million. Including his P &L, for sure. Yeah, like that includes, you know, it might include a guarantee for the time that the person is out of the market. It might include a budget for hiring out their team, right? A lot of these teams are 5, 10, in some cases 15 people, so that's expensive. And it also might include extra upside incentives, which are only paid out if the person delivers a certain amount of P &L. So they kind of like print one number, but it's actually like lots of different components. Usually with that type of number, you're budgeting that person to generate P &L of$100 million plus a year.

28:37That's a good investment. Yeah, and they should have a track record of doing that. And if you're right on that, that leads to very healthy returns net to our investor, which we've delivered over time. That's the game. You have over 300 analysts and 170 PMs. How many different teams are you guys running? 170 PMs. Is that 170 specific strategies? So it's 170 teams. So within the equities business, for example, you'll have like 70 teams, which sounds like a lot. But you have to remember that that's split across three distinct equities businesses that all have a different front end. And it's also split across offices all over the world.

29:20And folks are based in London trading Europe, based in Hong Kong or Singapore or Japan trading Asia. So it's still fairly specialized. And each one of those teams will have a mandate where this is the group of stocks that they're focused on in the case of equities. Or this is the macro strategy in RV or emerging markets or rates or directional that they're focused on in macro. Or this person focused on trading gas or trading power and commodities. And they'll build a team of subspecialists, analysts around that. Really interesting. So I mentioned earlier you've scaled up to$28 billion. dollars.

30:00Where does the general management strategy and style begin to get altered just by the size? At what point does that, we've seen a number of farms at 100, 200 billion dollars, and just the sheer heft becomes challenging. You can't generate alpha at that scale, or at least not the same alpha. How large can this get comfortably? It's hard to say. I think that's a function of how markets develop over time. So if you have more companies, active capital markets, the world is growing, more places to trade in, more credit instruments, more equity instruments, more macro instruments, then there's kind of more to do.

30:47So if I think of the subset of strategies that we trade today, hey, a lot of these things weren't significant businesses 10 years ago or 20 years ago. So a strategy like merger arbitrage has been around a long time. A strategy like index rebalancing really got going the last 10, 15 years. Power trading in the commodities markets, right? Not a lot of people doing that 20 years ago. So a lot of these things go from very small strategies to much larger markets over time. And that enables you to run more vol there, increasing your capacity. The way that we go about it is every year, and we update it throughout the year, we measure our capacity for this year and the following.

31:34And so we look at bottom up by each team, like how much can they grow at a steady pace. We don't want people to grow too fast. And we don't want people to stay stagnant, right? Like you want to find a healthy pace of growth as you're expanding your coverage, as you're getting used to running larger dollar amounts and dealing with those constraints. And we look at the recruiting. So where can we expand? Who is coming in? What does the pipeline kind of look like? You know, we discount that because not everyone's going to work out. But you add those numbers together, and that gives you a sense of what the growth path is likely to be.

32:08And over time, that's averaged about 20%, 25 % a year capacity growth. So you mentioned you're looking both internally and externally at recruiting. When you're looking internally, how do you identify and nurture talents? How can you tell when, hey, this person started out as a trader or a PM, but they really seem to have skills and can manage a larger group? That seems like a really challenging thing to do. We spend a lot of time on that, and I think that's one of the keys to how we're going to grow from here on out. Recruiting is super important, but being able to develop your talent, I think as you have scale and you have more people to learn from, that becomes a bigger and bigger slice of your senior talent pool over time.

32:58Right. So when we started off and for a long time, the vast majority of our PMs were recruited, you know, externally. Today, like in equities business, which is the most mature of our strategies, 25 percent in the U.S. are internally promoted. And I wouldn't be surprised if that was 50 percent in a few years. Because now you have more senior PMs from up-and-coming analysts to learn from, more programs that they can participate in to work their way up if that's the path that they want to choose, which that wasn't available. You didn't have the mentorship and the tools. So how do you help people and select?

33:39It's both quantitative and qualitative. So on the quantitative side, we try to measure as much as we can. So we have data on people's recommendations, not just on the ultimate trades, but the data on their recommendations. And you see what is the performance, and we track that. So you try to disaggregate the performance of the analyst from the PM and see who's driving value. and if it's a particular analyst is doing great, like we want to make sure that person is getting more authority, more autonomy, and more leeway over time, right, more growth opportunities. And the best growth opportunity for them might be with the team that they're on.

34:20They might become a more senior analyst. They might become a partner on that portfolio. Or they might raise their hand at some point and say, like, hey, I want to be a PM, and we want to make sure that we facilitate a path to that if we agree that they are talented. it. And part of that is in partnership with the PM that they're working for. You don't want the person to just leave and go somewhere else to take that opportunity. You want to make sure that they replace themselves, they work in partnership with the PM, maybe they co-run something for a period of time, and then they have the opportunity to do their own thing.

34:52So it's definitely a combination of those. And it's the same thing on the business side, like you're always on the lookout for emerging business leaders who can manage others. And we have a lot of leadership development that we do and also utilizing external coaches as well to help with that. That's really interesting, external coaches. You mentioned mentorship. How important is mentorship to the firm and how significant was it in your own professional journey? Well, that's where a partnership culture is really important, right? So I think it's still fairly unusual in hedge funds, especially in our type of fund.

35:29and we've always wanted to build a true partnership where people own real equity in the business. They buy in with their own money. They participate in all the economics of the business. And we have partners who are coming from the business side, running a particular department. We have partners who are managers, heads of strategies on the investment side, and we have portfolio managers. And so that dynamically creates a culture where folks are incentivized to make the firm better, to make someone else better. And they're obviously much more willing and excited to be mentors in those situations.

36:07And I think when you start with that, and I started with two of my co-founders, Scott and Taylor, 20-plus years ago in a partnership-type structure. And I think that then flows down through the organization. And so now today we have mentors for, you know, interns coming up. Right. And you have mentors for, you know, younger associates in different areas of the firm. And then it goes, you know, all the way up and down the firm. Really, really quite. So for myself, sorry, I didn't answer that question. No, but you did. Yeah. Let's hear about your own mentorship. I mean, I certainly learned a lot from Steve Schoenfeld, working with him at the time and got really good opportunities there.

36:46I think at a young age, it was more, you know, certainly work ethic from my folks. And then it was a lot from sports, right? I did a lot of, you know, basketball and, you know, taekwondo and things like that. And seeing kind of what was possible. Like I remember as a kid, like watching a taekwondo demonstration where our instructor, Master Shim, it was like a very slight Korean guy. It was probably, I don't know, 140, 130 pounds. And he punched through a stack of seven cinder blocks, punched through. And, you know, seeing that as a kid, and I went to like examine the bricks after he did that and like tried to punch it.

37:32And I was like, wow, you know, that hurt. And just seeing that just kind of shows you kind of what's possible, because every day after practice, you would see the guy sit there punching a lead slab, you know, for, you know, I don't know, 30 minutes. Wow. Right. And it just adds up over time. Reminds me of the demonstration, this old I am, Bruce Lee did with the one inch punch. Do you recall that? Yeah, I was just showing that to my kids the other day. Just an inch. And he's also 140 if he weighs soaking wet 140. And it's amazing the focus and power that you can create in such a small. That's exactly the thing.

38:10It's focus and perseverance, right? Really quite, quite fascinating. So let's talk a little bit about the current environment. I was kind of fascinated by something you told your team. You guys are trading too much and not investing enough, unquote. Explain. I think one of the keys to enduring success in the money management business is finding a balance between trading and investing. And you have to be true to your DNA and obviously the type of firm that you're at. Right. But within each type of firm and each type of strategy, there's always this tension. Right. Because you can't survive in a hedge fund type model, you know, just being a long term investor.

39:09And you can't really scale in a significant growing hedge fund being just a super active trader. So you need some combination of the two. And so what we try to do both at the individual level and at the strategy level is help folks find that balance. Part of it is just seeing what's working and part of it is a lot of statistical analysis that we do on each of the teams. So when I made that comment, we were coming out of a period where I noticed that folks were really trading a little bit too much in the fundamental equities business. And we're like a little bit overly focused on each data point or we're kind of missing the forest from the trees.

39:53Right. And we were chopping ourselves up a little bit too much, missing some of the bigger winners and creating a lot of trading slippage costs. So we really worked hard with the teams to find more balance with that, like find some positions that you can really be a longer term investor. It doesn't have to be years and years, but it could be months and quarters and supposed to days to weeks. And find investments where there's multiple ways to win, where you're not playing for one particular data point. You're playing for a whole series of data points that's going to revalue that security over time.

40:34And that's been very, very effective, I would say. So how much of this is a function of the environment that we all find ourselves in at any given moment? 22 was a double-digit down year for stocks and bonds, but it was followed by 23 and 24, both years, back-to-back, plus 25%, at least for U.S. equities. If you're shortening up your investing timeline in a plus 25 % year, is it just as simple as, hey, you're leaving too much money on the table by trading? Well, for us, it's a little bit different because we're running pretty much market neutral in almost all the strategies. So if you're running market neutral, whether the market's up 25 or down 25, you're always going to have half your portfolio that's losing money on an absolute basis.

41:21By the time. Yeah, but you're trying to make the spread, right? You're trying to make the spread between your longs and your shorts, right? So what influences our trading more than the absolute direction of the market is the volatility in the market. So if you're in a period that's very high vol, you're naturally going to be trading more to manage your risk. And also because you're getting stopped on things or they're hitting your targets fairly quickly. And high vol is associated with fundamental events like changing very quickly. 2022, 500 base points of Fed hikes. Yeah, or like the spring. So you're going to trade more during those periods.

41:58April of 2025. Exactly. Versus periods where things are sort of slowly trending. And that's okay. But over the course of the year, those periods are going to balance out. Some will be higher vol, some will be lower vol. You want to find the right amount of turnover to where you can capture your alpha, capture those relative mispricings, and move on to the next thing that generate a strong sharp combined with enough capacity. You can have a very high sharp and low capacity. That doesn't really help in a scale hedge fund. You can't eat your sharp. But you need enough sharp to be consistent putting up a P &L that kind of matters for the firm and that matters for the team that you're running.

42:41And so for every strategy, we try to come up with what is a reasonable range. And it might be higher for a tech portfolio manager than a utilities portfolio manager. But each of them should have a range that sort of is optimum for their style, and we try to help them find that. So with the benefit of hindsight, I'm looking back at 2024, a fairly low vol year. Hey, maybe we should be trading a little less and holding a little longer. And then 2025, volume spiked at the end of Q1 and into Q2. All right, you guys can chop it up a little more. Is it just that simple? Yes, but again, I would say the more nuanced answer would be there's lots of different types of trades that each person does.

43:29And you don't want any PM doesn't want their portfolio to just be one type of trade. So you might have short-term trades, medium-term trades, long-term trades, structural trades, tactical trades, risk mitigation trades, etc. There's lots of different types of trades. And people run into problems when they get too focused on one kind of thing. and then when that thing is no longer working it's very hard to then reinvent yourself because you don't have any other irons in the fire so again we're trying to run a lot of analysis and find what is the team really good at make sure that's being expressed in the portfolio make sure there's enough balance of different types of trades and that they're not betting on things that they don't really have views on that can take them out of the game before the things they do have views on pay off Coming up, we continue our conversation with Dimitri Baliazny, co-founder of Baliazny Asset Management, discussing the current market environment for trading.

44:33I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio.

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45:53I'm Barry Ritholtz. You're listening to Masters in Business on Bloomberg Radio, and some of you are watching this on YouTube. My extra special guest this week is Dimitri Baliasny. He is the co-founder of Baliasny Asset Management, a multi-strategy hedge fund running over$28 billion. Do the different teams hedge their own positions, or is that a function of firm-wide risk management and somebody else? We do both. So each team is responsible for running within their risk parameters. So they'll have, in the case of the long-short portfolio manager, they'll have an ideal risk, how much of your risk is outside of factor risk.

46:34And that should be 60%, 70%, 80 % of your risk, depending on the portfolio and the style of the PM. But it's basically the vast majority of somebody's risk is their stock picking alpha, right? Depending on their skill and things like picking the right industry or trading the directionality of the market around, we might give them some more room or less room, you know, to do that. If you're a directional macro trader, you're going to have, you're not going to have that constraint because you're paid to directionally bet on the market, right? But you're going to have other limits like stress limits, right?

47:10So if your directional bets don't work out and there's a gap tomorrow, how much are you going to lose in a stress scenario? So if that number is too high versus the agreed-upon risk limits, you have to do something in your portfolio to hedge that risk. So it's a little bit different for each type of strategy. But the common philosophy is you want to be able to run it to maximize your return while staying in the game and delivering a relatively steady source of alpha over time. It's interesting because they're called hedge funds, but many hedge funds don't hedge. And it sounds like Baliasny really makes an effort to make sure that as a risk management approach, anything that's potentially downside, as you said, a gap has to be hedged.

48:03Yeah, I mean, you're looking for consistent absolute returns. So how do you get that? You need specialists who have an edge in a particular strategy, and they need a portfolio construction or risk management approach that maximizes that edge, maximizes the capacity of dollars they can earn off of those advantages that they have, and minimizing the things that can create large drawdowns that they don't really have edge in betting on. And so that's the analysis that you're constantly running and iterating on with the teams. So I heard a fund manager say, we have no competition because none of us in our space have market share.

48:48For the most part, we're all less than 1 % market share. How do you look at the competitive environment for other multi-strat firms? It seems like add them all up and you get a decent number, but there are 11 ,000 hedge funds? Yeah, the way we think about it is we're not really competing with 11 ,000 hedge funds. So I think what you've seen over the last 20 plus years is a consistent market share gain from the larger platform firms. Right. And now I think there's really like four or five. Right. And if you look at the private equity industry, it's pretty similar. Like there's probably more than 10 ,000 private equity funds.

49:31But the vast majority of dollars, vast majority of alpha, vast majority of people are really at half a dozen. Fat head, long tail. Yeah. So the hedge fund industry is really headed in that same direction. So we really compete with half a dozen firms. And now there's also competition from some of the high frequency firms that are kind of going upstream to some of the longer duration discretionary strategies. And we're doing more quantitative stuff going the other way. Right. So maybe there's a couple more. But you're really competing with half a dozen to a dozen firms that are running specialist strategies at scale.

50:11And then everyone else in those strategies you kind of look at as like a generalist participant. And it's great to have generalist participation. We want as much as possible from retail, from other funds, from prop, from banks. The more liquidity there is, the more generous participation there is, I think the better for specialized firms. So the current environment, kind of hard to compare to any other era. On the one hand, we had a fairly robust economy coming into 2025, following a whole bunch of Fed hikes. Now we're expected to resume Fed cutting. By the time this airs, we're probably 25 paces points lower than where we are today.

50:52The whole tariff start-stop and now back to the litigation, the Supreme Court agreed to take to that. It looks like inflation is starting to percolate a little bit as the labor market seems to soften. How does the firm look at all of these macro cross currents? Are they significant or are they just background noise or somewhere in between? Well, I would just say it's a really interesting fluid environment, particularly for macro and long short equities because there's just so much change. So if you think about, like, what is the worst environment to be in? It's not when everything is clear, because when everything is clear, there's, like, no volatility.

51:36There's no change. It's hard to get any dispersion. So that environment might be good for passive strategies, but not good for else. Sideways markets don't really help. Yeah, so now there's a ton of money sloshing around trying to figure things out, and that's a great environment, right? So if you think about this year on the macro perspective, you went from a very positive view in January of how everything was going to play out to kind of the tariff mess and very pessimistic view of how the U.S. was going to play out and what was going to happen with markets. We're down 20 % in the S &P briefly.

52:15And now you're right back up and still like a lot of things kind of swirling around as to how it's going to play out. But to your point on rates and inflation, there's been a lot of change. It's created a lot of relative value opportunities as you get different hiking cycles, different cutting cycles in different markets. That's great for macro. In equity land, you have all the changes, not just from the economy, but from AI and how that's impacting tech, but also impacting companies that are customers or going to be run over because of AI. It creates great long-short opportunities. I think it's a really fascinating market.

52:50I don't have any giant prediction of how things are going to play out tomorrow. But if you have strong teams who are on top of the latest data points and you can figure it out a little bit ahead of the next person, just tremendous opportunities. Like this last week, Oracle reported a quarter. Crazy. 37 percent. Right. For a giant company. Amazing. I mean, what was the last time a company like that moved 35, 37 percent in the quarter? Right. Right, the dot-com collapse, and it was in the wrong direction. Yeah, I mean, amazing, right? So if you could figure that out, or I think of some of these fintech companies, Circle, went public, right?

53:28Usually public offerings are pretty efficiently priced. This one goes up 400 % after it starts trading, and then it goes down 50 % in a month after that. So in the first three months, think of the travel in the stock. So amazing opportunities, right, if your teams can figure that out. So, you know, we're out there working hard doing the research and, you know, figuring out the market. So it doesn't sound like you think the AI theme is overdone, but it certainly is creating a little more volatility and a little more opportunities. Yeah, I think the reality when we look back, you know, in 10 years or in 20 years, in the actual outcomes that have happened, it's probably underhyped.

54:13in terms of the stock of the stock prices across the board like that's harder to say like there's some they're probably way overhyped there's some they're probably under a lot of companies have moved from one bucket to another where they were in a loser bucket and actually they turns out maybe they're a winner or vice versa where people got too optimistic and maybe they don't really have anything that's defensible and differentiated so i think there's a lot of alpha to be gained in figuring that out. And it's hard to find things that are, you know, super bargain price that have anything to do with AI.

54:46But in terms of like the longer term potential to really transform how people work and how companies work, I think it's probably underhyped. I've been fond of thinking of this in terms of, hey, the Magnificent Seven certainly have been overhyped, but the magnificent 493, people haven't really been paying attention to that. Yeah, I mean, it's a good question. Like, have they been overhyped, right? If you look at the dollars in earnings and cash flow that they're generating, and the market caps that they're growing, I think they're executing amazingly well. I think it's quite different from what we had in the dot-com era, where companies weren't really making money.

55:30So that's one difference. The other 493, I think there's a lot of headwinds and tailwinds. So some companies are going to figure it out, right? And they're going to kind of make the leap into the future and figure out how to be much more efficient. And you're starting to see that in some of the commentary on the earnings calls where margins inflect positively for the way that they figured out how to leverage the tech. And others are going to disappear, right? So I think it's going to create a lot of opportunities. So the trader in me sees recording this on the 15th, another set of all-time highs.

56:08I always learned on the desk, all-time highs are bullish. What's your perspective on all-time highs? Yeah, I think you have this two-tiered market that you mentioned where you have the tech leaders and AI leaders and everything else. Everything else, companies definitely got hurt more with all the tariff ups and downs and inflation ups and downs earlier this year. That seems to be certainly calming down. And partially top-down is calming down and partially bottom-up companies are figuring out how to navigate these things and maybe it's not as troublesome as they thought. And so you're seeing like better execution and probably a little bit more positivity from companies than you were seeing, you know, certainly six months ago.

57:02And that's starting to get reflected and the market's broadening out a little bit. But, you know, the largest, you know, tech companies certainly have tremendous advantages that they're continuing to press. So last of our regular questions, what are traders and investors not thinking about or talking about but perhaps should be? What topics, assets, geography, policy, data points, what's getting overlooked but shouldn't? I think it's – I don't know if it's getting overlooked, but I would say when you think about AI, where it's going, what are the ramifications for every type of company? Right.

57:42So at the moment, while AI is making us much more productive and efficient, we haven't let go of one person because AI has automated their job. Right. Like we're just hiring more AI people. Right. But if you look out, you know, five years from now, is that still going to be the case? You know, probably not. Right. Like some jobs are going to get automated. Right. And, you know, we're kind of on the high end, I would say, of, you know, skills that are necessary to work at a leading hedge fund. If you think of like a typical company where there's a lot of folks doing like very bureaucratic type of things, like a lot of pretty mundane tasks, like all that stuff is going to be automated.

58:22I don't know if it's in a year or in five years, but somewhere in that time frame, it's going to be automated. We're starting to see that with the entry level jobs. Under 30 unemployment is like 9.9 percent, double regular unemployment. Yeah, exactly. And so as you think about that, like what does that mean for every type of company? If you're a company that can really harness that and you can produce your products, your services at a much lower price point, and you figure that out ahead of the competition, your margins might explode to the upside. On the other hand, if everybody in your space is doing that, maybe your margins are actually going to collapse because everybody's going to drive down pricing.

59:01How does it flow downstream? Do you need as much office space if you're going to have less people in a particular area? So all these kind of things, I think everyone is focused, because there is a lot of volatility, everyone is focused very much on the next quarter. But if you think out two, three, four years, how is this space going to look? And that's kind of the balance of trading and investing. You've got to have one eye on each. And before I get to my favorite questions that I ask all of my guests, I have to ask you about some of the philanthropy you participate in. And tell us a little bit about the Atlas Fellowship and some of the other things that you've been doing over the past couple of years.

59:40Sure. So this was a program that my wife Rebecca and I started, I think this was five years ago now. We were looking to start an initiative to help kids go to college who were a bit under-resourced, maybe first in their family to go to college, etc. And as we're looking at these scholarship opportunities, particularly in finance, we couldn't find any program that had a combination of internships with scholarships. There were some that had ones that were captive to a particular company, but then you were beholden to work just at that company forever. But there wasn't anything that was diverse, right, where someone could get real exposure across the industry.

1:00:23And so that's what we started with with Atlas Fellows, where we give kids who are super bright, driven, merit based scholarships. Right. So these are top students in the class, a lot of times from diverse backgrounds from with no connections to finance. Right. And they get scholarships of up to 20 grand a year for four years. And in addition to that, they get fully paid internships at finance firms for all four years. Not just your firm, but a broad variety. Exactly. So we take them their first internship when they're coming out of high school. And that one is typically done at BAM. And they work either on our investing teams, our data teams, our tech teams, our business teams.

1:01:05And then the next year, they go to work at a bank or they go to work at another hedge fund or they go to work at a prop firm or a VC firm. And every year, they rotate. And we just had the first cohort graduate last year. They all got jobs in finance, some in Chicago, some in New York. and employers are really competing over the kids. Like, they're super smart, driven, passionate kids, and now they've had four years of finance internships at top firms. So I think it's working really well, and we're working to scale it up. They become a hot commodity. Yeah, exactly, and just like the fund, like, now we've got 100 kids in the program, and we're trying to really scale it up to hundreds.

1:01:42Wow, that's great. All right, so let's jump to our favorite questions that we ask all of our guests, starting with. We talked about mentorship at BAM. Let's talk about who were your mentors, who shaped your career. You mentioned Steve Schoenfeld. He had to be significant. Tell us about him and anybody else that made a difference. Yeah, I think what Stephen did really well at the time of the firm was it was a super entrepreneurial type of environment. Everyone was kind of in business running your own little business, right? And most folks kind of stayed as one man shops, right? As a one man trading unit, right?

1:02:24But I had the opportunity to kind of build that into a unit of, you know, five and then 10 and then 20 and then 30. And then, you know, then we spun off. So just the freedom and support, you know, to to do that was really helpful. Right. And then a lot of business learnings from, you know, seeing how we allocate it to different people, seeing how they manage risk. Like that was very, you know, very helpful. And then philosophically, I would say the biggest impact was reading Atlas Shrugged in college, which I read in an English class in college. And that really kind of articulated a moral, philosophical framework around which I think makes it much easier to build a successful business.

1:03:12Hence the name Atlas. Yeah, exactly. It's the name of our fund and the name of our scholarship program. I think a lot of times people have all sorts of conflicts with being successful and at the same time being a good person and helping the world. And I don't actually think there's any conflicts. And that objectivist philosophy in her work really does a good job of laying that scaffolding for people. and I think it makes it much more fulfilling and less conflicted to also be successful in all realms. So since you mentioned Atlas Shrugged, let's talk about books. What are some of your favorites?

1:03:55What are you reading right now? Yeah, that's definitely the number one. The current one that's on my bookshelf is a fun one. It's from this explorer. I didn't know there were explorers anymore, but there are apparently. And we had this guy, Mike Horn, at our VC conference. We do like a public-private VC conference every year called Elevate. And we had him as a guest speaker. And we had two guest speakers this year. We had Steve Kerr, the coach of the Warriors, and we had Mike Horn. Steve went first, and he was amazing. He had great stories on teamwork and collaboration and work ethic and Michael Jordan stories and Steph Kerr's stories.

1:04:32So it was great. And then Mike had to follow him, and I was like, oh, my God, how is this guy going to follow Steph Kerr? That's a tough follow, right. And my partner Scott brought him on, and Scott's great at finding talent that other folks haven't discovered yet. And this guy has circumvented the equator several times around the world, self-powered walking, et cetera. He's gone to the North Pole, South Pole, swam the Amazon, like all these insane stories one after another. And he's got a book called, I think it's called Nothing is Impossible or something along those lines. And you start, you shake hands with this guy.

1:05:12And he's not a particularly big guy, but he crushed my hand. And I go, Mike, how do you get, and he's 60 years old. How do you get this handshake? Oh, my God. And he's like, well, I kite surfed across Antarctica. And that involves holding a kite across frozen Antarctica for 14 hours a day as this huge wind is pulling you along. And it's like, okay, that's how you get some grip strength. But he had like these amazing survival stories and just mental fortitude stories that I think really relate to trading and investing. So he was an awesome speaker. And so I just got his book. Have you ever read Endurance, the Shackleton story?

1:05:53Yes. Yes, I read it. Watched the movie. That one was hard to sit through. The book is just like it couldn't be fiction because nothing is believed. It's so amazing. at how to be real. Yeah, this is along those lines, but less abusive and more fun. Let's talk about streaming. Anything interesting that you're watching or listening to these days? I mean, shows I like. I really enjoyed the Three Body Problem that was on Netflix. That was a fun one. The book is a tough slog. I read the book actually afterwards. So it's a little challenging because it's originally Chinese and trans. But the show is really good.

1:06:28And the books, the creativity in the books are really fun. So that was a good one. Yellowstone is great. Usual ones there. I'm listening to, I think podcasts are the greatest invention in the last five, ten years of, not that they weren't around before, but popularized in terms of being able to just expand your knowledge set in a very efficient way. So I try to listen to as many as I can. I listen to, you know, a lot of yours. I listen to a lot of Tim Ferriss's. He's got all sorts of super interesting people on there. The Invest Like the Best ones, there's a ton on there. So there's a lot of finance ones.

1:07:05There's a lot of VC ones I enjoy. I was just listening to one that had Vinod Khosla and then another one with Marc Andreessen. They're just, like, super thought-provoking. And so I encourage, like, all our young people coming up that ask just, you know, you have this, like, amazing resource. So you could tap Spotify and you got a thousand different podcasts from the world's best people in every field that you can listen to sharing their insights. There's no excuse to be bored these days. No, it's amazing. I remember when I was coming up and I wanted to hear how do hedge funds make money, right?

1:07:35You couldn't figure that out. If you had no connectivity to a hedge fund, how are you going to figure that out? You read Market Wizards and now what? But besides that, reading all the books that are available now, like the podcast, amazing resource. Absolutely. Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either trading, investing, multi-strat hedge funds? I mean, one is just follow your curiosity, which hopefully leads to a passion of something that you want to really do. Don't go into finance, hedge funds, whatever it is, because your friend is making a lot of money.

1:08:16You've got to be interested in the work. like you got to be driven and curious and hopefully passionate about what it is that you're doing because um you know it's like pro sports or anything else like just because you know lebron makes a lot of money doesn't mean you're going to go make a lot of money playing basketball right um you know one you know he's 6 11 but besides that like he's put in a lot of work over the years right and it's because he loves the game of basketball right if you don't love it, you're not going to put in the work. And in trading, for sure, if you don't love the process, and you don't love sitting there looking at the screen and trying to figure things out, you're not going to survive the emotional ups and downs, because there's lots of downs in addition to the ups when things work out.

1:09:02So that's the first thing. The second thing I would say is go to a firm that's growing, right? And where there's a culture where you can learn from others, right? Where you can get good mentorship, there's top people you can learn from, and you'll have some amount of access to be able to do that. The particular thing that they're trading or investing or how they're doing it, like that's a lot less important because you might change, the company might change. And then the third thing is like once you're in a seat that's a decent seat, you know, ask for feedback. Like, here's what I did. Here's what I think I could have done, you know, what do you think, right?

1:09:42Don't ask for feedback when the market opens or the person's like in the middle of a, you know, disastrous day. But when things are quiet, right, early, late, right, lunch hour, like, you know, get feedback proactively, right? Don't sit around waiting for your year-end review to see how things are going. And, you know, iterate it together with, you know, the people that you're working with. And our final question, what do you know about the world of capital markets, trading, investing today that would have been useful in 1994 when you were first starting out? I think the things that we've been doing the last, you know, five years, I wish I had figured those out earlier.

1:10:22So investing more aggressively across strategies, right? I think we were too equity heavy for too long. We weren't serious enough about how do you build those strategies. outside of equities and not serious enough about hiring top people to manage those areas and then building like all the tech and the infrastructure that you needed to really be competitive and leading in those areas. So I wish I would have figured that out a little bit earlier and pushed at it harder. But I think it's on the right trajectory now. Dimitri, thank you for being so generous with your time. This has been absolutely fascinating.

1:11:09We have been speaking with Dimitri Baliazny, co-founder of Baliazny Asset Management. If you enjoy this conversation, well, check out any of the 550 we've done over the past 11 years. You can find those at iTunes, Spotify, Bloomberg here on YouTube as well. Check them out. They're really a great collection of resources. And be sure to check out my new book, How Not to Invest, The Ideas, Numbers and Behavior That Destroy Wealth and How to Avoid Them at your favorite bookstore. I would be remiss if I did not thank the crack team that helps us put these conversations together each week. Alexis Noriega and Anna Luke are my producers.

1:11:56Sage Bauman is the head of podcasts here at Bloomberg. Sean Russo is my researcher. I'm Barry Ritholtz. You've been listening to Masters in Business on Bloomberg Radio.

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