Joe.... Paragraphs make a lot of sense when you want someone to read your comments... A paragraph is a series of sentences that are organized and coherent, and are all related to a single topic. Almost every piece of writing you do that is longer than a few sentences should be organized into paragraphs. ... Paragraphs can contain many different kinds of information.

@Joseph A. Agreed to a certain extent. Would be interesting how this could be structured for a retail trader (Dragon Portfolio or similar). However I am not sold on this being needed. I do believe that many funds are releasing overly complex strategies so that they maintain relevance against the ever popular index fund.

I joined the pro level thinking there would be more “direction and guidance” regarding the areas you bring up. I have raised this and I hope to see more of this on the program. I love all the information but hope to have Raoul share more from his experience how to construct portfolios for us retailers. At the moment he has shared a portfolio of 20% gold, 20 % crypto and remaining in gold miners equities and now recently short highly leveraged US zombie corporations.

Hi Clifford, It’s the principles and insights they give that I am sold on not necessarily the exact construct however I think the holy grail portfolio for a retail trader might lie somewhere along the lines of or a combination of long short plus macro and Dragon style portfolio for an active trader with a passive income stream so they trade for absolute returns not for income.

Patrick I know what a paragraph is. Sorry that it bothers you so much that I haven’t laid out my sentences to your satisfaction.

Hi Jan, I’m quite certain RV are careful not to propose anything that might constitute giving financial advice and seeing as financial advisors tend to look at client portfolios in terms of percentage slices of a pie, then maybe that’s why they have tended (at least to date) not to make anything more than an observation about different portfolio constructs to prompt subscribers into thinking about it without appearing to give direct advice. I think that this area of knowledge is something even Raoul and other experts grapple with themselves. Everyone is looking for an ideal and consistent way to trade, even the experts who have been doing it for many years. I agree though that it would be beneficial to all if RV talked about this more. We could argue until the cows come home about what’s the best way to trade and what’s the best portfolio construct but at the end of the day a lot has to do with your personality, trading style, trading time horizon, psychology, attitude to risk and whether you’re looking for income, absolute returns, growing and protecting generational wealth etc. Everyone’s different there is no one best way but when I put together titbits of info from different interviews combined with what I have learned about trading, the puzzle has become clearer to me over the years as per my comments. I remember watching Grant Williams’ interviews with Anthony Deden, an investor who stays away from trading the stock market and focuses on protecting long term wealth not by trading markets but by investing in long established well run private family businesses with a very long term investment horizon. There’s no reason why the average person on the street could not choose to invest like that and create their own portfolio of investment in businesses with the same framework if they were willing to do the work to investigate each company of interest in depth instead of trading the markets. Same goes for trading frameworks. I think there are several different ones that work for different time horizons and styles but I also think there are lessons to be learned and warnings that a lot of methodologies come and go. Some work for a while then no longer work. As markets evolve so must traders adapt or know when to stop trading (example Bob Treue) when market opportunities no longer exist to make their methodology viable. Bob for example made it clear that he only trades when he identifies there are opportunities that fit his framework. When they don’t he ceases operations and closes his fund. He doesn’t try to find a new methodology to keep himself in the markets at all times. He has a system and knows when it is likely to work and when it isn’t. He stays out when the trading environment is not optimal for him. This is one of several examples I’ve noted over the years that I think offer profound wisdom to retail traders. Hence my comment about retail traders having the advantage over institutional traders in that area. I think, as Raoul has also suggested, retail traders first need a passive income from some other source and then find a framework and time horizon that suits them and then trade aiming for absolute returns. Trading for income by its very nature hurts returns in the long run and psychologically probably also results in over trading and trying to meet monthly/quarterly/annual targets instead of trading more optimally when you should rather than because of a feeling that you need to or have to trade because the returns need to pay the bills.

Clifford, furthermore most funds are at the cutting edge of seeking consistent alpha to attract the most money to their system and they do so using vast resources inaccessible to retail traders, so I don't blame them. The quest for the best alpha in the business fuels this drives for seeking excellence in trading performance. I think it's commendable. They are simply trying to be the best at what they do. Question for retail traders is what can we learn from that and what are the warnings we need to be aware of? I am just saying that given retail traders clearly can't compete with those resources, they have to find an edge a different way. I think it is doable just have to have more modest expectations than trying to match the alpha of the best in the business and I think taking clues from all the things I have learned from RV and before RV, that a repeating pattern of what tends to work and what doesn't has emerged and that was where I was going with my original comment. The role of psychology cannot be over emphasised. Knowing when to pause and not overtrade is a classic stumbling block. Something you hear time and time again is it's hardest to stop trading right after you have locked in a run of good returns because the tendency is hubris takes over and you keep trading without taking a step back and thinking whether it is appropriate to keep trading.

I agree Joseph A. Would welcome an educational session to better understand example of long vol, short vol, commodity trend, etc.. Love the content overall, very educational and have recommended it highly.

To me this was a capital intro event, in which Balyasny pitched what he does, without sharing any interesting macro views. He gave nothing to the community. Of course I managed portfolios of hedge funds for a living, and herd hundreds of these pitches, and way better ones, so I appreciate that this may sound interesting to people that never had this kind of exposure. Hope that at least he paid to get the opportunity to pitch to our comunity.

Nice paragraphing sub Stefan.

What specifically did you not enjoy about this interview? It was essentially a Masterclass of old but interested to hear?

Couldn't agree more Raoul - it was an absolutely splendid interview! :)

Almost as low key as Raoul’s V neck shirt.

Yes. I have no intention of getting on an airplane until June 2021. And, this depends on the legs of the stool and other factors. Forget it in the meantime. I've been avoiding crowds. Really, only getting out to buy booze.

PHILLIP B. - I live mostly like you except for a little outdoor microbrew when we are not locked down. DLS

There is so much for us all to learn from this interview as there was from the Bob Treue one. I could sense even you were thinking hard about why Dmitry trades the way he does. None of us will know whether our strategies will work in the very long run (life term and generational) until we have lived out the long run. Protecting against that unknown is the main reason why defense and psychology are so important in trading. We all need TIME to stay in the game to find out and protecting capital is paramount to achieve that luxury of time while also letting things like compounding of returns work their magic.

Very much appreciated the video as a final year finance student. Great to see the greats sharing their stories and highlighting their journeys adds a bit more motivation to smash out the rest of the year! Thanks Raoul and Dimitry from Australia!

As I understand relative value strategies, say for example pairs trading , the whole idea is to make money agnostic of market direction, in order to do that, you take offsetting long and short positions and bet on spread reducing. In effect, you are short volatility. If instead of converging the pairs start to diverge aka become volatile, that’s bad for the strategy....

story*

Nicholas Roditi

Hi John, the way I understood Dimitry's thoughts on Sharpe I don't think were inconsistent because of what he said at the 57 minute point when talking about traders he has that might have a 7 Sharpe but don't make a lot of money partly because they don't take enough risk on position sizing vs the trader with more hubris and aggressive risk taking style, so what I think he's saying is just that he wanted that more defensive/less risk taking trader with a high Sharpe, to lower their Sharpe, make more dollars and deal with the psychological effect of increasing the volatility swings due to taking more risk.

Agreed. I dont like Sharpe but it seems the Dmitry also factors that in by insisting that the core overall portfolio didnt have short vol as its core structure overall, using macro overlay too. Im more concerned about the focus on lower vol returns because that is what the pension fund investor demand (they want bond vol with a Sharpe of 1.5). It forces anyone out of the industry who cant have massively diverse and sophisticated strategies like BAM, Millennium and Graham.

Raoul, agree on citique of sharpe in the industry overall. That was my broader point and how I believe it ironically leads to higher structural risk and a mis-allocation of capital.

The blame there lies with tithe pension funds. One of the key reasons I decided to leave the industry as have most of the greats like Louis, Alan H, Roditi, etc.

Raoul I think he also said that he had specific long vol as well. It was a bit of a passing comment but I think it was in there plus macro overlay. So yeah I think although he mentions Sharpe quite a lot it is clear to me he doesn't rely on it totally. It's just one of several metrics he's using to analyse performance. He uses the info from it when he needs it and when other metrics are more important to refine and guide improved P&L performance he knows when to ignore or place less emphasis on the Sharpe.

I respectfully disagree. Understanding what different frameworks are used in markets (from top hedge funds to retail traders) allows you to understand where you fit in and what your edge might be. Also gives you a perspective of how different participants think, which is useful. I also found this interview very insightful from a business management point of view and how to think about building a team and a business for the long term. Lots in there about psychology too. As well as the What (idea generation), When (timing) and How Much (sizing) and the intersection between them.