Masters in Business: “21st Century Investing Strategies From Dmitry Balyasny”

Host: Barry Ritholtz (Bloomberg)
Guest: Dmitry Balyasny, Founder and CIO of Balyasny Asset Management
Date: September 26, 2025

Episode Overview

In this episode, Barry Ritholtz sits down with Dmitry Balyasny, the founder and Chief Investment Officer of Balyasny Asset Management (BAM), a $28B multi-strategy hedge fund. The conversation explores Balyasny's immigrant experience, the founding and growth of BAM, the evolution of investing strategies, technology’s impact on finance, talent development, risk management, and the future implications of artificial intelligence. The episode offers a rare peek into the philosophy and operations behind one of the most successful and innovative hedge funds of the 21st century.

Key Discussion Points & Insights

Early Life, Immigrant Perspective, & Early Career

• Formative experiences from immigration:
  • Balyasny immigrated from Kiev (then Soviet Union) at age 7, an experience he credits with developing perseverance and thick skin, necessary for navigating both life and markets.

    "It builds character and builds perseverance and the thick skin to be able to deal with the difficulties and figure stuff out." (D. Balyasny, 03:18)

• Discovering a passion for trading:
  • Worked in sales and as a stockbroker during college—learned about commissions, but realized his real interest and future lay in trading and investing.
  • Landed trading job at Schoenfeld Securities by responding to a newspaper ad.

Schoenfeld Years & Transition to BAM

• Flat structure & gradual growth:
  • Schoenfeld had a flat organization; traders could build teams and divisions if successful.
  • Balyasny began hiring and developing talent early, still working with some of the original hires 25+ years later (07:01).
• Strategic divergence and entrepreneurship:
  • Transitioned to a more fundamental and longer-horizon strategy compared to the firm's quantitative focus, necessitating a separate structure.
  • Gradually evolved from internal team to division, then to an externally funded hedge fund (08:29).

Technology Evolution in Trading

• From carousels to AI:
  • Early days: “One monitor on a little carousel” and “printer readers” to announce trade fills (09:37).
  • Contrast with modern AI-and-data-driven models: "Today we have 500+ people in technology, another 100+ in data teams and AI teams..." (12:25)
• AI as a game-changer:
  • AI holds potential for greater impact on productivity and decision-making than previous tech waves (internet, mobile).

    “If you project it out...where these are going to be in 5, 10, 15 years, I think it'll be pretty transformative.” (D. Balyasny, 11:34)

Internal Technology Development

• Building proprietary tools:
  • Initial reliance on external tech gave way to massive investment in in-house platforms for trading, research, and risk.
  • New hires from competitors: "People are kind of blown away by some of the things that we've developed" (13:20).

Risk Management Philosophy

• “Slugging” vs. “Hit rate”:
  • BAM views its mandate as "slugging" (big wins, controlled losses) as opposed to high-frequency “hit rate.”
  • Key: Narrow, transparent risk "boxes" tailored to each investing team and iterated over time (14:03).

    “For every strategy, we'll have stops, volume limits, stress limits, liquidity limits…create this box that’s completely transparent...” (14:03)

• On loss control:
  • Success not in percent winners but in ratio/gains of wins to losses (16:13).

Firm Growth, Crisis Management, & Surprises

• Dot-com and 2008 crisis:
  • Dot-com collapse was an "excellent environment": less efficient markets, many opportunities (17:50).
  • “08 was surprising” despite modest profits, 50% investor redemptions—a test of firm resilience (18:21).

Culture, Performance, and Talent

• Meritocracy, partnership, and culture:
  • “It all starts with talent...how are you going to differentiate?” (23:36)
  • Key levers: collaboration, coaching, development, and real equity partnerships offered to high performers on both the investment and business sides (24:54, 36:02).
• Award-winning culture:
  • Recognized as a top place to work in money management multiple years (24:31).
• Internal promotion emphasis:
  • In the mature equities business, 25% of PMs now promoted internally; expected to rise to 50% as mentorship and structured growth paths proliferate (33:17).

Multi-Strategy Model

• Range of strategies:
  • Includes fundamental equity, macro, commodities, systematic quant, various arbitrage, and more, each with multiple subcomponents (26:12).
• Scalability & capacity management:
  • Continuously measures and paces growth in AUM based on bottom-up team-by-team capacity, averaging 20-25% growth per year (31:11).

Compensation & Scale

• Context for large pay packages:
  • Media often misrepresents large pay headlines; figures include team costs, guarantees, and are justified by massive capital allocations (27:34, 28:43).

    “If you're hiring a trader with a $50 million pay package...you're budgeting that person to generate P and L of $100 million plus a year." (28:43)

Trading vs. Investing Balance

• Avoiding overtrading:
  • Balyasny emphasizes the need to balance trading activity and longer-term investing, warning against too narrow a focus or excessive churning.

    “I noticed that folks were really trading a little bit too much...missing some of the bigger winners and creating a lot of...slippage costs.” (39:12)

• Adjusting to market environments:
  • Turnover and holding periods are adjusted to fit market volatility, but always maintain a mix of trade types and time horizons (43:44).

Firm-wide vs. Team-level Risk

• Both local and global hedging:
  • Teams are responsible for running risk within their parameters, with firm-wide oversight; strategies vary by team structure and asset class (46:32).
• Consistent alpha generation:
  • “You need specialists who have an edge...and they need a risk management approach that maximizes that edge and minimizes large drawdowns.” (48:15)

Competition Landscape

• Focus is on top platforms:
  • True competition is not 11,000 hedge funds but "half a dozen to a dozen" large, specialist firms (49:16).
• Benefits of a fathead/long-tail market:
  • Generalist participants (smaller funds, retail, banks) increase overall efficiency and opportunities for specialized hedge funds (49:52).

Macro Environment and AI Trends

• 2025 macro:
  • Current market is “really interesting and fluid,” with shifting macro signals, tariffs, inflation, and AI all in play (51:27).
  • High volatility yields “tremendous opportunities for teams who can figure it out a little bit ahead of the next person” (53:21).
• Is AI overhyped?
  • No: “Probably underhyped in terms of the actual outcomes.” However, stock prices vary, and there is a lot of alpha in separating true winners from overhyped names (54:12).

    “If you look back in 10 years...it's probably underhyped in terms of the stock prices across the board...They're probably way overhyped.” (54:12)

Mentoring, Education, and Philanthropy

• Mentorship & partnership:
  • Critical for BAM’s structure and Balyasny’s own development. "Flows down through the organization...mentors for interns...younger associates...all the way up and down" (36:02).
  • Greatly influenced by Steve Schoenfeld and by family and sports in building work ethic and perseverance (37:23–38:51).
• Atlas Fellowship (59:53–61:55)
  • A blend of college scholarships and annual finance internships for under-resourced but bright students, founded with wife Rebecca. Now ~100 fellows, aiming for hundreds more.

Books, Podcasts, and Recommendations

• Influential books:
  • Atlas Shrugged—philosophical foundation for business, hence “Atlas” branding (63:24).
  • Endurance (Shackleton story), Nothing is Impossible by explorer Mike Horn (65:48).
• Shows:
  • Three Body Problem (“The show is really good”), Yellowstone.
• Podcasts:
  • “Greatest invention in the last five, 10 years…amazing resource,” listens to Ritholtz, Tim Ferriss, Invest Like the Best, VC/finance shows, and recommends younger staff maximize access to this knowledge (66:39–67:41).

Notable Quotes and Memorable Moments

• On starting from nothing:

  "I'd never been in a car until I was in the US...So it's...builds character and builds perseverance and the thick skin to be able to deal with the difficulties and figure stuff out." (D. Balyasny, 03:18)

• On the AI revolution:

  “AI will likely be a larger, more substantive change over time...I think it'll be pretty transformative.” (D. Balyasny, 11:34)

• On hiring headlines:

  “Publications like to do to get people to read the articles is put in large dollars as opposed to percentages, denominator blindness...But a typical portfolio manager might be managing a couple billion in gross market value...that’s 2.5% [drawdown], which is not good, but it’s not a disaster.” (D. Balyasny, 27:54–28:13)

• On performance:

  “Your win-loss record isn't what matters, it's how much do you lose when you lose relative to how much you're gaining when you win.” (Barry Ritholtz, 16:13)

• On scaling and opportunity:

  “Every year...we measure our capacity...the recruiting...what does the pipeline look like...and that gives you a sense of what the growth path is likely to be. Over time, that’s averaged about 20–25% a year capacity growth.” (D. Balyasny, 31:11)

• On the firm’s culture:

  “If you can create that type of culture, that really is one that high performers are going to want to work in and thrive at.” (D. Balyasny, 24:54)

• On trading versus investing:

  "We were chopping ourselves up a little bit too much, missing some of the bigger winners and creating a lot of trading slippage costs...Find some positions you can really be a longer term investor in." (D. Balyasny, 39:12)

• On markets & AI opportunity:

  "Amazing opportunities if your teams can figure that out...if you have strong teams who are on top of the latest data points and you can figure it out a little bit ahead of the next person, just tremendous opportunities." (D. Balyasny, 53:21, 54:12)

Timestamps of Important Segments

• [03:18] — Immigrating from Ukraine, early resilience
• [05:33] — Early days at Schoenfeld; starting from scratch as a trader
• [09:37] — 1990s tech transition: From monitors on carousels to AI
• [12:25] — In-house tech buildout at Balyasny Asset Management
• [14:03] — Explaining the "risk box" philosophy for teams
• [17:50] — Launching BAM during the dot-com collapse
• [18:21] — 2008 crisis surprise: "We had 50% redemption"
• [23:36] — The premium placed on talent and talent development
• [24:54] — Corporate culture, meritocracy, and partnership awards
• [26:12] — Multi-strategy platform and sub-strategy expansion
• [27:34] — The reality behind "headline" trader compensation
• [31:11] — Growth management and capacity scaling
• [33:17] — Internal promotion of analysts/PMs
• [36:02] — The importance of true partnership and mentorship
• [39:12] — The need to rebalance from "too much trading, not enough investing"
• [46:32] — Team-level vs. firm-wide risk management
• [49:16] — Who BAM really competes with in the hedge fund ecosystem
• [51:27] — Macro environment, AI-driven volatility, and market opportunities
• [54:12] — Is AI hype justified? “Underhyped” on productivity, “overhyped” in some stocks
• [59:53] — The Atlas Fellowship: Scholarships plus internships
• [63:24] — Most influential book: Atlas Shrugged
• [65:48] — Book recommendation: Mike Horn’s Nothing is Impossible
• [66:39] — On the value of podcasts as a learning tool for young professionals

Conclusion

Dmitry Balyasny offers transparent, actionable insights into the inner workings of a top hedge fund, emphasizing a data-driven, culture-forward, and adaptable growth model. The episode is a masterclass in risk management, organizational structure, innovation, and mentorship in finance, with thoughtful reflections on the future of investing in an era defined by AI and global volatility.