Comments
Transcript
-
LRended up being very dull. Dmitry evaded the answers or just answered with big picture marketing soundbites. RP kept trying and [his views were more interesting] but DB just refused to give any details
-
KHWhy trade at longer timeframes? 1. We can improve odds by adding more thinking before a position 2. The cost of trading becomes less and less with longer timeframes With long timeframe we only have to be right 52-60% of the time With daytrading we have to be right 66% of the time to manage break even. 66% is for masters.
-
DSThis is a masterclass of who is trading the market with us. The professional competition is really smart, really well funded and really well experienced. Mr. Balyasny is essentially Nadal at the French. It is a pleasure to keep coming back to different parts of the interview. DLS
-
JCToo weedy in hedge fund minutia for me... and guest was very tight lipped on how he thinks market is going to behave going forward...
-
VSA masterclass in revealing enough but not too much. I felt Raoul didn't press him too much, perhaps that was part of the agreement in coming on, but a thoroughly enjoyable discussion nevertheless. Key takeaways; like in any industry, you always have to reign in your type A personalities, tough to find those who can operate at a granular AND big picture level and even tougher to find people who can do all of the above AND lead. Surprised by the 26% down votes, though that speaks more to the current RV audience than to the quality of the discussion.
-
KSThis is an important discussion for non-investment professionals to hear; because, this is how active management works these days. Baly is one of a handful of shops that employ most of the experienced, educated, market participants on wall street. Risk limits are tight and ideas are harvested quickly. And most importantly the guiding factors are not always fundamentals in the traditional sense, instead vol, crowding, sentiment, etc drive process. Reading Buffett is important for your personal wealth but it isn't what 90% of trained professionals use to guide their allocation of capital. This drives markets.
-
RXPay attention kids - this is how the real bastion of active money in the equities market is run.
-
KSExcellent interview. One that I will be revisiting
-
BBGreat interview! I thought his points about focusing on timing and trade size, and also his thoughts on running .2-.3 correlations between strategies were my biggest takeaways
-
JBDmitry has a sharp mind and high integrity. Great interview!
-
SHWhy you didn't ask him about the debt that is growing exponential at all levels , MMT and fiscal avalanche what will come regardless who is coming in power ? This is the main fuel that is driving the SP 500 , commodities and precious metals to moon? What about devaluation of the US dollars , when will go 50 % down, again ?
-
KOQuestion connected to chapter looking forward: What about the bio-tech companies? I missed some comments on these companies that are on the path to developing treatments. Example Prevail Therapeutics that received a rare "fast-track" from FDA. Are they going to melt-up and crushing? What are your thoughts?
-
EGThis interview sits now at the top together with Stan Druckenmiller's. THANK YOU
-
NSSTFU you’re scaring Raoul Pal!!
-
MDThanks Raoul and Dmitry. Great interview. The most important thing for a successful trading - psychology. Funny, the greats all say that!
-
JAAn instant classic. Needs to go right at the top of the portfolio management and construction videos on RV. Watching this I’m also giving myself a quiet pat on the back. About 6 months ago after all I have learned about trading over the years (even before joining RV), fundamental and technical, top down / bottom up, long / short equity and macro, medium term and long term time horizons as a preference with the occasional short term if volatility warrants it, trying to identify overly correlated trades, risk management discipline being essential both offensively and defensively speaking, I came to the exact same conclusion as Dmitry intuitively myself for portfolio construction at least. That a long short equity portfolio plus a macro layer was a good way to think about creating a balanced and manageable portfolio as a retail investor but I was also left with the volatility conundrum and then thanks to Real Vision I got more focused on long vol especially in relation to a long term wealth accumulation and protection strategy when I saw Christopher Cole of Artemis Capital talk about his balanced dragon portfolio and the 21% allocation to a long vol strategy. There remains a couple of questions in my head and Raoul I hope you can help guide me and others / think it forward on this after what you also picked up yourself from this interview. Firstly, (and I asked this before and wanted to ask it in your last AMA) now that it’s clear to many that a 60/40 portfolio is dead and given that I am most definitely moving towards something akin to Chris Cole’s allocation especially the long vol aspect and Dmitry’s strategy of long short combined with macro, can you propose some ideas and suggestions for how a retail trader should structure long vol into their portfolio long term in a way that the cost of that insurance premium doesn’t hurt the P&L too much and also can you encourage the RV membership in a future AMA perhaps that it is possible to construct a portfolio that mimick these ideas, still produces some alpha without needing a team of traders to make it work and that could be run by an individual or family? At the end of the day that’s what the average retail trader needs to empower their financial independence. I don’t think they need to be so sophisticated in operation such as what Dmitry describes but I do think there is a way for retail traders to get returns with a watered down version of what I describe above and what Dmitry does. Once again it does seem that longer term time horizons win the day and the one edge retail investors have over institutions like Dmitry’s is we don’t need to trade all the time unlike his operation where his clients need to see a monthly P&L which forces him to construct a higher frequency side to his trading operation which although it has high sharpe ratio it’s also short vol by design so then he uses macro and other strategies to help improve returns long term and reduce P&L volatility by introducing a long vol aspect (to compensate for the short vol but high sharpe ratio higher frequency long short equity trading part of his business). The more RV presents these kinds of videos the higher my conviction that this kind of portfolio construction is the optimal for retail traders to explore constructing just on a smaller, less ambitious scale and while they should not expect the same kind of alpha I think they should take some confidence from this that it is possible to make respectably consistent returns over time.
-
NAA guest and interview of the highest caliber, many thanks and well done.
-
ASPlease guys, bring back the quality you used to provide. Stop expanding too fast at the cost of quality.
-
DFI love RV and will probably continue to subscribe for years to come. The beauty is that in each and every interview you can take something if not more than a few things with you to enhance your perspective and approach to the markets. However with this interview I just didn’t receive any value. It is interesting how he got started and reminds me of the many Craigslist ads where they pitch learning to trade and using the “Firms” money but all other perspectives that were shared could be commonly seen on “The Cartoon Network” as the brilliant Marc Cahodes coins the channel. I left this interview totally unconvinced that Dimitry trades anymore. I also found it a bit odd that they have thousands of micro trades but yet spend enormous time on themes and portfolio construction.. I believe they must have specialists in certain areas but I bet it’s less in terms of analysis and more just about trading specific stocks.. I don’t know.. I’m just unconvinced with this firm.. but maybe that was deliberate! Thank you nonetheless!
-
IJthat was low key awesome
-
IJthat was low key awesome
-
DSGreat conversation. One of the calmest hedge fund managers we have seen. There is a third leg to the COVID stool. Therapeutics and vaccines were rightly mentioned here as two legs of the stool. The third leg is rapid testing. I am much more likely to get on a plane if everyone has had a COVID test shortly before takeoff. It greatly reduces the risk. I am also much more likely to accept travelers from some other place onto my island if they were tested before getting on the plane. A stool with three legs is stable as three points define a plane. DLS
-
RPGetting Dmitry was a very big deal indeed... so much to learn from his journey, how things are changing and the odds are stacked against many, how to think about constructing portfolios, layering on trading strategies, etc
-
SSCan someone explain why relative value strategies are inherently short vol? Not sure why that would have to be the case...
-
LBbuild a stream of consisten P&L by managing a market-making-like trading activity (not in the sense that you've got a mandate to provide any liquidity, but rather in the style of performing trades, holding positions, managing risks, dealing with time horizons and so on) in order to allocate a part of it to few potential yield-amplifying bets (convexity-like tickets for istance) and that is basically all uncorrelated to market trends. I love it. I wanna buy in!
-
MMRoaul - "your story's starts as an inspiration for a trader but end up crushing their dreams because the industry is so sophisticated now" so spot on!!! hahaha
-
CSWhat is the name of the investor/trader mentioned by Raoul at 43:30 who has "astonishing volatility and astonishing returns"? Nick _____? Would like to look that guy up.
-
JPI wish to be respectful here, but I have a problem with how he constantly refers to sharpe ratio and how they manage the portfolios to Sharpe. I think the sharpe ratio is a very flawed metric because of the fact that it equates risk to volatility, which are are in no way the same thing. There are many investments that have fundamentally lower risk and higher volatility and other that have higher risk and lower volatility (for a time anyways). Hedge Fund managers managing for high sharpe ratio or smooth returns is a portion of what led us to 'Volmageddon' as they became attracted to strategies that smooth their returns, but are implicitly short vol. For example, I have seen funds that run risk arb portfolios with short equity or index volatility layered on top. This search for sharpe has arguably led to a major mis-allocation of capital in the space, and actually ironically added risk to a lot of portfolios and assets of those who thought they were seeking lower risk returns. He says the right things here about being long vol, but it is not wholly consistent with the other comments.
-
CGI put this at 1.25 speed and as a Bostonian it sounds completely normal.
-
MSBrilliant interview.
-
TSNice man. Humility is a virtue. Now in terms of returns I really can not believe how hedging and constant position taking (trading) produces good results. Maybe it is because we the retail investors we have only one path to follow that of the Value investor and not the one hedge funds use.
-
JLGreat insight! Thank you RV for such a worthwhile interview. We have come to expect nothing less. Keep up the great content!
-
SPAmazing!
-
SKOverall a very good interview. Thank you Raol and Dmitry. I am in the investment business and found it interesting and admirable how he built such a successful enterprise. That said, I was most interested in hearing his current market views and positioning which he touched on with about 10 minutes left. So, overall pleased with a touch of disappointment!!
-
MWMaybe it would have made sense to publish this interview at the Pro tier? I'm never likely to need to know how to manage a hedge fund.
-
NRThis is a huge win for RV subscribers. Balyasny is a very solid shop and good operator. Kudos to all involved...and thanks.
-
NFNot sure young professionals will get much from this interview but if you run a fund or RIA it is solid gold. Humble, understated insight into one if the true grown up institutional multi-strat managers in the world. Loved the interview.
-
TJFascinating insight into the hedge fund world and how it's changed in the last decade or so. Giving RV members the opportunity to sit in and watch and listen (and learn) to more than an hour of discourse between successful investors and traders like Raoul and Dmitry has from outset defined the unique appeal of Real Vision for me. Long may it continue.
-
NvI doubt the markets have dealt with this type of election before Greatest division (Pew) + psychopath-in-chief + mail-in ballots + voting fraud, expectations prepping = not the same
Chapters
-
Overview of Balyasny Asset Management
-
A Look Inside the Hedge Fund Industry
-
Passive Indexation and Generalist Participation
-
Investment Philosophy and Trading Styles
-
Position Sizing and Risk Management
-
Volatility, Black Swans, and Stress Testing
-
Hallmarks of a Great Trader
-
Looking forward: COVID Treatments, Tech Valuations, Politics, and the Federal Reserve