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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholtz on Bloomberg Radio on.

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Speaker 2: The latest Masters in Business podcasts. Strap Yourself in another

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Speaker 2: great one. Dmitri Ballyasni. He's co founder of the hedge

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Speaker 2: fund bally Asny Asset Management. They're a twenty eight billion

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Speaker 2: dollar multistrat firm, one hundred and seventy portfolio teams, twenty

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Speaker 2: three hundred people working in their offices around the world.

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Speaker 2: Started as a trader at Schoenfeld, grew into both a

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Speaker 2: manager and just a person looking at the world and

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Speaker 2: identifying inefficiencies and coming up with ways to capitalize in it.

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Speaker 2: Fascinating conversation. Not only are they one of the most

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Speaker 2: successful multistrats, but they have a one unusual business manager.

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Speaker 2: They have lots of partners who are employees, traders, business people,

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Speaker 2: fund managers. Really just a fascinating approach to corporate culture,

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Speaker 2: to creating the right set of incentives and creating a

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Speaker 2: high functioning meritocracy. Very few people have seen the world

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Speaker 2: of hedge funds develop from a trading perspective the way

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Speaker 2: Dmitri has I thought. The conversation was absolutely spectacular. And

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Speaker 2: I think you will also with no further ado my

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Speaker 2: discussion with Dimitri bally Asny. Thanks for having me very much,

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Speaker 2: and we got to say hello to Mike on the

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Speaker 2: way in. We'll talk about that a little later. I'm

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Speaker 2: fascinated by your background. You immigrated from the Ukraine at

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Speaker 2: age seven. How did that affect your perspective in terms

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Speaker 2: of taking risk and just looking at the world.

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Speaker 3: I think it was probably very formative in building a

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Speaker 3: thick skin. Right. So back in Kiev, we're living in

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Speaker 3: communist Soviet Union, parents would stand in line to buy

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Speaker 3: jog of milk for a couple hours. I'd never been

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Speaker 3: in a car until I was in the US, never

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Speaker 3: taken a flight until we immigrated, so a very different life.

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Speaker 3: There a lot of discrimination from a religious perspective and

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Speaker 3: ethnic perspective, being Jewish in Kiev at the time and

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Speaker 3: then coming here didn't speak the language. Different type of

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Speaker 3: discrimination for being Russian during the height of the Cold War,

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Speaker 3: although never really thought of ourselves as Russian. So it

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Speaker 3: builds a you know, I think it builds character and

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Speaker 3: builds a perseverance of a thick skin to be able

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Speaker 3: to deal with the difficulties and figure stuff up.

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Speaker 2: You go to college at Loyola University in Chicago, where

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Speaker 2: you study business, what was the career plan?

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Speaker 3: I wanted to invest, So I did a lot of

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Speaker 3: sales type jobs in high school because I figured out

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Speaker 3: that was the only way you could get paid because

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Speaker 3: you got commission as opposed to salary as a kid.

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Speaker 3: But I wanted to transition from selling stocks as a stockbroker,

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Speaker 3: which I was doing in college, to trading and taking

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Speaker 3: risk and investing. I wasn't sure how I was going

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Speaker 3: to do that in what format, but I was interested

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Speaker 3: in trading and investing from a young age. I read,

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Speaker 3: you know, market wizards, you know, followed the careers of

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Speaker 3: the top traders at the time, applied to every hedge

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Speaker 3: fund I could find, And I was lucky enough to

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Speaker 3: answer a newspaper out of all things when Showinfeld Securities

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Speaker 3: ran a newspaper aut in Chicago when they opened up

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Speaker 3: that office, and I was the one and only time

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Speaker 3: they actually ran a newspaper ad. So I was lucky

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Speaker 3: that I was following the one.

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Speaker 2: I recall seeing, you know, traders wanted shore Field Securities.

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Speaker 2: They were down on Wall Street back in the mid nineties,

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Speaker 2: so you begin trading for Showenfeld in the mid nineteen nineties,

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Speaker 2: What was the trading environment, like, what were you doing

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Speaker 2: for them on the desk?

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Speaker 3: Well, at the time, they were looking for people who

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Speaker 3: didn't have a lot of preconceived notions and kind of

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Speaker 3: systems and strategies that they really thought work, because they

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Speaker 3: wanted to start them from scratch and kind of teach

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Speaker 3: them their methodology, which was working well at the time.

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Speaker 3: And that fit me very well because I was making

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Speaker 3: a lot of money at the time in commissions as

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Speaker 3: a broker, but I was promptly losing a trading because

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Speaker 3: I didn't know what I was doing from a trading standpoint.

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Speaker 2: You had to support your trading habit with commissions.

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Speaker 3: Yeah, exactly, exactly, And so I would give people lots

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Speaker 3: of great advice and then proceed to go do the

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Speaker 3: opposite in my own trading. So I needed to go

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Speaker 3: somewhere to learn a method that had more structure and discipline.

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Speaker 3: And so they started you with a very small amount

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Speaker 3: of capital but and very tight risk limits in terms

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Speaker 3: of you know what you could trade, when you could trade,

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Speaker 3: you know what size you could trade, and from there,

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Speaker 3: once you showed some proficiency your risk box would expand.

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Speaker 2: Meaning more capital, little little looser reins on what you

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Speaker 2: could do when how long you could hold things.

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Speaker 3: That's right, And so I started with you know, very

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Speaker 3: short time periods, very small risk. Didn't make any money

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Speaker 3: for the first year, which was difficult because the salary

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Speaker 3: was zero, But after that I started kind of getting

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Speaker 3: the hang of it and making money pretty consistently.

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Speaker 2: How did you work your way through the various roles

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Speaker 2: that Schoenfeld because eventually you end up allocating for their

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Speaker 2: internal funds.

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Speaker 3: Right, Yeah, So it was almost completely flat management structure.

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Speaker 3: So at one point there were over one thousand people

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Speaker 3: on the trading side, and there was a handful of

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Speaker 3: people in senior management and you know, virtually no people

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Speaker 3: in middle management. It was very, very flat, and so

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Speaker 3: you were basically a trader. You could run a group

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Speaker 3: of traders, or you were just managing and not really trading.

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Speaker 3: And so I kind of worked my way up from

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Speaker 3: a pure trading position where after I was successful for

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Speaker 3: three or four years, I went to Steven and asked

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Speaker 3: him if I could start hiring people to trade some

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Speaker 3: of my risk, and he was kind enough to say, sure,

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Speaker 3: if you're willing to pay for them, you can hire them.

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Speaker 3: And that was good enough for me, and so I

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Speaker 3: did the same thing. I ran an ad in the

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Speaker 3: paper and I started hiring the initial traders, some of

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Speaker 3: whom are still with us today twenty five years later, wow.

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Speaker 3: And then I would allocate some of my risk to them,

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Speaker 3: and then as that became more successful, I hired more traders,

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Speaker 3: eventually analysts, eventually portfolio managers, and we spun off into

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Speaker 3: a division. And while I was doing that, Steve gave

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Speaker 3: me the opportunity to co invest in a portfolio of

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Speaker 3: hedge fund managers, external managers that we would allocate to,

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Speaker 3: and that was a great experience. I got to meet

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Speaker 3: a lot of the top headge fund guys at the time.

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Speaker 2: So from building a whole division at Schoenfeld, what led

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Speaker 2: you to found Ballyosny Asset Management.

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Speaker 3: It was always very entrepreneurial and so again it was

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Speaker 3: like a very flat firm, So I always felt like

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Speaker 3: I was building my own business. And our strategy started

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Speaker 3: to divert from the rest of the firm, like we

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Speaker 3: became more fundamental. We were holding things longer. We needed

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Speaker 3: to meet with company management, so we needed sell side

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Speaker 3: coverage and so that led to separate office space, separate strategies,

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Speaker 3: different types of pms and traders that we wanted to hire,

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Speaker 3: and eventually it led to needing to take an external

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Speaker 3: capital because it was a more higher capacity, you know,

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Speaker 3: type of strategy that demanded external capital. And so we

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Speaker 3: gradually moved from you know, an internal group to a division,

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Speaker 3: to a proprietary funded you know hedge fund, to a

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Speaker 3: traditional you know, externally funded hedge fund over a few years.

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Speaker 2: So we'll talk a little later about some of the

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Speaker 2: technology that you guys have built internally, but mid nineties

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Speaker 2: had to be an incredible environment for trading, and it

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Speaker 2: seemed like every month it was a whole different set

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Speaker 2: of technology that came down the pike. Tell us about

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Speaker 2: your experiences in the nineties and are there any parallels

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Speaker 2: to what's going on today.

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Speaker 3: Well, I think the world has moved, you know, tremendously

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Speaker 3: in terms of the trading technologies the people are using today.

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Speaker 3: When I think about at the time that I first

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Speaker 3: started as a broker, that's really going to date me.

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Speaker 3: But we had, you know, one monitor that would be

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Speaker 3: on a little carousel that you would spin around between

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Speaker 3: four different brokers, when you needed a quote, right, And

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Speaker 3: when I started trading at Choinfo, we had a person

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Speaker 3: whose job it was to be the printer reader, and

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Speaker 3: so you didn't get your fills electronically. You would get

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Speaker 3: your fills coming back on a printer and some poor

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Speaker 3: guys job was to read out your prints, you know,

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Speaker 3: so you would know where you got filled. So you know,

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Speaker 3: you contrast that with all the AI and data you

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Speaker 3: know technology today that we and others use for trading

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Speaker 3: and investing, and it's just, you know, tremendously different world

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Speaker 3: from the overall kind of technologies coming through the pike

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Speaker 3: the Internet, I would say, was you know, bigger change

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Speaker 3: in terms of going from you know, very little interaction

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Speaker 3: I would say with technology for most companies at the

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Speaker 3: time and really most individual people to you know, tremendously

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Speaker 3: kind of jumping in and trying to figure it out.

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Speaker 3: Although I think AI will likely be a larger, you know,

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Speaker 3: more substantive change over time. We're coming from a place

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Speaker 3: where everybody's already you know, immeshed in technology in so

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Speaker 3: many different ways, whether you're an individual with your your phone,

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Speaker 3: your computers, your laptops, or you know, your your metaglasses,

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Speaker 3: et cetera, or a company with you know, zillions of engineers.

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Speaker 3: So I think it'll be more profound over the long term.

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Speaker 3: But the change feels a little bit less than it

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Speaker 3: did at the time.

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Speaker 2: I mean, there's no doubt the Internet would a sea change.

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Speaker 2: Being able to plug into the hive mind was huge.

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Speaker 2: Mobile was pretty big. But it sounds like you're saying

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Speaker 2: artificial intelligence has potential to be even a bigger change agent.

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Speaker 3: Then yeah, I think so. I think over time. I

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Speaker 3: think in terms of actual usefulness over time and ability

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Speaker 3: to make you better and smarter and lots of different

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Speaker 3: tasks at work, at home, et cetera. Like I use

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Speaker 3: these apps you know, every day, and they're still very

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Speaker 3: new and rough, but you could see at the rate

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Speaker 3: of improvement if you projected out, then you think about

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Speaker 3: like where these are going to be in five, ten,

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Speaker 3: fifteen years. I think it'll be pretty transformative.

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Speaker 2: One of the things that really separates Ballyas and the

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Speaker 2: Asset Management from many other large multi strat hedge funds

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Speaker 2: are the amount of technology that you develop internally. Tools, apps,

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Speaker 2: research databases tell a little bit. To discuss a little

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Speaker 2: bit about what's it like to constantly being on the

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Speaker 2: bleeding edge of technology.

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Speaker 3: Sure, so this was a big evolution for us. I

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Speaker 3: would say over the last six seven eight years. First

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Speaker 3: fifteen plus years, we mostly used external technologies and we

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Speaker 3: had a pretty small internal tech team, and the idea

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Speaker 3: was basically, give people all the support that they needed,

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Speaker 3: all the supporting type of tools, but do as much

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Speaker 3: off the shelf as you can. And over time, as

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Speaker 3: we expanded different strategies and added you know, macro and

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Speaker 3: commodities and quant and these more technologically sophisticated strategies, we

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Speaker 3: really found that we needed to build a lot more

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Speaker 3: things internally. And so now today we have five hundred

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Speaker 3: plus people and technology and other one hundred plus people

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Speaker 3: and data teams and AI teams, and we build a

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Speaker 3: lot of really outstanding tools that not only support investing teams,

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Speaker 3: but really enable a lot of the investing functions, whether

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Speaker 3: it's trading, research, risk, even operational in some aspects. When

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Speaker 3: we have folks come over from other firms. A lot

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Speaker 3: of times there because we don't really advertise it that much,

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Speaker 3: a lot of times people are kind of blown away

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Speaker 3: by some of the things that we've developed.

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Speaker 2: So when I think of technology, I think of things.

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Speaker 2: When you say trading execution, the ability to get best execution,

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Speaker 2: but risk is a big challenge. How do you identify

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Speaker 2: how much risk is within a portfolio? And given that

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Speaker 2: your multi strat, how much do the does the risk

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Speaker 2: cancel each other out? How do you do that analysis

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Speaker 2: that seems like a moving target.

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Speaker 3: That's really important. So first the overall philosophy, right, like

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Speaker 3: this is a slugging type of business. Right, So if

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Speaker 3: you if you contrasted with like high frequency trading, which

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Speaker 3: is a hit great type of business, right, you're going

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Speaker 3: to have ninety nine percent of your trades or whatever

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Speaker 3: it going to be offitable or a tiny loss, right right, tiny, tiny,

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Speaker 3: tiny and repeat repeat.

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Speaker 2: Right.

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Speaker 3: This is more of a slugging type of business. So

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Speaker 3: if we have pms and we have one hundred and

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Speaker 3: seventy investing teams at the moment, right when you hire

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Speaker 3: and so when you hire an investing team, chances are,

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Speaker 3: depending on their track record, maybe seventy five percent of

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Speaker 3: them will lind up working out. If they have a

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Speaker 3: lower track record, they're coming as like a former analysts

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Speaker 3: making a transition to the PM, maybe it'll be fifty

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Speaker 3: to fifty. Right, But if you can control the risk

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Speaker 3: you might lose you know, ten million, twenty million, thirty

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Speaker 3: million on somebody who doesn't work out kind of life

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Speaker 3: to date in their performance. But the ones that do

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Speaker 3: work out, you're increasing their capital, you're growing their team,

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Speaker 3: and they'll hopefully be with you for ten twenty plus

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Speaker 3: years and you might make you know, hundreds and hundreds

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Speaker 3: of millions off of them. Right, So how that plays

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Speaker 3: into risk, Right, In order to enable the slugging, you

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Speaker 3: have to have very well defined risk boxes within which

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Speaker 3: people will operate to enable them to bet on the

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Speaker 3: things that they're really good at betting on, and try

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Speaker 3: to exclude as much of other stuff as possible. So

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Speaker 3: for every strategy, we'll have you know, stops, we'll have

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Speaker 3: voll targets, vall limits, we'll have stress limits, liquidity limits,

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Speaker 3: et cetera. And you create this box that's completely transparent

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Speaker 3: and in partnership with the portfolio manager that you're hiring,

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Speaker 3: and customize it and iterate it, and then it has

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Speaker 3: their strategy evolves and there's new opportunities you're you know,

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Speaker 3: adding to it, subtracting from it all the time, et cetera.

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Speaker 3: But the idea is to create this this platform for

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Speaker 3: them within which they can create like a very steady growing,

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Speaker 3: you know, alpha stream that really placed to their individual strengths.

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Speaker 2: You know, you mentioned market wizards at the beginning, and

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Speaker 2: I can't remember. I've read all of them over the years,

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Speaker 2: the first one a couple of times. I don't remember

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Speaker 2: which trader it was. But the thing that stayed with

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Speaker 2: me was it your win loss record is in what matters.

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Speaker 2: It's how much do you lose when you lose relative

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Speaker 2: to how much you're gaining when you win exactly, And

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Speaker 2: you could lose three quarters of the time if you're

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Speaker 2: losing a little bit. But the winners are big winners. Yeah,

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Speaker 2: net net that's a big win.

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Speaker 3: Yeah. We find are it varies by strategies, but if

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Speaker 3: you think about equities. In equities, we find portfolio managers

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Speaker 3: who have hit rates in the fifties with decent slugging

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Speaker 3: could be very very good. Right. If somebody's got a

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Speaker 3: hit rate and the upper fifties with decent slugging, like

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Speaker 3: that's you know, that's an all star, or somebody could

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Speaker 3: be more like fifty to fifty, but they have very

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Speaker 3: good slugging. You know that that works it's hard to

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Speaker 3: find somebody with you know, twenty five percent hit rate

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Speaker 3: and enough slugging to kind of overcome that, because there's

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Speaker 3: just there's just.

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Speaker 2: Too many reps, too much churn.

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Speaker 3: But in some other strategies, if you have you know,

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Speaker 3: commodities for example, or a directional macro there you can

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Speaker 3: have like even a lower hit rate if they're very

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Speaker 3: good at sizing right, because they have a smaller number

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Speaker 3: of bets at any given time and they're trying to

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Speaker 3: find like a few larger, bigger.

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Speaker 2: Trades pyramid, the winners ride the trends all the way out.

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Speaker 2: Really interesting. So you start the firm in two thousand

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Speaker 2: and one, really the beginning of a lost decade. We

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Speaker 2: didn't get back over prior highs in every asset class

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Speaker 2: pretty much till twenty thirteen. What was it like, launching

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Speaker 2: right into the teeth of that dot com collapse.

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Speaker 3: It was a great trading environment, actually, so we did

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Speaker 3: very well at the time. We were running a lot

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Speaker 3: less capital. We started with forty million dollars, so, but

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Speaker 3: the markets were less efficient. We were predominantly equity long short.

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Speaker 3: There's a lot of dispersion. There was a lot of

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Speaker 3: things that were unwinding from the bubble. In both directions,

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Speaker 3: we were able to take advantage of that and really

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Speaker 3: grow the business.

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Speaker 2: What was the biggest surprise to you in terms of

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Speaker 2: the direction the business grew and evolved.

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Speaker 3: I would say in those years there wasn't anything particularly surprising.

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Speaker 3: In you know, two thousand and eight, we made people

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Speaker 3: a little bit of money, but we had fifty percent redemption,

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Speaker 3: so that was a bit surprising and not particularly pleasant.

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Speaker 2: They people, just clients just panicked and said, I need look.

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Speaker 3: At any liquid. It did because so we didn't. We

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Speaker 3: chose not to get people. We had the adoption in

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Speaker 3: our docks, but we decided we were liquid and we

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Speaker 3: actually went to cash and Q four OFA.

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Speaker 2: Did that cash come flying back in nine?

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Speaker 3: Yeah, it took a few years actually, but eventually, yes,

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Speaker 3: eventually we got some credit for that.

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Speaker 2: But if you're positive in eight, what was eight down

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Speaker 2: thirty seven percent fifty or something? Oh, really, that's a win.

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Speaker 2: Anything in the green is a win.

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Speaker 3: It's that was surprising, but outside of that, it wasn't

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Speaker 3: anything too crazy.

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Speaker 2: Coming up, we continue our conversation with Dimitri Ballyosny discussing

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Speaker 2: what it was like building bally Osney Asset Management into

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Speaker 2: a powerhouse. I'm Barry Ridults. You're listening to Masters of

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Speaker 2: Business on Bloomberg Radio. I'm Barry Dults. You're listening to

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Speaker 2: Masters in Business on Bloomberg Radio. My extra special guest

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Speaker 2: this week is Dmitri Ballyasni. He is the founder of

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Speaker 2: Ballyasney Asset Management, running about twenty eight billion dollars in

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Speaker 2: various strategies, and currently your title is Chief Investment Officer.

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Speaker 2: How do you balance that role while simultaneously running a

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Speaker 2: firm of twenty three hundred employees.

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Speaker 3: Well, I think number one, I have great partners and

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Speaker 3: great management teams, so that helps a lot. We have

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Speaker 3: twenty partners today and a lot of top senior managements

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Speaker 3: across all the departments. Besides that, I don't think there's

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Speaker 3: a tremendous amount of different difference in the hedge fund

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Speaker 3: business between being a c I own a CEO. It's

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Speaker 3: kind of really commingle type of function because what are

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Speaker 3: you doing as a CEO, Like, you're trying to figure

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Speaker 3: out where to make money in the hedge fund, right,

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Speaker 3: So that's basically how I spend my time. It's like

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Speaker 3: trying to optimize our investment strategies, and that really includes

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Speaker 3: pretty much everything you need to do from a business standpoint.

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Speaker 3: How do you get the best people, where do you

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Speaker 3: have edge, how do you build your competitive mode around

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Speaker 3: a strategy, how do you break in and wedge into

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Speaker 3: a new strategy, and then how do you grow it

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Speaker 3: from there? Again, that it's going to go down to

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Speaker 3: finding the best people and enabling them to execute in

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Speaker 3: that area. How do you support them with the best

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Speaker 3: infrastructure and technology. So you have to work with all

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Speaker 3: the departments to figure out how to do that.

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Speaker 2: So the one thing that continues to surprise me doing

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Speaker 2: these interviews is how many people have said talent acquisition

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Speaker 2: is absolutely the single most important thing.

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Speaker 3: Yeah, they do it.

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Speaker 2: Sounds like you're in that campus.

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Speaker 3: Definitely. It all start. It all starts with talent, right,

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Speaker 3: and the talent starts with why are they going to

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Speaker 3: come to you? Right? Like, how are you going to differentiate?

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Speaker 3: And that was always kind of the starting point from

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Speaker 3: twenty five years ago because even at that time, we were

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Speaker 3: competing with firms that were, you know, twenty five times

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Speaker 3: our size, right, and so how are you going to compete?

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Speaker 3: And you're not going to write the largest check for

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Speaker 3: somebody to show up, so you really got to compete

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Speaker 3: on enabling them to be the most successful over time. Right.

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Speaker 3: So that's you know, the insights, the collaboration across strategies,

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Speaker 3: the culture that you can foster, helping them build their teams,

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Speaker 3: helping them build the resources and infrastructure around them, coaching,

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Speaker 3: learning from other people's mistakes, you know, having a very

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Speaker 3: transparent environment. All these things that each individually might not

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Speaker 3: be that important, but when you add them all up,

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Speaker 3: it really makes the difference over the arc of somebody's

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Speaker 3: career and to.

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Speaker 2: Put a little flesh on those bones. Ballyasny Asset Management

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Speaker 2: has won numerous awards in terms of best places to

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Speaker 2: work in money management, including taking the top award from

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Speaker 2: Pensions and Investments Best Places to Work. How much of

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Speaker 2: this is comp and how much of this is corporate

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Speaker 2: culture beyond just the dollars.

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Speaker 3: I think comp is always part of it. Like, you

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Speaker 3: certainly have to be competitive and you want to run

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Speaker 3: a meritocracy. So the top people that are really driving

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Speaker 3: the performance of the fund on the business side and

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Speaker 3: the investing side should be super well compensated and have

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Speaker 3: partnership opportunities. But besides that, I think the culture can

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Speaker 3: lead to the performance.

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Speaker 2: Right.

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Speaker 3: The culture is not just it's a nice place and

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Speaker 3: people are nice to you, Like that's great. But if

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Speaker 3: you have like a culture that's really driven but at

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Speaker 3: the same time collaborative, right, and where people are collegial,

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Speaker 3: but they also push each other and they're also constantly

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Speaker 3: trying to figure out like better ways of doing things

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Speaker 3: and want to succeed themselves and be the best, but

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Speaker 3: also they want the person next to them to succeed

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Speaker 3: and make the firm better. Right, Like, if you can

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Speaker 3: create that type of culture like that really is one

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Speaker 3: that high performers are going to want to work in

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Speaker 3: and thrive at.

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Speaker 2: Really really interesting. So so let's talk a little bit

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Speaker 2: about high performance. You operate a multi strategy platform. When

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Speaker 2: I hear multi strat I think fundamental equity, macro commodity, slash, futures, trading, arbitrage,

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Speaker 2: systematic quant.

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Speaker 3: You got it?

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Speaker 2: Am I missing any that.

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Speaker 3: Those those are the major strategies. They all have lots

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Speaker 3: of subcomponents. So you know, we have an arbitrage business

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Speaker 3: for example, that will include you know, converts and credit

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Speaker 3: long short and merger arbitrage, and you know, a dozen

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Speaker 3: different strategies, right, and commodities will have folks that are

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Speaker 3: trading futures directionally, we'll have folks that are doing a

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Speaker 3: lot of our V type tradings. We'll have physical commodities

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Speaker 3: now that we're building out. So all these strategies have

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Speaker 3: lots of sub strategies associated with them, but generally that's

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Speaker 3: the right idea, and you're constantly trying to enable the

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Speaker 3: next set of strategies. Right, if you can execute well

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Speaker 3: in the ones that you're in this year, you have

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Speaker 3: the option to figure out how to expand them, which

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Speaker 3: might be more dollars in the stuff you're doing well.

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Speaker 3: But also what does that give you the right to compete?

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Speaker 3: And that's adjacent and we're always trying to kind of

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Speaker 3: figure out what is the next thing.

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Speaker 2: Really interesting, there was an article I'm trying to remember

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Speaker 2: which publication I saw it in that claimed you hired

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Speaker 2: a trader with a fifty million dollar pay package from

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Speaker 2: a competitor. Is that remotely close to the sort of

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Speaker 2: pay packages and how much does a trader have to

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Speaker 2: generate in profits to qualify for a fifty million dollar package?

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Speaker 3: Sure, so you have to remember that the size of

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Speaker 3: capital the folks are running these days has grown a lot.

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Speaker 3: And so what publications like to do to get people

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Speaker 3: to read the articles rights put in large dollars as

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Speaker 3: opposed to you know.

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Speaker 2: Percentages, denominator blindness. They leave out, yeah, the context that

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Speaker 2: it just looks like a big round number.

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Speaker 3: Yeah. So you have like these headlines all the time,

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Speaker 3: one on how much people get paid to how much

436
00:24:25,920 --> 00:24:28,000
Speaker 3: somebody made or lost. And you know, if you have

437
00:24:28,080 --> 00:24:30,680
Speaker 3: something that says, you know, trader x y Z lost,

438
00:24:30,720 --> 00:24:33,120
Speaker 3: you know, fifty million dollars, right, and that's like, wow,

439
00:24:33,160 --> 00:24:34,720
Speaker 3: that sounds like a giant number, but you have to

440
00:24:34,760 --> 00:24:37,320
Speaker 3: remember we're managing twenty eight billion, right.

441
00:24:38,200 --> 00:24:39,480
Speaker 2: That's a normal draw down.

442
00:24:39,800 --> 00:24:42,600
Speaker 3: Yeah, I mean a typical portfolio manager, right, might be

443
00:24:42,680 --> 00:24:45,880
Speaker 3: managing a couple of billion in gross market value. Right,

444
00:24:45,960 --> 00:24:48,080
Speaker 3: So you know that's two and a half percent, which

445
00:24:48,119 --> 00:24:50,359
Speaker 3: is not good, but it's not you know, it's not

446
00:24:50,400 --> 00:24:53,560
Speaker 3: a disaster, no, Like, that's kind of the fluctuation that

447
00:24:53,560 --> 00:24:55,640
Speaker 3: that that you're going to get, right, And so from

448
00:24:55,640 --> 00:24:57,879
Speaker 3: a hiring standpoint, it's the same thing if you're hiring

449
00:24:58,160 --> 00:25:01,679
Speaker 3: a trader with a fifty million dollar pay package for

450
00:25:01,720 --> 00:25:04,919
Speaker 3: example one, that pay package is composed of lots of

451
00:25:04,920 --> 00:25:06,840
Speaker 3: different things. It's not all it's not just you know,

452
00:25:06,880 --> 00:25:07,560
Speaker 3: here's fifty.

453
00:25:07,359 --> 00:25:09,480
Speaker 2: Million for sure.

454
00:25:09,560 --> 00:25:12,080
Speaker 3: Yeah, Like that includes you know, it might include a

455
00:25:12,119 --> 00:25:14,720
Speaker 3: guarantee for the time that the person is out of

456
00:25:14,760 --> 00:25:18,760
Speaker 3: the market. It might include a budget for hiring out

457
00:25:18,800 --> 00:25:20,879
Speaker 3: their team, right, that's a lot of these teams are

458
00:25:20,920 --> 00:25:23,600
Speaker 3: five to ten, in some cases fifteen people, so that's expensive.

459
00:25:24,040 --> 00:25:28,600
Speaker 3: And it also might include extra upside incentives which are

460
00:25:28,720 --> 00:25:31,040
Speaker 3: only paid out if the person delivers a certain amount

461
00:25:31,080 --> 00:25:33,480
Speaker 3: of P and L. So you know, they kind of

462
00:25:33,480 --> 00:25:35,919
Speaker 3: like print one number, but it's actually like lots of

463
00:25:35,920 --> 00:25:40,960
Speaker 3: different components. Usually with that type of number, you're budgeting

464
00:25:40,960 --> 00:25:43,960
Speaker 3: that person to generate P and L of one hundred

465
00:25:43,960 --> 00:25:48,520
Speaker 3: million plus a year. That we should have a track

466
00:25:48,560 --> 00:25:50,720
Speaker 3: record of doing that, and if and if you're right

467
00:25:50,760 --> 00:25:54,199
Speaker 3: on that, that leads to very healthy returns net to

468
00:25:54,280 --> 00:25:56,640
Speaker 3: our investor, which you know we've delivered over time.

469
00:25:56,760 --> 00:26:00,720
Speaker 2: That's the game. You have over three hundred analysts and

470
00:26:00,800 --> 00:26:05,399
Speaker 2: one hundred and seventy pms. How many different teams do

471
00:26:05,440 --> 00:26:07,920
Speaker 2: you are you guys running one hundred and seventy pms?

472
00:26:08,359 --> 00:26:11,040
Speaker 2: Is that one hundred and seventy specific strategies, so.

473
00:26:10,960 --> 00:26:14,200
Speaker 3: It's one hundred and seventy teams. So within the equity's business,

474
00:26:14,240 --> 00:26:17,320
Speaker 3: for example, you'll have like seventy teams, which sounds like

475
00:26:17,359 --> 00:26:19,200
Speaker 3: a lot, but you have to remember that that's split

476
00:26:19,240 --> 00:26:23,159
Speaker 3: across you know, three distinct equities businesses that all have

477
00:26:23,320 --> 00:26:27,800
Speaker 3: like a different front end. And it's also split across

478
00:26:28,200 --> 00:26:30,760
Speaker 3: offices all over the world. And folks are you know,

479
00:26:30,800 --> 00:26:33,720
Speaker 3: based in London, trading Europe, based in Hong Kong or

480
00:26:33,800 --> 00:26:37,600
Speaker 3: Singapore or Japan, you know, trading Asia. So it's still

481
00:26:37,640 --> 00:26:41,159
Speaker 3: fairly specialized. And each one of those teams will have

482
00:26:41,200 --> 00:26:44,240
Speaker 3: a mandate where this is the group of stocks that

483
00:26:44,240 --> 00:26:46,679
Speaker 3: they're focused on in the case of equities, or this

484
00:26:46,840 --> 00:26:49,440
Speaker 3: is the macro strategy and you know RV or emerging

485
00:26:49,480 --> 00:26:53,240
Speaker 3: markets or rates or directional that they're focused on in macro,

486
00:26:53,480 --> 00:26:56,359
Speaker 3: or this person focused on you know, trading gas or

487
00:26:56,400 --> 00:26:59,720
Speaker 3: trading power and commodities, and they'll build a team of

488
00:26:59,720 --> 00:27:02,560
Speaker 3: sub specialists analysts around that.

489
00:27:03,520 --> 00:27:06,919
Speaker 2: Really interesting, so I mentioned earlier you've scaled up to

490
00:27:07,040 --> 00:27:14,240
Speaker 2: twenty eight billion dollars, Where does the general management strategy

491
00:27:14,280 --> 00:27:19,360
Speaker 2: and style begin to get altered just by the size

492
00:27:19,400 --> 00:27:22,480
Speaker 2: At what point does that. We've seen a number of

493
00:27:22,520 --> 00:27:25,040
Speaker 2: farms at one hundred and two hundred billion dollars and

494
00:27:25,160 --> 00:27:30,160
Speaker 2: just the sheer heft becomes challenging. You can't generate alpha

495
00:27:30,560 --> 00:27:34,439
Speaker 2: at that scale, or at least not the same alpha.

496
00:27:34,720 --> 00:27:36,919
Speaker 2: How large can this get comfortably?

497
00:27:37,560 --> 00:27:40,960
Speaker 3: It's hard to say. I think that's a function of

498
00:27:41,040 --> 00:27:45,919
Speaker 3: how markets develop over time. So if you have more companies,

499
00:27:46,760 --> 00:27:50,560
Speaker 3: active capital markets, the world is growing, more places to

500
00:27:50,600 --> 00:27:54,120
Speaker 3: trade in, you know, more credit instruments, more equity instruments,

501
00:27:54,160 --> 00:27:56,360
Speaker 3: more macro instruments, then there's there's kind of more to do.

502
00:27:56,760 --> 00:27:59,040
Speaker 3: So if I think of the subset of strategies that

503
00:27:59,080 --> 00:28:02,760
Speaker 3: we trade today, a lot of these things weren't significant businesses,

504
00:28:02,840 --> 00:28:05,199
Speaker 3: you know, ten years ago or twenty years ago. So

505
00:28:05,680 --> 00:28:09,200
Speaker 3: a strategy like merger arbitrage has been around a long time.

506
00:28:09,640 --> 00:28:13,440
Speaker 3: A strategy like index rebalancing really got going the last

507
00:28:13,440 --> 00:28:16,680
Speaker 3: ten to fifteen years, right, you know, power trading in

508
00:28:16,720 --> 00:28:19,560
Speaker 3: the commodities markets, right, not a lot of people doing

509
00:28:19,600 --> 00:28:23,160
Speaker 3: that twenty years ago. So a lot of these things

510
00:28:23,440 --> 00:28:28,080
Speaker 3: go from very small strategies to much larger markets, you know,

511
00:28:28,160 --> 00:28:31,080
Speaker 3: over time, and that enables you to run more volved

512
00:28:31,080 --> 00:28:34,239
Speaker 3: there you know, increasing your capacity. The way that we

513
00:28:34,280 --> 00:28:38,400
Speaker 3: go about it is every year and we updated throughout

514
00:28:38,400 --> 00:28:42,120
Speaker 3: the year. We measure our capacity for you know, this

515
00:28:42,200 --> 00:28:45,000
Speaker 3: year in the following, and so we look at bottom

516
00:28:45,080 --> 00:28:47,760
Speaker 3: up by each team, like how much can they grow

517
00:28:47,800 --> 00:28:49,800
Speaker 3: at a steady pace. We don't want people to grow

518
00:28:49,840 --> 00:28:52,560
Speaker 3: too fast, and we don't want people to stay stagnant,

519
00:28:52,600 --> 00:28:54,480
Speaker 3: right Like, you want to find the healthy pace of

520
00:28:54,520 --> 00:28:57,600
Speaker 3: growth as you're expanding your coverage, as you're getting used

521
00:28:57,640 --> 00:29:00,840
Speaker 3: to running larger, dour amounts and dealing with those constraints.

522
00:29:01,280 --> 00:29:03,680
Speaker 3: And we look at the recruiting, so where can we

523
00:29:03,760 --> 00:29:06,960
Speaker 3: expand who is coming in? What does the pipeline kind

524
00:29:06,960 --> 00:29:09,040
Speaker 3: of look like? You know, we discount that because not

525
00:29:09,080 --> 00:29:12,440
Speaker 3: everyone's going to work out, But you add those numbers

526
00:29:12,480 --> 00:29:15,800
Speaker 3: together and that gives you a sense of what the

527
00:29:15,840 --> 00:29:18,600
Speaker 3: growth path is likely to be. And over time that's

528
00:29:18,640 --> 00:29:22,040
Speaker 3: averaged about twenty twenty five percent a year, you know,

529
00:29:22,120 --> 00:29:23,040
Speaker 3: capacity growth.

530
00:29:23,520 --> 00:29:28,320
Speaker 2: So you mentioned you're looking both internally and externally at recruiting.

531
00:29:28,680 --> 00:29:33,200
Speaker 2: When you're looking internally, how do you identify and nurture talents?

532
00:29:33,200 --> 00:29:36,440
Speaker 2: How can you tell when, hey, this person started out

533
00:29:36,480 --> 00:29:39,360
Speaker 2: as a trader or a PM, but they really seem

534
00:29:39,400 --> 00:29:41,680
Speaker 2: to have skills and can manage a larger group. That

535
00:29:42,080 --> 00:29:43,520
Speaker 2: seems like a really challenging thing.

536
00:29:43,800 --> 00:29:45,200
Speaker 3: We spend a lot of time on that, and I

537
00:29:45,240 --> 00:29:48,080
Speaker 3: think that's one of the keys to how we're going

538
00:29:48,120 --> 00:29:53,400
Speaker 3: to grow from here on out. Like recruiting is super important,

539
00:29:53,880 --> 00:29:57,240
Speaker 3: but being able to develop your talent. I think as

540
00:29:57,280 --> 00:30:00,000
Speaker 3: you have scale and you have more people to learn

541
00:30:00,040 --> 00:30:03,800
Speaker 3: learn from, right, that becomes a bigger and bigger slice

542
00:30:03,840 --> 00:30:08,360
Speaker 3: of your senior talent pool over time. So when we

543
00:30:08,600 --> 00:30:12,800
Speaker 3: started off for a long time, the vast majority of

544
00:30:12,800 --> 00:30:16,040
Speaker 3: our pms were recruited, you know, externally. Today, like an

545
00:30:16,080 --> 00:30:19,200
Speaker 3: equities business, which is the most mature of our strategies,

546
00:30:19,400 --> 00:30:23,640
Speaker 3: twenty five percent in the US are internally promoted, and

547
00:30:23,640 --> 00:30:25,880
Speaker 3: I wouldn't be surprised if that was fifty percent in

548
00:30:25,920 --> 00:30:28,800
Speaker 3: a few years, right, because now you have more senior

549
00:30:28,840 --> 00:30:32,000
Speaker 3: pms from up and coming analysts to learn from, more

550
00:30:32,040 --> 00:30:36,560
Speaker 3: programs that they can participate in to work their way

551
00:30:37,440 --> 00:30:39,480
Speaker 3: up if that's the path that they want to choose,

552
00:30:40,240 --> 00:30:42,880
Speaker 3: which you know that wasn't available. You didn't have the

553
00:30:42,960 --> 00:30:46,240
Speaker 3: mentorship and the tools. So how do you help people

554
00:30:46,280 --> 00:30:51,960
Speaker 3: and select It's both quantitative and qualitative so on the

555
00:30:52,040 --> 00:30:54,560
Speaker 3: quantitative side, we try to measure as much as we can.

556
00:30:55,080 --> 00:31:00,800
Speaker 3: So we have data on people's recommendations, not just on

557
00:31:00,840 --> 00:31:03,720
Speaker 3: the ultimate trades, but the data on their recommendations, and

558
00:31:03,760 --> 00:31:07,160
Speaker 3: you see what is the performance and we track that.

559
00:31:08,600 --> 00:31:11,240
Speaker 3: So you try to disaggregate the performance of the analyst

560
00:31:11,280 --> 00:31:15,160
Speaker 3: from the PM and see if who's driving value and

561
00:31:15,200 --> 00:31:17,360
Speaker 3: if it's a particular analyst is doing great, Like, we

562
00:31:17,400 --> 00:31:21,120
Speaker 3: want to make sure that person is getting more authority,

563
00:31:21,200 --> 00:31:25,080
Speaker 3: more autonomy, and more leeway over time, right, more growth opportunities,

564
00:31:25,520 --> 00:31:28,040
Speaker 3: and the best growth opportunity for them might be with

565
00:31:28,120 --> 00:31:30,840
Speaker 3: the team that they're on. They might become a more

566
00:31:30,920 --> 00:31:33,920
Speaker 3: senior analyst, they might become a partner on that portfolio,

567
00:31:34,720 --> 00:31:36,480
Speaker 3: or they might raise their hand at some point say

568
00:31:36,520 --> 00:31:38,600
Speaker 3: like hey, I want to be a PM, and we

569
00:31:38,640 --> 00:31:41,280
Speaker 3: want to make sure that we facilitate a path to that.

570
00:31:41,440 --> 00:31:44,560
Speaker 3: If we agree that they are talented and part of

571
00:31:44,560 --> 00:31:47,760
Speaker 3: that is in partnership with the PM that they're working for.

572
00:31:48,160 --> 00:31:49,720
Speaker 3: You don't want the person to just leave and go

573
00:31:49,800 --> 00:31:52,320
Speaker 3: somewhere else to take that opportunity. You want to make

574
00:31:52,360 --> 00:31:54,840
Speaker 3: sure that they replace themselves they work in partnership with

575
00:31:54,880 --> 00:31:57,480
Speaker 3: the PM, maybe they co run something for a period

576
00:31:57,560 --> 00:32:00,120
Speaker 3: of time and then they have the opportunity to do

577
00:32:00,160 --> 00:32:03,200
Speaker 3: their own thing. So it's definitely a combination of those.

578
00:32:03,400 --> 00:32:05,040
Speaker 3: And it's the same thing on the business side, like

579
00:32:05,040 --> 00:32:08,200
Speaker 3: you're always on the lookout for emerging business leaders who

580
00:32:08,240 --> 00:32:11,640
Speaker 3: can manage others, and we have a lot of leadership

581
00:32:11,680 --> 00:32:16,320
Speaker 3: development that we do and also utilizing external coaches as

582
00:32:16,320 --> 00:32:17,160
Speaker 3: well to help with that.

583
00:32:17,800 --> 00:32:22,360
Speaker 2: That's really interesting external cultures. You mentioned mentorship. How important

584
00:32:22,400 --> 00:32:27,160
Speaker 2: is mentorship to the firm and how significant was it

585
00:32:27,480 --> 00:32:28,840
Speaker 2: in your own professional job.

586
00:32:28,920 --> 00:32:31,280
Speaker 3: Well, that's where a partnership culture is really important, right.

587
00:32:31,520 --> 00:32:35,080
Speaker 3: So I think it's still fairly unusual in hedge funds,

588
00:32:36,000 --> 00:32:39,680
Speaker 3: especially in our type of fund, and we've always wanted

589
00:32:39,680 --> 00:32:43,200
Speaker 3: to build a true partnership where people own real equity

590
00:32:43,240 --> 00:32:45,719
Speaker 3: in the business, you know, they buy in with their

591
00:32:45,720 --> 00:32:49,360
Speaker 3: own money, they participate in all the economics of the business.

592
00:32:49,840 --> 00:32:52,720
Speaker 3: And we have partners who are coming from the business

593
00:32:52,720 --> 00:32:58,120
Speaker 3: side running a particular department. We have partners who are managers,

594
00:32:58,480 --> 00:33:02,000
Speaker 3: heads of strategies, investment site, and we have portfolio managers,

595
00:33:02,360 --> 00:33:05,880
Speaker 3: and so that dynamically creates like a culture where folks

596
00:33:05,960 --> 00:33:09,760
Speaker 3: are incentivized to make the firm better to make someone

597
00:33:09,800 --> 00:33:13,840
Speaker 3: else better, and they're obviously much more willing and excited

598
00:33:13,880 --> 00:33:17,080
Speaker 3: to be mentors in those situations. And I think when

599
00:33:17,120 --> 00:33:20,760
Speaker 3: you start with that, and I started with you know,

600
00:33:20,840 --> 00:33:23,720
Speaker 3: two my co founders, Scott and Taylor, you know, twenty

601
00:33:23,720 --> 00:33:27,040
Speaker 3: plus years ago, in a partnership type structure, and I

602
00:33:27,040 --> 00:33:30,640
Speaker 3: think that then flows down through the organization. And so

603
00:33:30,760 --> 00:33:36,280
Speaker 3: now today we have mentors for you know, interns coming up, right,

604
00:33:36,600 --> 00:33:40,360
Speaker 3: and you have mentors for you know, younger associates in

605
00:33:40,400 --> 00:33:42,360
Speaker 3: different areas of the firm, and then it goes you know,

606
00:33:42,360 --> 00:33:44,600
Speaker 3: all the way up and down the firm really really

607
00:33:44,640 --> 00:33:46,720
Speaker 3: so far myself Sorry didn't answer that question.

608
00:33:46,600 --> 00:33:49,520
Speaker 2: No, but you did. Yeah, let's hear about your own mentorship.

609
00:33:49,960 --> 00:33:51,920
Speaker 3: I mean, I certainly learned a lot from Stifo work

610
00:33:52,240 --> 00:33:53,880
Speaker 3: working with him at the time, and got really good

611
00:33:53,880 --> 00:33:57,200
Speaker 3: opportunities there. I think at a young age it was

612
00:33:57,280 --> 00:34:01,959
Speaker 3: more you know, certainly work at from my folks, uh,

613
00:34:02,280 --> 00:34:04,880
Speaker 3: And then it was a lot from sports, right. I

614
00:34:04,960 --> 00:34:07,720
Speaker 3: did a lot of you know, basketball and you know,

615
00:34:07,840 --> 00:34:12,120
Speaker 3: taekwondo and things like that and seeing kind of what

616
00:34:12,440 --> 00:34:16,400
Speaker 3: was possible, Like I remember as a kid like watching

617
00:34:17,200 --> 00:34:21,640
Speaker 3: taekwondo demonstration where our instructor Master Shim. It was like

618
00:34:21,680 --> 00:34:23,759
Speaker 3: a very slight Korean guy. It's probably I don't one

619
00:34:23,800 --> 00:34:27,680
Speaker 3: hundred and forty hundred and thirty pounds, and he punched

620
00:34:27,719 --> 00:34:34,359
Speaker 3: through a stack of seven cinder blocks, punched through and uh,

621
00:34:34,719 --> 00:34:36,399
Speaker 3: you know seeing that as a kid, you know, And

622
00:34:36,480 --> 00:34:38,920
Speaker 3: I went to like examine the bricks after he did that,

623
00:34:39,560 --> 00:34:41,200
Speaker 3: and like tried to punch it, and I was like,

624
00:34:41,239 --> 00:34:45,239
Speaker 3: wow that, you know, that hurt. And just seeing that

625
00:34:45,400 --> 00:34:47,760
Speaker 3: just kind of shows you kind of what's possible. Because

626
00:34:47,800 --> 00:34:49,960
Speaker 3: every day after practice you would see the guy sit

627
00:34:50,040 --> 00:34:54,360
Speaker 3: there punching a lead slab, you know, for you know,

628
00:34:54,400 --> 00:34:57,319
Speaker 3: I don't know, thirty minutes. Wow, right, and it just

629
00:34:57,360 --> 00:34:58,279
Speaker 3: adds up over time.

630
00:34:58,520 --> 00:35:01,279
Speaker 2: Reminds me of the demonstration the so old I Am

631
00:35:01,840 --> 00:35:04,400
Speaker 2: Bruce Lee did with the one inch punch.

632
00:35:04,480 --> 00:35:06,000
Speaker 3: Do you recall that I was just showing that to

633
00:35:06,040 --> 00:35:06,319
Speaker 3: my kids.

634
00:35:06,400 --> 00:35:11,879
Speaker 2: Letter just an inch and he's also forty ways soaking wet,

635
00:35:11,880 --> 00:35:16,440
Speaker 2: one forty And it's amazing the focus and power that

636
00:35:16,480 --> 00:35:18,440
Speaker 2: you can create in such a small.

637
00:35:18,400 --> 00:35:21,880
Speaker 3: That's exactly the thing. It's it's focus and perseverance, right.

638
00:35:22,400 --> 00:35:25,719
Speaker 2: Really quite quite fascinating. So let's talk a little bit

639
00:35:25,760 --> 00:35:29,040
Speaker 2: about the current environment. I was kind of fascinated by

640
00:35:29,080 --> 00:35:33,719
Speaker 2: something you told your team, You guys are trading too

641
00:35:33,800 --> 00:35:38,000
Speaker 2: much and not investing enough unquote explain.

642
00:35:39,040 --> 00:35:43,680
Speaker 3: I think one of the keys to enduring success in

643
00:35:43,719 --> 00:35:48,720
Speaker 3: the money management business is finding a balance between trading

644
00:35:48,760 --> 00:35:52,680
Speaker 3: and investing. And you have to be true to your

645
00:35:53,840 --> 00:35:59,160
Speaker 3: DNA and obviously the type of firm that you're at, right,

646
00:36:00,440 --> 00:36:05,880
Speaker 3: But within each type of firm and each type of strategy, uh,

647
00:36:06,320 --> 00:36:12,280
Speaker 3: there's always this you know tension, right, because you can't

648
00:36:12,800 --> 00:36:15,960
Speaker 3: survive in a hedge fund type model, you know, just

649
00:36:16,080 --> 00:36:20,759
Speaker 3: being a long term investor, and you can't really scale

650
00:36:21,440 --> 00:36:27,560
Speaker 3: in a significant growing hedge fund being just a superactive trader, right,

651
00:36:27,800 --> 00:36:30,319
Speaker 3: So you need some combination of the two. And so

652
00:36:30,600 --> 00:36:33,040
Speaker 3: what we try to do, both at the individual level

653
00:36:33,080 --> 00:36:37,120
Speaker 3: and at the strategy level, is help folks find that balance.

654
00:36:37,640 --> 00:36:39,640
Speaker 3: Part of it is just seeing what's working, and part

655
00:36:39,680 --> 00:36:42,800
Speaker 3: of it is a lot of statistical analysis that we

656
00:36:42,920 --> 00:36:46,839
Speaker 3: do on each of the each of the teams. So

657
00:36:46,880 --> 00:36:49,040
Speaker 3: when I made that comment, we were coming out of

658
00:36:49,080 --> 00:36:53,240
Speaker 3: a period where I noticed that folks are really trading

659
00:36:53,280 --> 00:36:55,640
Speaker 3: a little bit too much in the fundamental know equities

660
00:36:55,719 --> 00:36:58,680
Speaker 3: business and we're like a little bit overly focused on

661
00:36:58,760 --> 00:37:01,520
Speaker 3: each data point or we're kind of sing the forest

662
00:37:01,560 --> 00:37:04,520
Speaker 3: from the trees, right, and we were chopping ourselves up

663
00:37:04,520 --> 00:37:06,440
Speaker 3: a little bit too much, missing some of the bigger

664
00:37:06,480 --> 00:37:12,319
Speaker 3: winners and creating a lot of trading slippitch costs. So

665
00:37:13,200 --> 00:37:16,560
Speaker 3: we really worked hard with the teams to find more

666
00:37:16,600 --> 00:37:19,080
Speaker 3: balance with that, Like find some positions that you can

667
00:37:19,160 --> 00:37:22,319
Speaker 3: really be a longer term investor. Doesn't have to be

668
00:37:22,480 --> 00:37:24,719
Speaker 3: you know, years and years, but it could be you know,

669
00:37:24,840 --> 00:37:28,719
Speaker 3: months and quarters and supposed to days to weeks. And

670
00:37:29,960 --> 00:37:34,080
Speaker 3: find investments where there's multiple ways to win, where you're

671
00:37:34,080 --> 00:37:37,839
Speaker 3: not playing for one particular data point, you're playing for

672
00:37:38,000 --> 00:37:40,640
Speaker 3: a whole series of data points that's going to revalue

673
00:37:41,280 --> 00:37:44,600
Speaker 3: you know, that security over time, and that's been you know,

674
00:37:44,760 --> 00:37:46,520
Speaker 3: very very effective outside.

675
00:37:46,640 --> 00:37:48,840
Speaker 2: So how much of this is a function of the

676
00:37:49,040 --> 00:37:53,080
Speaker 2: environment that we all find ourselves in in any given moment.

677
00:37:53,800 --> 00:37:56,800
Speaker 2: Twenty two was a double digit down year for stocks

678
00:37:56,880 --> 00:37:59,600
Speaker 2: and bonds, but it was followed by twenty three and

679
00:37:59,640 --> 00:38:03,520
Speaker 2: twenty four for both years back to back plus twenty

680
00:38:03,520 --> 00:38:08,160
Speaker 2: five percent at least for US equities. If you're shortening

681
00:38:08,239 --> 00:38:12,160
Speaker 2: up your investing timeline in a plus twenty five percent year.

682
00:38:12,200 --> 00:38:14,600
Speaker 2: Is it just as simple as hey, you're leaving too

683
00:38:14,640 --> 00:38:15,520
Speaker 2: much money on the table.

684
00:38:15,600 --> 00:38:17,640
Speaker 3: But well, for us, it's a little bit different because

685
00:38:17,719 --> 00:38:20,880
Speaker 3: we're running pretty much market neutral and almost all the strategies.

686
00:38:20,920 --> 00:38:23,640
Speaker 3: So if you're running market neutral, whether the market's up

687
00:38:23,640 --> 00:38:25,719
Speaker 3: twenty five or down twenty five, like, you're always going

688
00:38:25,760 --> 00:38:28,840
Speaker 3: to have half your portfolio that's losing money on an

689
00:38:28,880 --> 00:38:33,080
Speaker 3: absolute basis, Yeah, but you're trying to make the spread right,

690
00:38:33,080 --> 00:38:36,680
Speaker 3: like you're trying to make the spread between your lungs

691
00:38:36,880 --> 00:38:41,960
Speaker 3: and your shorts right. So what influences are trading more

692
00:38:42,080 --> 00:38:45,080
Speaker 3: than the absolute direction of the market is the volatility

693
00:38:45,080 --> 00:38:47,239
Speaker 3: in the market. So if you're in a period that's

694
00:38:47,320 --> 00:38:50,799
Speaker 3: very high VALL, you're naturally going to be trading more

695
00:38:50,840 --> 00:38:54,000
Speaker 3: to manage your risk and also because you're getting stopped

696
00:38:54,040 --> 00:38:56,440
Speaker 3: on things or they're hitting your targets like fairly quickly,

697
00:38:56,960 --> 00:39:00,759
Speaker 3: and high VALL is associated with fundamental events changing.

698
00:39:00,560 --> 00:39:03,640
Speaker 2: Very quickly twenty two or like the.

699
00:39:03,680 --> 00:39:09,280
Speaker 3: Spring, so you've got to trade more exactly versus periods

700
00:39:09,280 --> 00:39:12,120
Speaker 3: where things are sort of slowly you know, trending, and

701
00:39:12,160 --> 00:39:15,040
Speaker 3: that's okay, but over the course of the year, right,

702
00:39:15,400 --> 00:39:17,840
Speaker 3: those periods are going to balance out. Some will be higherball,

703
00:39:17,920 --> 00:39:20,360
Speaker 3: soon be lower ball. You want to find like the

704
00:39:20,440 --> 00:39:23,400
Speaker 3: right amount of turnover to where you can capture your alpha,

705
00:39:23,800 --> 00:39:26,960
Speaker 3: capture those relative miss pricings and move on to the

706
00:39:27,000 --> 00:39:32,040
Speaker 3: next thing that generate a strong sharp combined with like

707
00:39:32,239 --> 00:39:35,880
Speaker 3: enough capacity. Right, you can have a very high sharp

708
00:39:35,880 --> 00:39:38,480
Speaker 3: and low capacity. That doesn't really help in a scale

709
00:39:38,560 --> 00:39:40,280
Speaker 3: you know, hedge fund, Right, you can't eat your sharp,

710
00:39:40,600 --> 00:39:44,880
Speaker 3: but you need enough sharp to be consistent putting up

711
00:39:44,880 --> 00:39:46,839
Speaker 3: a P and L. That kind of matters for the firm,

712
00:39:46,880 --> 00:39:49,960
Speaker 3: and that matters for the team that you're running. And

713
00:39:50,040 --> 00:39:52,319
Speaker 3: so for every strategy, like we try to come up with,

714
00:39:52,400 --> 00:39:56,080
Speaker 3: like what is a reasonable range, right, And it might

715
00:39:56,120 --> 00:39:58,879
Speaker 3: be higher for you know, a tech portfolio manager than

716
00:39:58,920 --> 00:40:02,920
Speaker 3: you know utility sport f manager, right, but each of

717
00:40:02,960 --> 00:40:06,920
Speaker 3: them should have a range that sort of is optimum

718
00:40:07,000 --> 00:40:09,520
Speaker 3: for their style, and we try to help them, you know,

719
00:40:09,600 --> 00:40:10,080
Speaker 3: find that.

720
00:40:10,560 --> 00:40:13,239
Speaker 2: So with the benefit of hindsight, I'm looking back at

721
00:40:13,239 --> 00:40:17,320
Speaker 2: twenty twenty four, a fairly low vall year. Hey, maybe

722
00:40:17,320 --> 00:40:19,440
Speaker 2: we should be trading a little less and holding a

723
00:40:19,480 --> 00:40:23,480
Speaker 2: little longer. And then twenty twenty five fine spiked at

724
00:40:23,520 --> 00:40:25,920
Speaker 2: the end of Q one and into Q two. All Right,

725
00:40:25,960 --> 00:40:27,680
Speaker 2: you guys can chop it up a little more. Is

726
00:40:27,680 --> 00:40:30,200
Speaker 2: it just that simple or yes?

727
00:40:30,440 --> 00:40:34,160
Speaker 3: But again I would say the more nuanced answer would be,

728
00:40:34,400 --> 00:40:37,840
Speaker 3: there's lots of different types of trades that each person does,

729
00:40:38,280 --> 00:40:43,600
Speaker 3: and you don't want any PM doesn't want their portfolio

730
00:40:43,719 --> 00:40:46,160
Speaker 3: to just be one type of trade, right, So you

731
00:40:46,239 --> 00:40:50,200
Speaker 3: might have short term trades, medium term trades, long term trades, right,

732
00:40:50,280 --> 00:40:54,279
Speaker 3: structural trades, tactical trades, risk mitigation trades, et cetera. There's

733
00:40:54,600 --> 00:40:57,640
Speaker 3: lots of different types of trades, and people run into

734
00:40:57,760 --> 00:41:04,200
Speaker 3: problems when they get two focused on one kind of thing, right,

735
00:41:04,239 --> 00:41:06,879
Speaker 3: and then when that thing is no longer working, it's

736
00:41:06,960 --> 00:41:09,680
Speaker 3: very hard to then reinvent yourself because you don't have

737
00:41:09,719 --> 00:41:13,640
Speaker 3: any other irons in the fire. So again, we're trying

738
00:41:13,640 --> 00:41:16,040
Speaker 3: to run a lot of analysis and find like, what

739
00:41:16,560 --> 00:41:18,759
Speaker 3: is the team really good at, make sure that's being

740
00:41:18,800 --> 00:41:21,840
Speaker 3: expressed in the portfolio, make sure there's enough balance of

741
00:41:21,880 --> 00:41:24,719
Speaker 3: different types of trades, and that they're not betting on

742
00:41:24,840 --> 00:41:28,319
Speaker 3: things that they don't really have views on that can

743
00:41:28,360 --> 00:41:30,160
Speaker 3: take them out of the game before the things they

744
00:41:30,160 --> 00:41:30,960
Speaker 3: do have views on.

745
00:41:31,000 --> 00:41:35,319
Speaker 2: Payoffs coming up, we continue our conversation with Dimitri Ballyasny,

746
00:41:35,680 --> 00:41:40,280
Speaker 2: co founder of Ballyasney Asset Management, discussing the current market

747
00:41:40,440 --> 00:41:45,000
Speaker 2: environment for trading. I'm Barry Ridals. You're listening to Masters

748
00:41:45,040 --> 00:42:03,920
Speaker 2: in Business on Bloomberg Radio. I'm Barry Redults. You're listening

749
00:42:03,960 --> 00:42:06,799
Speaker 2: to Masters in Business on Bloomberg Radio, and some of

750
00:42:06,840 --> 00:42:11,319
Speaker 2: you are watching this on YouTube. My extra special guest

751
00:42:11,360 --> 00:42:14,840
Speaker 2: this week is Dmitri Ballyasni. He is the co founder

752
00:42:14,880 --> 00:42:18,800
Speaker 2: of bally Asny Asset Management, a multi strategy hedge fund

753
00:42:18,880 --> 00:42:22,920
Speaker 2: running over twenty eight billion dollars. Do the different teams

754
00:42:23,080 --> 00:42:25,719
Speaker 2: hedge their own positions or is that a function of

755
00:42:26,239 --> 00:42:28,799
Speaker 2: firmwide risk management and somebody else?

756
00:42:28,880 --> 00:42:31,400
Speaker 3: We do both. So each team is responsible for running

757
00:42:31,680 --> 00:42:35,520
Speaker 3: within their risk parameters. So they'll have, you know, in

758
00:42:35,560 --> 00:42:38,360
Speaker 3: the case of the long short portfolio manager, they'll have

759
00:42:38,440 --> 00:42:40,880
Speaker 3: an IDIO risk right. How much of your risk is

760
00:42:41,480 --> 00:42:45,319
Speaker 3: outside of factor risk? Right? And that should be you know,

761
00:42:45,640 --> 00:42:48,840
Speaker 3: sixty seventy eighty percent of your risk, depending on the

762
00:42:48,880 --> 00:42:52,640
Speaker 3: portfolio and the style of the PM. But it's basically

763
00:42:52,640 --> 00:42:55,879
Speaker 3: the vast majority of somebody's risk is their stock picking

764
00:42:56,000 --> 00:42:59,360
Speaker 3: alpha right. Depending on their skill and things like picking

765
00:42:59,360 --> 00:43:02,680
Speaker 3: the right, industy tree or trading the directionality of the

766
00:43:02,719 --> 00:43:05,319
Speaker 3: market around, we might give them some more room or

767
00:43:05,400 --> 00:43:07,759
Speaker 3: less room, you know, to do that. If you're a

768
00:43:07,760 --> 00:43:11,360
Speaker 3: directional macro trader, you're going to have you're not going

769
00:43:11,440 --> 00:43:14,560
Speaker 3: to have that constraint because you're paid to directionally bet

770
00:43:14,560 --> 00:43:17,480
Speaker 3: on the market, right, But you're going to have other

771
00:43:17,520 --> 00:43:22,280
Speaker 3: limits like stress limits. Right. So if your directional bets

772
00:43:22,320 --> 00:43:24,960
Speaker 3: don't work out and there's a gap tomorrow, you know

773
00:43:24,960 --> 00:43:27,000
Speaker 3: how much are you going to lose in a stress scenario?

774
00:43:27,040 --> 00:43:29,320
Speaker 3: So you have to if that number is too high

775
00:43:29,440 --> 00:43:31,920
Speaker 3: versus the agreed upon risk limits, you have to do

776
00:43:32,000 --> 00:43:36,040
Speaker 3: something in your portfolio to hedge you know that that risk, right.

777
00:43:36,120 --> 00:43:39,799
Speaker 3: So it's a little bit different for each type of strategy,

778
00:43:40,080 --> 00:43:43,120
Speaker 3: but the common philosophy is you want to be able

779
00:43:43,160 --> 00:43:46,000
Speaker 3: to run it to maximize your return while staying in

780
00:43:46,040 --> 00:43:51,920
Speaker 3: the game right and delivering a relatively steady source of

781
00:43:52,320 --> 00:43:53,360
Speaker 3: alpha over time.

782
00:43:54,000 --> 00:43:59,080
Speaker 2: It's interesting because they're called hedge funds, but many hedge

783
00:43:59,080 --> 00:44:02,560
Speaker 2: funds don't hedge, and it sounds like balle Asni really

784
00:44:03,120 --> 00:44:05,879
Speaker 2: makes an effort to make sure that as a risk

785
00:44:05,960 --> 00:44:10,960
Speaker 2: management approach, anything that's potentially downside as you said, a

786
00:44:11,000 --> 00:44:12,120
Speaker 2: gap has to be edged.

787
00:44:12,160 --> 00:44:16,640
Speaker 3: Yeah, I mean you're looking for consistent absolute returns. So

788
00:44:16,680 --> 00:44:17,440
Speaker 3: how do you get that?

789
00:44:18,239 --> 00:44:18,359
Speaker 2: Right?

790
00:44:18,440 --> 00:44:23,000
Speaker 3: You need specialists who have an edge and a particular strategy,

791
00:44:24,160 --> 00:44:27,480
Speaker 3: and they need a portfolio construction or risk management approach

792
00:44:27,960 --> 00:44:32,319
Speaker 3: that maximizes that edge, maximizes the capacity of dollars they

793
00:44:32,360 --> 00:44:37,359
Speaker 3: can earn off of those advantages that they have, and

794
00:44:37,440 --> 00:44:41,000
Speaker 3: minimizing the things that can create large draw downs that

795
00:44:41,040 --> 00:44:44,759
Speaker 3: they don't really have edge and betting on. And so

796
00:44:44,800 --> 00:44:47,600
Speaker 3: that's the analysis that you're constantly running and iterating on

797
00:44:47,680 --> 00:44:48,280
Speaker 3: with the teams.

798
00:44:48,880 --> 00:44:52,920
Speaker 2: So I heard a fund manager say, we have no

799
00:44:53,080 --> 00:44:57,320
Speaker 2: competition because none of us in our space have market share.

800
00:44:57,480 --> 00:44:59,640
Speaker 2: For the most part, we're all less than one percent

801
00:44:59,680 --> 00:45:02,960
Speaker 2: market chair, how do you look at the competitive environment

802
00:45:03,400 --> 00:45:08,239
Speaker 2: for other multistrat firms. It seems like animal up and

803
00:45:08,280 --> 00:45:10,719
Speaker 2: you get a decent number. But there are what are

804
00:45:10,719 --> 00:45:12,360
Speaker 2: there eleven thousand hedge funds?

805
00:45:12,640 --> 00:45:15,200
Speaker 3: Yeah. The way we think about it is we're not

806
00:45:15,280 --> 00:45:18,719
Speaker 3: really competing with eleven thousand hedge funds. So I think

807
00:45:18,719 --> 00:45:21,760
Speaker 3: what you've seen over the last you know, twenty plus

808
00:45:21,840 --> 00:45:28,360
Speaker 3: years is a consistent market share gain from the larger

809
00:45:28,600 --> 00:45:32,480
Speaker 3: platform firms, Right, and now I think there's really like

810
00:45:32,600 --> 00:45:35,200
Speaker 3: four or five, right, And if you look at the

811
00:45:35,200 --> 00:45:38,160
Speaker 3: private equity industry, it's pretty similar, Like there's probably more

812
00:45:38,160 --> 00:45:41,160
Speaker 3: than ten thousand private equity funds, but the vast majority

813
00:45:41,200 --> 00:45:45,720
Speaker 3: of dollars, best majority of alpha, vast majority of people

814
00:45:46,160 --> 00:45:47,000
Speaker 3: are really.

815
00:45:46,719 --> 00:45:49,000
Speaker 2: At half a dozen fat head, long tail.

816
00:45:49,200 --> 00:45:51,600
Speaker 3: Yeah, so hedge fund industry has really had it in

817
00:45:51,640 --> 00:45:55,359
Speaker 3: that same you know direction. So we really compete with

818
00:45:55,520 --> 00:45:58,319
Speaker 3: you know, half a dozen firms. And now there's also

819
00:45:58,400 --> 00:46:00,759
Speaker 3: competition from some of the high frequency firms that are

820
00:46:00,840 --> 00:46:04,600
Speaker 3: kind of going upstream to some of the longer duration

821
00:46:05,239 --> 00:46:08,759
Speaker 3: discretionary strategies, and you know, we're doing more quantitative stuff

822
00:46:08,800 --> 00:46:11,680
Speaker 3: going the other way. Right, So maybe there's a couple more,

823
00:46:12,600 --> 00:46:14,759
Speaker 3: but you're really competing with half a dozen to a

824
00:46:14,840 --> 00:46:19,879
Speaker 3: dozen firms that are running you know, specialist strategies at scale,

825
00:46:20,280 --> 00:46:22,400
Speaker 3: and then everyone else in those strategies you kind of

826
00:46:22,400 --> 00:46:25,680
Speaker 3: look at as like a generalist, you know, participant, and

827
00:46:25,719 --> 00:46:27,879
Speaker 3: it's great to have general's participation. We want as much

828
00:46:27,880 --> 00:46:31,279
Speaker 3: as possible from you know, retail, from other funds, from

829
00:46:31,400 --> 00:46:34,560
Speaker 3: you know, prop from banks. The more liquidity of there is,

830
00:46:34,560 --> 00:46:37,640
Speaker 3: the more generous participation there is. You know, I think

831
00:46:37,640 --> 00:46:39,480
Speaker 3: the better for specialized firms.

832
00:46:39,760 --> 00:46:42,839
Speaker 2: So the current environment kind of hard to compare to

833
00:46:42,920 --> 00:46:46,120
Speaker 2: any other era. On the one hand, we had a

834
00:46:46,160 --> 00:46:50,880
Speaker 2: fairly robust economy coming into twenty twenty five following a

835
00:46:50,880 --> 00:46:54,840
Speaker 2: whole bunch of FED hikes. Now we're expected to resume

836
00:46:55,040 --> 00:46:58,280
Speaker 2: FED cutting. By the time the sares, we're probably twenty

837
00:46:58,320 --> 00:47:03,400
Speaker 2: five paces points lower than today the whole tariff start stop.

838
00:47:03,520 --> 00:47:08,160
Speaker 2: And now back to the litigation the Supreme Court agreed

839
00:47:08,200 --> 00:47:11,480
Speaker 2: to take to that, it looks like inflation is starting

840
00:47:11,520 --> 00:47:15,160
Speaker 2: to percolate a little bit as the labor market seems

841
00:47:15,200 --> 00:47:18,000
Speaker 2: to soften. How does the firm look at all of

842
00:47:18,040 --> 00:47:21,480
Speaker 2: these macro crosscurrents. Are they significant or are they just

843
00:47:21,560 --> 00:47:23,400
Speaker 2: background noise or somewhere in between.

844
00:47:23,680 --> 00:47:26,520
Speaker 3: Well, I would just say it's a really interesting fluid environment,

845
00:47:27,640 --> 00:47:32,560
Speaker 3: particularly for macro and long short equities, because there's just

846
00:47:33,080 --> 00:47:36,080
Speaker 3: so much change. So if you think about, like, what

847
00:47:36,239 --> 00:47:40,160
Speaker 3: is the worst environment to be in, it's not when

848
00:47:40,440 --> 00:47:43,880
Speaker 3: everything is clear, because when everything is clear, there's like

849
00:47:43,920 --> 00:47:47,360
Speaker 3: no volatility, there's no change. It's hard to get any dispersion.

850
00:47:47,800 --> 00:47:50,760
Speaker 3: So that environment might be good for passive strategies.

851
00:47:50,280 --> 00:47:52,080
Speaker 2: But not good sideways markets.

852
00:47:52,680 --> 00:47:57,320
Speaker 3: Yeah. Yeah, So now there's a ton of money slashing

853
00:47:57,360 --> 00:48:00,880
Speaker 3: around trying to figure things out, and that's that's a

854
00:48:00,920 --> 00:48:01,640
Speaker 3: great environment.

855
00:48:01,760 --> 00:48:01,920
Speaker 2: Right.

856
00:48:02,200 --> 00:48:05,000
Speaker 3: So if you think about this year on the macro perspective, right,

857
00:48:05,000 --> 00:48:09,239
Speaker 3: you went from a very you know, positive view in

858
00:48:09,360 --> 00:48:12,080
Speaker 3: January of how everything was going to play out to

859
00:48:12,320 --> 00:48:15,799
Speaker 3: you know, kind of the tariff mess and very pessimistic

860
00:48:15,880 --> 00:48:18,080
Speaker 3: view of how you know the US was going to

861
00:48:18,080 --> 00:48:20,240
Speaker 3: play out and what was going to happen with markets.

862
00:48:20,280 --> 00:48:24,680
Speaker 3: We're down twenty percent in SMP briefly and now you're

863
00:48:24,800 --> 00:48:26,600
Speaker 3: you know, right back up and still like a lot

864
00:48:26,640 --> 00:48:28,680
Speaker 3: of things kind of swirling around as to how it's

865
00:48:28,719 --> 00:48:31,320
Speaker 3: going to play out. To your point on rates and inflation,

866
00:48:31,400 --> 00:48:33,319
Speaker 3: has been a lot of change. It's create a lot

867
00:48:33,320 --> 00:48:36,080
Speaker 3: of relative value opportunities as you get different hiking cycles,

868
00:48:36,120 --> 00:48:39,640
Speaker 3: different cutting cycles in different markets. Like that's great for macro.

869
00:48:41,200 --> 00:48:44,279
Speaker 3: In equity land, you have all the changes not just

870
00:48:44,280 --> 00:48:47,960
Speaker 3: from the economy but from AI and how that's impacting

871
00:48:48,000 --> 00:48:52,799
Speaker 3: tech but also impacting companies that are customers or going

872
00:48:52,880 --> 00:48:55,719
Speaker 3: to be run over because of AI. Like creates great

873
00:48:55,760 --> 00:48:58,880
Speaker 3: long short opportunities. So I think it's a really fascinating market.

874
00:48:58,920 --> 00:49:00,920
Speaker 3: I don't have any giant you know, prediction of how

875
00:49:00,960 --> 00:49:03,160
Speaker 3: things are going to you know, play out tomorrow. But

876
00:49:03,680 --> 00:49:07,040
Speaker 3: if you have strong teams who are on top of

877
00:49:07,080 --> 00:49:11,040
Speaker 3: the latest data points and you can figure it out

878
00:49:11,080 --> 00:49:13,920
Speaker 3: a little bit ahead of the next person, just tremendous

879
00:49:13,960 --> 00:49:17,280
Speaker 3: opportunities like this last week, Oracle report a quarter.

880
00:49:17,120 --> 00:49:22,839
Speaker 2: You know, crazy right for for a giant company company amazing.

881
00:49:22,520 --> 00:49:24,600
Speaker 3: I mean it was last time you know a company

882
00:49:24,640 --> 00:49:26,239
Speaker 3: like that moved thirty five thirty something?

883
00:49:27,280 --> 00:49:30,239
Speaker 2: Right? Dot Com collapse in direction.

884
00:49:30,040 --> 00:49:31,960
Speaker 3: Yeah, I mean I'm amazing, right, So if you can

885
00:49:32,040 --> 00:49:34,520
Speaker 3: figure that out, or you know, I think of some

886
00:49:34,560 --> 00:49:37,280
Speaker 3: of these, you know, fintech company Circle went public, right,

887
00:49:37,640 --> 00:49:40,360
Speaker 3: Usually public offerings are like pretty efficiently priced. You know,

888
00:49:40,400 --> 00:49:44,279
Speaker 3: this one goes up four hundred percent after it starts trading, right,

889
00:49:44,280 --> 00:49:46,640
Speaker 3: and then it goes down fifty percent, you know, and

890
00:49:47,000 --> 00:49:48,960
Speaker 3: a month after that, so in the first three months,

891
00:49:49,200 --> 00:49:52,719
Speaker 3: I think of the travel in the stock. So amazing opportunities,

892
00:49:52,800 --> 00:49:54,960
Speaker 3: right if if your teams can figure that out. So

893
00:49:55,440 --> 00:49:57,360
Speaker 3: you know, we're out there working hard doing the research

894
00:49:57,400 --> 00:49:59,120
Speaker 3: and you know, figuring out the market.

895
00:49:59,320 --> 00:50:02,040
Speaker 2: So it doesn't sound like you think the AI theme

896
00:50:02,239 --> 00:50:06,000
Speaker 2: is overdone, but it certainly is. Creating a little more

897
00:50:06,080 --> 00:50:08,040
Speaker 2: volatility and a little more opportunities.

898
00:50:08,800 --> 00:50:13,359
Speaker 3: Yeah, I think the reality when we look back, you know,

899
00:50:13,400 --> 00:50:18,239
Speaker 3: in ten years or in twenty years, in the actual

900
00:50:19,360 --> 00:50:23,200
Speaker 3: outcomes that have happened, it's probably under hyped. In terms

901
00:50:23,239 --> 00:50:26,640
Speaker 3: of the stock rate of the stock prices across the board,

902
00:50:26,800 --> 00:50:29,080
Speaker 3: Like that's harder to say, Like, there's some that are

903
00:50:29,080 --> 00:50:31,920
Speaker 3: probably way overhyped, there's some that are probably under A

904
00:50:31,960 --> 00:50:34,560
Speaker 3: lot of companies have moved from one bucket to another

905
00:50:34,600 --> 00:50:36,560
Speaker 3: where they were in a loser bucket and actually they

906
00:50:36,760 --> 00:50:40,160
Speaker 3: turns out maybe they're a winner or vice versa, where

907
00:50:40,360 --> 00:50:43,319
Speaker 3: people got too optimistic and maybe they don't really have

908
00:50:43,400 --> 00:50:46,440
Speaker 3: anything that's defensible and differentiated. So I think there's a

909
00:50:46,440 --> 00:50:48,759
Speaker 3: lot of alpha to be gained in figuring that out.

910
00:50:50,040 --> 00:50:52,680
Speaker 3: And it's hard to find things that are, you know,

911
00:50:52,760 --> 00:50:55,319
Speaker 3: super bargain priced that have anything to do with AI.

912
00:50:55,719 --> 00:50:58,640
Speaker 3: But in terms of like the longer term potential to

913
00:50:58,719 --> 00:51:02,719
Speaker 3: really transform how people work and how companies work, I

914
00:51:02,719 --> 00:51:03,919
Speaker 3: think it's probably under hyped.

915
00:51:04,719 --> 00:51:09,160
Speaker 2: I've been fond of thinking of this in terms of, Hey,

916
00:51:09,360 --> 00:51:14,120
Speaker 2: the Magnificent seven certainly have been overhyped, but the Magnificent

917
00:51:14,200 --> 00:51:17,280
Speaker 2: four ninety three people haven't really been paying attention.

918
00:51:17,520 --> 00:51:19,680
Speaker 3: Yeah, I mean it's a good question, like have they

919
00:51:19,719 --> 00:51:24,040
Speaker 3: been overhype? Right? If you look at the dollars in

920
00:51:24,120 --> 00:51:27,359
Speaker 3: earnings and cash flow that they're generating, impressive, the market

921
00:51:27,400 --> 00:51:30,400
Speaker 3: caps that they're growing, like, I think they're you know,

922
00:51:30,560 --> 00:51:34,040
Speaker 3: executing amazingly, amazingly well, I think it's quite different from

923
00:51:34,200 --> 00:51:36,160
Speaker 3: what we had in the in the dot com era,

924
00:51:36,280 --> 00:51:40,440
Speaker 3: where companies weren't really making making money. So that's one difference.

925
00:51:40,440 --> 00:51:42,840
Speaker 3: The other four in ninety three, I think there's a

926
00:51:42,880 --> 00:51:48,400
Speaker 3: lot of you know, headwinds and tailwinds. So some companies

927
00:51:48,400 --> 00:51:50,960
Speaker 3: are going to figure it out, right, and they're going

928
00:51:51,040 --> 00:51:53,000
Speaker 3: to kind of make the leap into the future and

929
00:51:53,040 --> 00:51:55,399
Speaker 3: figure out how to be much more efficient. And you're

930
00:51:55,440 --> 00:51:57,520
Speaker 3: starting to see that in some of the commentary on

931
00:51:57,560 --> 00:52:02,120
Speaker 3: the earnings calls where margins and positively for you know,

932
00:52:02,160 --> 00:52:04,000
Speaker 3: the way that they figured out how to leverage the

933
00:52:04,040 --> 00:52:07,840
Speaker 3: tech and others are going to disappear, right, So I

934
00:52:07,840 --> 00:52:09,640
Speaker 3: think it's going to create a lot of opportunities.

935
00:52:10,160 --> 00:52:15,160
Speaker 2: So the trader in May sees recording this on the fifteenth,

936
00:52:15,640 --> 00:52:18,880
Speaker 2: another set of all time highs. I always learned on

937
00:52:19,000 --> 00:52:22,640
Speaker 2: the desk all time highs or bullish. What's your perspective

938
00:52:22,719 --> 00:52:23,680
Speaker 2: on all time highs?

939
00:52:23,920 --> 00:52:26,560
Speaker 3: Yeah, I think like you have this two tiered market

940
00:52:26,560 --> 00:52:30,040
Speaker 3: that you mentioned, where you have the kind of tech

941
00:52:30,160 --> 00:52:35,120
Speaker 3: leaders and AI leaders and everything else, everything else. Companies

942
00:52:35,160 --> 00:52:39,319
Speaker 3: definitely got hurt more with all the tariff ups and

943
00:52:39,360 --> 00:52:43,799
Speaker 3: downs and inflation ups and downs earlier this year. That

944
00:52:43,960 --> 00:52:50,080
Speaker 3: seems to be certainly calming down and the partially you know,

945
00:52:50,200 --> 00:52:52,560
Speaker 3: top down is calming down and partially bottom up companies

946
00:52:52,600 --> 00:52:55,160
Speaker 3: are figuring out, you know, how to navigate these things

947
00:52:55,160 --> 00:52:59,040
Speaker 3: and maybe it's not as troublesome as they thought. And

948
00:52:59,200 --> 00:53:05,080
Speaker 3: so you're seeing like better execution and probably a little

949
00:53:05,080 --> 00:53:09,840
Speaker 3: bit more uh positivity from companies than you were seeing,

950
00:53:10,000 --> 00:53:12,520
Speaker 3: you know, certainly six months ago, and that's starting to

951
00:53:12,560 --> 00:53:16,120
Speaker 3: get reflected and the market's broadening out a little bit.

952
00:53:17,080 --> 00:53:19,920
Speaker 3: But you know, the largest you know, tech companies certainly

953
00:53:19,960 --> 00:53:23,640
Speaker 3: have you know, tremendous advantages that they're continuing to press.

954
00:53:24,080 --> 00:53:28,399
Speaker 2: So last of our regular questions, what are traders and

955
00:53:28,440 --> 00:53:33,240
Speaker 2: investors not thinking about? We're talking about, but perhaps should

956
00:53:33,320 --> 00:53:37,680
Speaker 2: be what topics, assets, geography, policy, data points, what's getting

957
00:53:37,719 --> 00:53:39,360
Speaker 2: overlooked but shouldn't.

958
00:53:39,840 --> 00:53:41,720
Speaker 3: I think it's I don't know if it's getting overlooked,

959
00:53:41,719 --> 00:53:46,440
Speaker 3: but I would say, when you think about AI, where

960
00:53:46,440 --> 00:53:51,880
Speaker 3: it's going, what are the ramifications for every type of company? Right? So,

961
00:53:52,600 --> 00:53:56,799
Speaker 3: at the moment, while AI is making us much more

962
00:53:56,840 --> 00:54:01,040
Speaker 3: productive and efficient, we haven't lego of one person because

963
00:54:01,040 --> 00:54:03,800
Speaker 3: AI has automated their job, right, Like we're just hiring

964
00:54:03,800 --> 00:54:07,040
Speaker 3: more AI people, right, But if you look out, you know,

965
00:54:07,080 --> 00:54:08,600
Speaker 3: five years from now, is that's still going to be

966
00:54:08,600 --> 00:54:10,680
Speaker 3: the case? You know, probably not right, Like some jobs

967
00:54:10,719 --> 00:54:13,239
Speaker 3: are going to get automated, right, and you know we're

968
00:54:13,320 --> 00:54:15,720
Speaker 3: kind of on the you know, high end. I would

969
00:54:15,719 --> 00:54:19,359
Speaker 3: say of you know, skills that are necessary to work

970
00:54:19,400 --> 00:54:21,319
Speaker 3: at a leading hedge fund. If you think of like

971
00:54:21,360 --> 00:54:23,520
Speaker 3: a typical company where there's a lot of folks doing

972
00:54:23,560 --> 00:54:26,000
Speaker 3: like very bureaucratic type of things, like a lot of

973
00:54:26,840 --> 00:54:30,120
Speaker 3: pretty mundane tasks, Like all that stuff is going to

974
00:54:30,120 --> 00:54:31,839
Speaker 3: be automated. I don't know if it's in a year

975
00:54:31,960 --> 00:54:35,200
Speaker 3: and five years like, but somewhere in that timeframe, it's

976
00:54:35,239 --> 00:54:36,000
Speaker 3: going to be automated.

977
00:54:36,320 --> 00:54:39,680
Speaker 2: When you think about that, with the entry level jobs, yeah,

978
00:54:39,800 --> 00:54:43,480
Speaker 2: under thirty unemployment is like nine point nine percent double

979
00:54:43,560 --> 00:54:44,520
Speaker 2: regular employment.

980
00:54:44,600 --> 00:54:47,120
Speaker 3: Yeah exactly. And so as you think about that, Like

981
00:54:47,200 --> 00:54:49,080
Speaker 3: what does that mean for every type of company? Right?

982
00:54:49,120 --> 00:54:52,640
Speaker 3: If if you're a company that can really harness that

983
00:54:52,719 --> 00:54:56,759
Speaker 3: and you could produce your products your services at a

984
00:54:56,840 --> 00:54:59,520
Speaker 3: much lower price point and you figure out how to

985
00:54:59,560 --> 00:55:01,920
Speaker 3: the competition, like your margins might explode to the upside.

986
00:55:02,040 --> 00:55:04,200
Speaker 3: On the other hand, if everybody in your space is

987
00:55:04,239 --> 00:55:06,880
Speaker 3: doing that, like maybe your margins are actually going to collapse,

988
00:55:07,040 --> 00:55:10,440
Speaker 3: right because everybody's going to drive down pricing. And how

989
00:55:10,440 --> 00:55:13,359
Speaker 3: does it flow downstream? Like do you need as much

990
00:55:13,400 --> 00:55:15,279
Speaker 3: office space if you're going to have less people in

991
00:55:15,320 --> 00:55:18,280
Speaker 3: a particular area? Right, So, like all these kind of things,

992
00:55:18,440 --> 00:55:21,719
Speaker 3: I think everyone is focused because there is a lot

993
00:55:21,760 --> 00:55:23,840
Speaker 3: of volatility. Everyone is focused very much on like the

994
00:55:23,880 --> 00:55:26,200
Speaker 3: next quarter. But if you think out, you know, two, three,

995
00:55:26,239 --> 00:55:27,960
Speaker 3: four years, like how's this space going to look?

996
00:55:28,360 --> 00:55:28,520
Speaker 2: Right?

997
00:55:28,560 --> 00:55:30,520
Speaker 3: And that's kind of the balance of trading and investing

998
00:55:30,600 --> 00:55:32,239
Speaker 3: the work. You know, you got to have one eye

999
00:55:32,239 --> 00:55:32,680
Speaker 3: on each.

1000
00:55:33,719 --> 00:55:36,799
Speaker 2: And before I get to my favorite questions that I

1001
00:55:36,920 --> 00:55:38,920
Speaker 2: ask all of my guests, I have to ask you

1002
00:55:39,640 --> 00:55:43,360
Speaker 2: about some of the philanthropy you participate in. Tell us

1003
00:55:43,400 --> 00:55:47,680
Speaker 2: a little bit about the Atlas Fellowship and some of

1004
00:55:47,719 --> 00:55:49,319
Speaker 2: the other things that you've been doing. Over the past.

1005
00:55:49,360 --> 00:55:51,760
Speaker 3: Sure. So this was a program that my wife, Rebcka

1006
00:55:51,760 --> 00:55:54,359
Speaker 3: and I started I think this is five years ago now.

1007
00:55:55,200 --> 00:55:59,840
Speaker 3: We were looking to start an initiative to help kids

1008
00:55:59,840 --> 00:56:02,880
Speaker 3: go to college who were a bit under resource, maybe

1009
00:56:02,880 --> 00:56:06,680
Speaker 3: first in their family to go to college, et cetera.

1010
00:56:06,960 --> 00:56:11,640
Speaker 3: And as we're looking at these scholarship opportunities, particularly in finance,

1011
00:56:12,000 --> 00:56:15,719
Speaker 3: we couldn't find any program that had a combination of

1012
00:56:16,480 --> 00:56:22,279
Speaker 3: internships with scholarships. There were some that had ones that

1013
00:56:22,320 --> 00:56:24,480
Speaker 3: were captive to a particular company, but then you were

1014
00:56:24,719 --> 00:56:28,040
Speaker 3: beholden to work just at that company forever. But there

1015
00:56:28,080 --> 00:56:30,359
Speaker 3: wasn't anything that was diverse right where someone could get

1016
00:56:30,360 --> 00:56:33,319
Speaker 3: real exposure across the industry. And so that's what we

1017
00:56:33,360 --> 00:56:38,920
Speaker 3: started with with Aplos Fellows, where we give kids who

1018
00:56:39,000 --> 00:56:42,640
Speaker 3: were super bright driven merit based scholarships.

1019
00:56:42,719 --> 00:56:42,839
Speaker 2: Right.

1020
00:56:42,880 --> 00:56:46,200
Speaker 3: So these are the top students in the class, a

1021
00:56:46,200 --> 00:56:49,920
Speaker 3: lot of times from diverse backgrounds, from with no connections

1022
00:56:49,960 --> 00:56:52,920
Speaker 3: to finance, right, and they get scholarships of up to

1023
00:56:52,920 --> 00:56:55,800
Speaker 3: twenty grand a year for four years. And in addition

1024
00:56:55,800 --> 00:56:58,960
Speaker 3: to that, they get fully paid internships at finance firms

1025
00:56:59,320 --> 00:57:00,160
Speaker 3: for all four years.

1026
00:57:00,320 --> 00:57:03,080
Speaker 2: Not your sure firm, but exactly bad variety exactly.

1027
00:57:03,120 --> 00:57:05,799
Speaker 3: So we take them their first internship when they're coming

1028
00:57:05,800 --> 00:57:08,960
Speaker 3: out of high school, and that one is typically done

1029
00:57:08,960 --> 00:57:11,840
Speaker 3: at BAM, and they work either on investing teams, our

1030
00:57:11,920 --> 00:57:14,799
Speaker 3: data teams, our tech teams, our business teams. And then

1031
00:57:14,880 --> 00:57:16,680
Speaker 3: the next year they go to work at a bank,

1032
00:57:16,760 --> 00:57:18,120
Speaker 3: or they go to work at another hedge fund, or

1033
00:57:18,160 --> 00:57:19,480
Speaker 3: they go to work at a PROP firm or a

1034
00:57:19,560 --> 00:57:23,400
Speaker 3: VC firm, and every year they rotate. And we just

1035
00:57:23,440 --> 00:57:26,240
Speaker 3: had the first cohort graduate last year. They all got

1036
00:57:26,280 --> 00:57:29,479
Speaker 3: jobs in finance, some in Chicago, some of New York,

1037
00:57:30,960 --> 00:57:33,800
Speaker 3: and employers are really competing over the kids. Like they're

1038
00:57:33,840 --> 00:57:37,000
Speaker 3: super smart, driven, passionate kids, and now they've had four

1039
00:57:37,080 --> 00:57:41,040
Speaker 3: years of finance internships at top firms. So I think

1040
00:57:41,040 --> 00:57:44,080
Speaker 3: it's working really well and we're working to scale it up.

1041
00:57:44,360 --> 00:57:46,200
Speaker 2: They become a hot commodity.

1042
00:57:46,320 --> 00:57:48,160
Speaker 3: Yeah, exactly, And just like the fun like, now we

1043
00:57:48,200 --> 00:57:50,080
Speaker 3: got one hundred kids in the program and we're trying

1044
00:57:50,080 --> 00:57:51,320
Speaker 3: to really scale it up to hundreds.

1045
00:57:51,560 --> 00:57:54,320
Speaker 2: Wow, that's great. All right, So let's jump to our

1046
00:57:54,480 --> 00:57:57,200
Speaker 2: favorite questions that we ask all of our guests. Starting

1047
00:57:57,240 --> 00:58:01,520
Speaker 2: with we talked about mentorship at a Let's talk about

1048
00:58:01,760 --> 00:58:05,480
Speaker 2: who were your mentors who shaped your career. You mentioned

1049
00:58:05,560 --> 00:58:08,800
Speaker 2: Steve Schoenfeld, he had to be significant. Tell us about

1050
00:58:08,840 --> 00:58:11,040
Speaker 2: him and anybody else that made a difference.

1051
00:58:11,080 --> 00:58:11,280
Speaker 1: Yeah.

1052
00:58:11,400 --> 00:58:13,800
Speaker 3: I think what Steven did really well at the time

1053
00:58:13,800 --> 00:58:17,000
Speaker 3: of the firm was it was a super entrepreneurial type

1054
00:58:17,040 --> 00:58:20,720
Speaker 3: of environment. Everyone was kind of in business, running your

1055
00:58:20,760 --> 00:58:25,680
Speaker 3: own little business, right, and most folks kind of stayed

1056
00:58:25,720 --> 00:58:31,760
Speaker 3: as one man shops, right, as a one man trading unit, right.

1057
00:58:33,080 --> 00:58:37,080
Speaker 3: But I had the opportunity to kind of build that

1058
00:58:37,280 --> 00:58:40,120
Speaker 3: into a unit of you know, five and then ten

1059
00:58:40,200 --> 00:58:42,120
Speaker 3: and then twenty and then thirty and then you know,

1060
00:58:42,160 --> 00:58:46,160
Speaker 3: then we spun off. So just the freedom and support

1061
00:58:46,280 --> 00:58:50,920
Speaker 3: you know to do that was really helpful, right. And

1062
00:58:50,960 --> 00:58:54,000
Speaker 3: then a lot of business learnings from you know, seeing

1063
00:58:54,000 --> 00:58:56,320
Speaker 3: how he allocated to different people, seeing how they managed

1064
00:58:56,400 --> 00:58:58,960
Speaker 3: risk like that was very you know, very helpful. And

1065
00:58:59,000 --> 00:59:02,200
Speaker 3: then philosophically, I would say the biggest impact was reading

1066
00:59:02,560 --> 00:59:05,600
Speaker 3: Apples Shrugged in college, which I read in an English

1067
00:59:05,600 --> 00:59:11,680
Speaker 3: class in college, and that really kind of articulated a moral,

1068
00:59:11,800 --> 00:59:17,720
Speaker 3: you know, philosophical uh framework around which I think, uh,

1069
00:59:17,880 --> 00:59:21,080
Speaker 3: it makes it much easier to build a successful.

1070
00:59:20,640 --> 00:59:22,800
Speaker 2: Business, right, Hence the name Atlas.

1071
00:59:23,080 --> 00:59:25,000
Speaker 3: Yeah, exactly the name of our fund and the name

1072
00:59:25,040 --> 00:59:29,280
Speaker 3: of uh, you know, our our scholarship program. I think

1073
00:59:29,320 --> 00:59:31,240
Speaker 3: a lot of times people have all sorts of conflicts

1074
00:59:31,280 --> 00:59:35,080
Speaker 3: with you know, being successful, uh and at the same time,

1075
00:59:35,520 --> 00:59:38,280
Speaker 3: you know, being a good person and helping the world.

1076
00:59:38,600 --> 00:59:41,480
Speaker 3: And I don't actually think there's any conflicts. And that

1077
00:59:43,000 --> 00:59:45,840
Speaker 3: objective is philosophy, and her work like really does a

1078
00:59:45,840 --> 00:59:51,200
Speaker 3: good job of laying that scaffolding for people, uh, And

1079
00:59:51,320 --> 00:59:54,120
Speaker 3: I think it makes it, you know, much more fulfilling

1080
00:59:54,280 --> 00:59:57,800
Speaker 3: and less conflicted to also be uh, be successful in

1081
00:59:57,880 --> 00:59:58,560
Speaker 3: all realms.

1082
00:59:59,200 --> 01:00:03,640
Speaker 2: So, since you mentioned Atlas Shrug, let's talk about books.

1083
01:00:03,640 --> 01:00:05,240
Speaker 2: What are some of your favorites? What are you reading

1084
01:00:05,320 --> 01:00:05,760
Speaker 2: right now?

1085
01:00:05,840 --> 01:00:09,240
Speaker 3: Yeah, that's definitely the number one. Uh. The current one

1086
01:00:09,240 --> 01:00:13,040
Speaker 3: that's on my bookshelf is a fun one. It's from

1087
01:00:13,040 --> 01:00:16,520
Speaker 3: this explorer. I didn't know there were explorers anymore, but

1088
01:00:16,560 --> 01:00:19,160
Speaker 3: there are apparently. And we had this guy, Mike Horn

1089
01:00:19,680 --> 01:00:22,040
Speaker 3: at our VC conference we do like a public private

1090
01:00:22,120 --> 01:00:25,520
Speaker 3: VC conference every year called Elevate, and we had him

1091
01:00:25,520 --> 01:00:28,480
Speaker 3: as a guest speaker, and we had two guest speakers

1092
01:00:28,480 --> 01:00:30,480
Speaker 3: this year. We had Steve Kerr, the coach of the Warriors,

1093
01:00:30,520 --> 01:00:33,160
Speaker 3: and we had Mike Horn Steve went first, and he

1094
01:00:33,280 --> 01:00:35,800
Speaker 3: was amazing and a great you know stories on teamwork

1095
01:00:35,880 --> 01:00:40,080
Speaker 3: and and uh collaboration and work ethic and Michael Jordan's

1096
01:00:40,080 --> 01:00:42,320
Speaker 3: stories and stuff, Curry story, so it's great. And then

1097
01:00:42,360 --> 01:00:43,840
Speaker 3: Mike had to follow him, and I was like, oh

1098
01:00:43,840 --> 01:00:47,640
Speaker 3: my god, how is this guy gonna follow us? And uh,

1099
01:00:47,680 --> 01:00:51,040
Speaker 3: my partner, Scott brought him, brought him on. And Scott's

1100
01:00:51,080 --> 01:00:54,400
Speaker 3: great at finding like talent that's you know, other folks

1101
01:00:54,800 --> 01:00:58,800
Speaker 3: haven't discovered yet. And this guy, uh, you know, has

1102
01:00:58,840 --> 01:01:02,800
Speaker 3: circumvented the equator, so several times around the world, you know,

1103
01:01:02,880 --> 01:01:06,360
Speaker 3: self powered walking, et cetera. He's gone to North Pole,

1104
01:01:06,440 --> 01:01:09,080
Speaker 3: South Pole, swam the Amazon, like all these you know,

1105
01:01:09,240 --> 01:01:14,680
Speaker 3: insane stories, one after another. And he's he's got a

1106
01:01:14,720 --> 01:01:17,160
Speaker 3: book called I think it's called Nothing Is Impossible or

1107
01:01:17,160 --> 01:01:20,320
Speaker 3: something along those lines. And you started, like, you shake

1108
01:01:20,360 --> 01:01:22,200
Speaker 3: hands with this guy and he's not like a particularly

1109
01:01:22,200 --> 01:01:25,720
Speaker 3: big guy, but you like crushed my hand. I go, Mike,

1110
01:01:26,160 --> 01:01:27,600
Speaker 3: how do you get any sixty years old the way?

1111
01:01:27,600 --> 01:01:30,040
Speaker 3: How do you get this handshake? And he's like, well, I,

1112
01:01:30,240 --> 01:01:33,160
Speaker 3: you know, kite surfed across the Antarctica and that involves

1113
01:01:33,960 --> 01:01:38,400
Speaker 3: you know, holding a kite across you know, frozen Antarctica

1114
01:01:38,480 --> 01:01:40,880
Speaker 3: for fourteen hours a day. Is this huge wind is

1115
01:01:40,880 --> 01:01:43,520
Speaker 3: pulling you along, and it's like, okay, that's that's how

1116
01:01:43,560 --> 01:01:46,960
Speaker 3: you get that's how you get some grip string. But

1117
01:01:47,000 --> 01:01:50,280
Speaker 3: he had like these amazing survival stories and just mental

1118
01:01:50,400 --> 01:01:55,280
Speaker 3: fortitude stories that I think really relate to trading and investing.

1119
01:01:56,000 --> 01:01:57,600
Speaker 3: So he was an awesome speaker, and so I just

1120
01:01:57,600 --> 01:01:58,160
Speaker 3: got his book.

1121
01:01:59,040 --> 01:02:01,600
Speaker 2: Have you ever read Endurance the Shackleton?

1122
01:02:01,720 --> 01:02:03,840
Speaker 3: Yes, yes, I read it, watched the movie. That one

1123
01:02:03,920 --> 01:02:04,800
Speaker 3: was hard to sit through.

1124
01:02:05,320 --> 01:02:08,720
Speaker 2: The book is just like it couldn't be fiction because

1125
01:02:08,840 --> 01:02:11,880
Speaker 2: nothing is believed. It's so amazing it how to be real.

1126
01:02:12,000 --> 01:02:14,360
Speaker 3: Yeah, this is along those lines, but less abusive and

1127
01:02:14,680 --> 01:02:15,080
Speaker 3: more fun.

1128
01:02:16,680 --> 01:02:19,800
Speaker 2: Let's talk about streaming anything interesting that you're watching or

1129
01:02:19,840 --> 01:02:21,040
Speaker 2: listening to these days.

1130
01:02:22,080 --> 01:02:24,919
Speaker 3: I mean shows I like, I really enjoyed The Three

1131
01:02:24,920 --> 01:02:26,880
Speaker 3: Body Problem those on Netflix. That was a fun one

1132
01:02:26,920 --> 01:02:27,120
Speaker 3: of them.

1133
01:02:27,120 --> 01:02:28,480
Speaker 2: The book slog.

1134
01:02:28,720 --> 01:02:31,040
Speaker 3: I read the book actually afterwards, so.

1135
01:02:31,040 --> 01:02:35,360
Speaker 2: It's a little challenging. It's originally Chinese and transit, but

1136
01:02:35,560 --> 01:02:37,000
Speaker 2: the show is it was really good.

1137
01:02:37,080 --> 01:02:39,520
Speaker 3: And in the books, the books like the Creativity and

1138
01:02:39,560 --> 01:02:42,320
Speaker 3: the books are really fun, so that was a good one,

1139
01:02:42,400 --> 01:02:47,000
Speaker 3: you know, Yellowstone. It's great usual ones there I'm listening to.

1140
01:02:47,080 --> 01:02:50,480
Speaker 3: I think podcasts are like the greatest invention in the

1141
01:02:50,600 --> 01:02:54,040
Speaker 3: last you know, five ten years of of not that

1142
01:02:54,080 --> 01:02:56,880
Speaker 3: they weren't around before, but like popularized in terms of

1143
01:02:56,920 --> 01:02:59,400
Speaker 3: being able to just expand your your knowledge set in

1144
01:02:59,400 --> 01:03:01,760
Speaker 3: a very efficient way. So I try to listen to

1145
01:03:01,800 --> 01:03:04,000
Speaker 3: as many as I can. I listened to, you know,

1146
01:03:04,080 --> 01:03:06,200
Speaker 3: a lot of yours. I listened to a lot of

1147
01:03:06,200 --> 01:03:08,880
Speaker 3: Tim Ferriss's. He's got all sorts of super interesting people

1148
01:03:08,880 --> 01:03:11,840
Speaker 3: on there that invest like the best ones. There's a

1149
01:03:11,880 --> 01:03:14,439
Speaker 3: ton on there. So there's a lot of finance ones.

1150
01:03:14,480 --> 01:03:16,840
Speaker 3: There's a lot of VC ones I enjoy. I was

1151
01:03:16,880 --> 01:03:19,520
Speaker 3: just listening to one they had vinode Cosla and then

1152
01:03:19,560 --> 01:03:22,040
Speaker 3: another one with Mark and Dreesen. They're just like super

1153
01:03:22,080 --> 01:03:25,520
Speaker 3: thought provoking. And so I encourage like all our young

1154
01:03:25,560 --> 01:03:28,040
Speaker 3: people coming up that ask just you know, you have

1155
01:03:28,080 --> 01:03:30,640
Speaker 3: this like amazing resource you could tap you know, Spotify

1156
01:03:30,760 --> 01:03:33,840
Speaker 3: and and you got, you know, a thousand different podcasts

1157
01:03:33,840 --> 01:03:35,960
Speaker 3: from world's best people in every field that you can

1158
01:03:36,000 --> 01:03:37,240
Speaker 3: listen to sharing their insights.

1159
01:03:37,280 --> 01:03:39,360
Speaker 2: Well, there's no excuse to be bored these days.

1160
01:03:39,440 --> 01:03:41,000
Speaker 3: No it's amazing. I remember when I was coming up

1161
01:03:41,040 --> 01:03:42,680
Speaker 3: and I wanted to hear like how do hedge funds

1162
01:03:42,720 --> 01:03:45,360
Speaker 3: make money? Right? Like you couldn't figure that out? Like

1163
01:03:45,400 --> 01:03:47,920
Speaker 3: if you had no connectivity to edge fund Like, how

1164
01:03:47,920 --> 01:03:49,200
Speaker 3: are you going to figure that out? You read Market

1165
01:03:49,240 --> 01:03:54,960
Speaker 3: Wizards and Malway, right, But besides besides that, reading all

1166
01:03:55,000 --> 01:03:58,160
Speaker 3: the books they're available now, like the podcast, like amazing resource.

1167
01:03:58,480 --> 01:04:02,520
Speaker 2: Absolutely Our final two questions, what sort of advice would

1168
01:04:02,520 --> 01:04:05,080
Speaker 2: you give to a recent college grad interest in the

1169
01:04:05,160 --> 01:04:09,400
Speaker 2: career and either trading, investing multi strat hedge funds.

1170
01:04:09,800 --> 01:04:13,400
Speaker 3: I mean one is just follow your curiosity, which hopefully

1171
01:04:13,520 --> 01:04:16,320
Speaker 3: leads to a passion of something that you want to

1172
01:04:16,320 --> 01:04:21,760
Speaker 3: really do. Right, don't go into finance, hedge funds, whatever

1173
01:04:21,800 --> 01:04:23,880
Speaker 3: it is, because your your friend is making a lot

1174
01:04:23,880 --> 01:04:27,360
Speaker 3: of money, right, Like, you got to be interested in

1175
01:04:27,400 --> 01:04:31,400
Speaker 3: the work, Like you got to be driven and curious

1176
01:04:31,560 --> 01:04:34,479
Speaker 3: and hopefully passionate about what it is that you're doing,

1177
01:04:34,560 --> 01:04:39,920
Speaker 3: because you know it's like pro sports or anything else. Like,

1178
01:04:40,080 --> 01:04:42,080
Speaker 3: just because you know Lebron makes a lot of money,

1179
01:04:42,120 --> 01:04:43,280
Speaker 3: doesn't mean you're going to go make a lot of

1180
01:04:43,280 --> 01:04:47,040
Speaker 3: money play basketball, right, you know one, you know he's

1181
01:04:47,040 --> 01:04:49,400
Speaker 3: six eleven. But besides that, like he's put in a

1182
01:04:49,400 --> 01:04:52,320
Speaker 3: lot of work over the years, right, and it's because

1183
01:04:52,400 --> 01:04:53,960
Speaker 3: he loves the game of basketball.

1184
01:04:54,080 --> 01:04:54,200
Speaker 2: Right.

1185
01:04:54,200 --> 01:04:55,440
Speaker 3: If you don't love it, you're not going to put

1186
01:04:55,440 --> 01:04:58,280
Speaker 3: in the work and and trading for sure, if you're

1187
01:04:58,320 --> 01:05:01,080
Speaker 3: if you don't love the process, and you don't love

1188
01:05:01,120 --> 01:05:03,120
Speaker 3: sitting there looking at the screen and trying to figure

1189
01:05:03,160 --> 01:05:06,440
Speaker 3: things out, you're not going to survive the emotional ups

1190
01:05:06,480 --> 01:05:08,920
Speaker 3: and downs, because there's lots of downs in addition to

1191
01:05:08,920 --> 01:05:12,400
Speaker 3: the ups when things work out. So that's the first thing.

1192
01:05:12,440 --> 01:05:14,160
Speaker 3: The second thing I would say is go to a

1193
01:05:14,240 --> 01:05:19,880
Speaker 3: firm that's growing right, and where there's a culture where

1194
01:05:19,920 --> 01:05:22,760
Speaker 3: you can learn from others, right, where you can get

1195
01:05:22,800 --> 01:05:26,760
Speaker 3: good mentorship. There's top people you can learn from, and

1196
01:05:26,800 --> 01:05:30,000
Speaker 3: you'll have some amount of access to be able to

1197
01:05:30,720 --> 01:05:33,880
Speaker 3: do that. The particular thing that they're trading or investing

1198
01:05:33,960 --> 01:05:36,560
Speaker 3: or how they're doing it, like that's a lot less

1199
01:05:36,680 --> 01:05:39,800
Speaker 3: important because you might change, the company might change. And

1200
01:05:39,800 --> 01:05:41,280
Speaker 3: then the third thing is like, once you're in a

1201
01:05:41,320 --> 01:05:44,800
Speaker 3: seat that's a decent seat, you know, ask for feedback,

1202
01:05:45,240 --> 01:05:48,080
Speaker 3: like here's what I did, Here's what I think I

1203
01:05:48,080 --> 01:05:51,040
Speaker 3: could have done. You know, what do you think right,

1204
01:05:51,040 --> 01:05:53,120
Speaker 3: don't ask for feedback when the market opens or the

1205
01:05:53,160 --> 01:05:56,080
Speaker 3: person's like in the middle of a you know, disaster's day.

1206
01:05:56,840 --> 01:06:00,640
Speaker 3: But when things are quiet right early, late, right lunch hour,

1207
01:06:01,360 --> 01:06:05,120
Speaker 3: like you know, get get feedback proactively, right, don't sit

1208
01:06:05,160 --> 01:06:08,200
Speaker 3: around waiting for your year end review to see how

1209
01:06:08,240 --> 01:06:11,600
Speaker 3: things are going. And you know, iterated together with you

1210
01:06:11,640 --> 01:06:13,000
Speaker 3: know the people that you're working with.

1211
01:06:13,240 --> 01:06:15,760
Speaker 2: And our final question, what do you know about the

1212
01:06:15,760 --> 01:06:19,640
Speaker 2: world of capital markets? Training investing today would have been

1213
01:06:19,720 --> 01:06:22,720
Speaker 2: useful in nineteen ninety four when you were first starting out.

1214
01:06:23,640 --> 01:06:26,120
Speaker 3: I think the things that we've been doing the last

1215
01:06:26,360 --> 01:06:30,480
Speaker 3: you know, five years, I wish I had figured those

1216
01:06:30,520 --> 01:06:39,320
Speaker 3: out earlier. So investing more aggressively across strategies, right, I

1217
01:06:39,320 --> 01:06:43,160
Speaker 3: think we were too equity heavy for too long. We

1218
01:06:43,160 --> 01:06:47,480
Speaker 3: weren't serious enough about how do you build those strategies

1219
01:06:47,880 --> 01:06:52,240
Speaker 3: outside of equities, and not serious enough about hiring top

1220
01:06:52,320 --> 01:06:57,440
Speaker 3: people to manage those areas and then building like all

1221
01:06:57,480 --> 01:06:59,880
Speaker 3: the tech and the infrastructure that you needed to really

1222
01:07:00,120 --> 01:07:04,040
Speaker 3: be competitive and leading in those areas. So I wish

1223
01:07:04,080 --> 01:07:05,680
Speaker 3: I would have figured that out a little bit a

1224
01:07:05,680 --> 01:07:10,400
Speaker 3: little bit earlier and pushed at it harder. But I

1225
01:07:10,440 --> 01:07:13,120
Speaker 3: think it's on the right trajectory.

1226
01:07:12,560 --> 01:07:15,600
Speaker 2: Now, Dimitri, thank you for being so generous with your time.

1227
01:07:15,840 --> 01:07:20,040
Speaker 2: This has been absolutely fascinating. We have been speaking with

1228
01:07:20,120 --> 01:07:25,200
Speaker 2: Dimitri Ballyasny, co founder of bally Asney Asset Management. If

1229
01:07:25,240 --> 01:07:28,440
Speaker 2: you enjoy this conversation, well check out any of the

1230
01:07:28,440 --> 01:07:32,400
Speaker 2: five hundred and fifty we've done over the past eleven years.

1231
01:07:32,800 --> 01:07:38,240
Speaker 2: You can find those at iTunes, Spotify, Bloomberg here on

1232
01:07:38,280 --> 01:07:42,040
Speaker 2: YouTube as well. Check them out. They're really a great

1233
01:07:42,040 --> 01:07:45,200
Speaker 2: collection of resources. And be sure to check out my

1234
01:07:45,280 --> 01:07:48,880
Speaker 2: new book How Not to Invest The ideas, numbers and

1235
01:07:48,960 --> 01:07:52,720
Speaker 2: behavior that destroy Wealth and How to Avoid Them at

1236
01:07:52,760 --> 01:07:56,000
Speaker 2: your favorite bookstore. I would be remiss if I know.

1237
01:07:56,080 --> 01:07:58,400
Speaker 2: I think the crack team that helps us put these

1238
01:07:59,040 --> 01:08:03,840
Speaker 2: conversations together each week. Alexis Noriega and Anna Luke are

1239
01:08:03,880 --> 01:08:07,440
Speaker 2: my producers. Sage Bauman is the head of podcasts here

1240
01:08:07,440 --> 01:08:13,320
Speaker 2: at Bloomberg. Sean Russo is my researcher. I'm Barry Ritolts.

1241
01:08:13,440 --> 01:08:22,160
Speaker 2: You've been listening to Masters in Business on Bloomberg Radio.