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Impact & Insights

Impact & Insights

A Mentorship Session with Dmitry Balyasny

"You need to have the awareness and the mental flexibility to adapt to what the market is doing. You need to constantly improve your process and not be wedded to one particular way of doing things."

At a recent virtual forum hosted by Young Jewish Professionals (YJP), Dmitry Balyasny, the Managing Partner and Chief Investment Officer of Balyasny Asset Management, shared his views on what it takes to succeed in a field where exceptional intelligence counts as table stakes and the failure rate is high.


Below is a collection of excerpts and insight from his conversation, which was moderated by Stuart Zimmer, the CEO of Zimmer Partners.


Trading and fund management is a hard business to succeed in. You have to enjoy what you do, work hard to get better at it, and be able to adapt to changing market conditions.


A lot of people get into this business because they think they can make a lot of money doing it, which is obviously true if you do well. But if you are not passionate about markets, data and investing, it’s very hard to be successful.


We had two individuals at the firm who came up through our analyst training program. They had very similar experience, traded in the same sector, had the same kind of track record. Last March when the market plunged, both had drawdowns. In mid-March, one of them told us: "I don't want to do this anymore – it's stressful, things aren’t making sense, it's not for me." He liquidated his portfolio and went out to do something else.


The other person buckled down, went around to all the more experienced portfolio managers and asked: "How do you guys navigate these periods? What are the best practices for dealing with this kind of volatility?" He re-underwrote some of his positions, cut other positions, worked really hard with his team. By the end of the year, he was one of our top performers in 2020.


When times are good, it's exciting and everybody wants to do it. But when you're in a difficult period, you have to make sure that this is really what you want to do as a career. If not, don't wait; find something else you’re better at.


That's my first piece of advice. The story also illustrates a second point:  You need to have the awareness and the mental flexibility to adapt to what the market is doing. You need to constantly improve your process and not be wedded to one particular way of doing things. The ability to adjust is really important, because the way you made money five or 10 years ago might be completely different from the way you make money tomorrow.


Also, ask for feedback. Early in my career, one of the things that helped me start consistently making money was to seek out advice from other traders who were consistently making money: "I lost money on this trade. What would you have done in this situation? Is there something I missed?"


Having the right temperament is important. When we hire analysts and portfolio managers, we look for a combination of conviction, flexibility and the right balance of confidence and humility. Those are somewhat opposite, but you need a combination of those two traits to succeed. To navigate drawdowns, you need enough confidence and conviction to make bets and take risk to run enough capital.


Finally, if you want to advance in your career and eventually manage a team, you must be able to work well with others. A collaborative approach is an underrated virtue. There are a lot of people who are good individual performers, yet they may not work well with people who are junior or senior to them.


Are you willing to invest time and effort to help others on your team develop and improve? That is a big part of being successful in this industry, because success is really hard to achieve by yourself. You need to be able to build a strong team and having the desire and ability to work well with people around you is critical.


In my experience, there is a strong correlation between collaboration and longevity in our business – a partnership mentality helps investors stand the test of time.