The three traits that scale a PM: Balyasny's founder Dmitry Balyasny "The things I look for are how does the person respond to adversity. Because if they had an amazing track record before they got to you, you can be certain they'll have a drawdown once they're here." "You need people who have the perseverance and mental fortitude to use the difficult periods to re-underwrite what they're doing, come up with some fresh ideas, improve their process, improve their team, as opposed to pack it in." "A real learning, adaptive type of mindset, where they're constantly looking for better ways to do things and aren't overly wedded to a particular trade style approach." "The folks that are really scaled over time are ones that have a business building DNA." "They enjoy hiring people, they enjoy managing people, they enjoy running their own business within a business, and those kind of folks do a better job of scaling over time."

The airline problem for GPUs: Citadel's CEO Ken Griffin "GPUs, like airlines, have a very low marginal cost to run. Like the incremental seat on an airline that's not full, if you can sell that ticket for $20, you're making money in that seat." "That's one of the reasons that the airline industry is such a nightmare: the moment you have overcapacity, pricing goes into freefall." "We saw this actually with the telecom build out back in 2000." "We built more fiber than we had demand for, and the price of telecommunications just went straight down." "If we reach a point where the provisioning of GPUs exceeds demand for GPUs, marginal pricing will actually go into free fall. And that really upends all the investment assumptions that people are working with today." "Right here, right now, there's people that are earning extraordinary pricing on GPUs that are five or six years old. That probably doesn't persist for another five or six years."

Prompts vs. embeddings: AQR's Managing Director Peter Hecht "You literally ask ChatGPT or Claude, is Apple cheap or expensive? Give me your analysis and give me the details why you think it's cheap or expensive. That's prompt, okay?" "Then there's a way of using a large language model where you feed in documents, financial documents, broker reports, earnings reports, and you go under the hood of the large language model and you take what we call a word embedding, which is a numerical representation of the text." "When we use large language models, we're doing the latter. We're not doing the prompt-based approach." "All of the special sauce is not in the large language model. The fact that you can get a numerical representation of the data is sort of a commodity." "The hardest part is can you find whether that numerical representation of the data can predict future returns." "That is very difficult to do, requires a ton of skill and it's highly subjective. And that's why I don't think there will be convergence."

Probability bets, learned at the poker table: Point72's founder Steve Cohen "I did play poker every day in high school." "We were playing poker at about 5:30 in the morning the day of my SATs. Like nobody cared." "It really taught you how to take risk, right? Because I didn't have a lot of money in my pocket. I mean, I wasn't a rich kid. And so I had to win. And so that's pressure when you have to win." "It teaches you how to take probability bets, right? I mean, when you play, when you fold, how do you raise, all that type of stuff." "It became not about the money, it became about, you know, just making good probability bets, which is sort of what I do in the markets."

Forward rates aren't predictions. They're the back end of an arbitrage-free process — and conflating the two gets him angry. Harley Bassman, creator of the MOVE Index, on ReSolve Riffs (Sept 2025). Rates below are an illustrative example, not live quotes. Harley Bassman explains: "You're advising grandma. She has $10,000. The one-year CD is at 3%, the two-year at 4%. What do you tell her?" "I can earn 4% for two years, or 3% the first year. What do I have to earn the second year so the two periods equal 4%? That's the forward rate." "Ignoring compounding, it’s five. I get five, I get three, that’s 4%." "So the question is: do I think the one-year rate will be above or below 5 a year from now? That's all there is to it." "People talk about forward rates as a prediction. That's false. It is not a prediction." "When people say that, it kinda gets me angry." "It's not a prediction — it's the back end of an arbitrage-free process."

Offense vs. defense on risk: Balyasny's founder Dmitry Balyasny "We have additional risk conversations as much as we have reduced risk conversations, offense versus defense." "Oftentimes some of the higher Sharpe performers who are very consistent tend to be very defensive on risk." "So we're always working with them on how do you really scale what you're doing, and trying to build their confidence to take more risk, to make them more meaningful overall." "On the flip side, you'll have other folks for whom whatever amount of risk you give them, it's never enough. The next day they want more. And that's fine, that's a good mindset." "But you also need to figure out when they're a little bit too far over their skis."

The casino model of diversification: AQR's Managing Director Peter Hecht "First off, we believe in diversification. So we are a systematic fundamental manager." "Most systematic managers have a small edge for any single security that they trade." "Like a casino, a casino would never exist if it could only play blackjack against you, one person." "They bring in thousands of uncorrelated blackjack customers. That's like bringing in thousands of uncorrelated trades." "So we believe in diversification. We're militant about thinking about: are these trades correlated with each other?"

"If you want to get into trading for the excitement, don't do it for a living. You're in the wrong game." From former Tudor quant PM Tom Costello (@tcoste110): "One big idea, and it turned into quite a bit of money. It was a very, very profitable strategy over the years I ran it." "But for eight years of it, it was just in the mud up to your elbows, wrestling with making sure that it squeezed as much alpha out of the markets as it could." "It was, frankly, dull work, kind of work that I appreciate, because I think excitement is wildly overbid in finance." "Nothing I like better than making a nice steady profit every single day." "Go to work in Silicon Valley, find an exciting job in venture capital. Don't do it in trading, because there's an excess of excitement."

"You have to surrender yourself somewhat to the machine." Asness on why he slowed AQR into ML — and what the edge costs in interpretability. AQR’s Cliff Asness at iConnections Global Alts New York in June 2025. Cliff Asness explains: "We invested the money into researching it, so it’s not like we were like, “This ain’t gonna work. This is stupid.”" "We've had a philosophy for years of combining economic common sense, theory, intuition." "What we were doing had to make sense to us and had to work historically." "Out of sample is better, real-life trading is better, backtests are secondary — but you need to understand why it works." "I slowed that down somewhat because machine learning can't do that." "You have to surrender yourself somewhat to the machine. If not, what's the machine doing?" "It's finding patterns you couldn't see with simple theory or even the naked eye." "I usually say partially surrender — sometimes that word gets dropped."

Citadel's CEO Ken Griffin on why 'hedge fund deleveraging' is the excuse that stops you learning: "So everyone's favorite go-to answer when they're losing money is hedge funds are de-leveraging." "In fact, in the last 10 years, I've seen the entire industry de-leveraged to zero at least 10,000 times. Just imagine if these hedge funds ever levered back up." "And the reason that people love that answer is it actually washes your hands of accountability." "Let's take a step back. What prices are changing and why? What don't we understand? Because the minute I start to use an excuse, I actually stop learning." "So I always want hedge fund deleveraging to be answer number 10 on the list of answers. And I want one through nine to be, okay, what don't we understand? What does somebody else get?"

Carver’s 2009 bank trade: conviction in the idea, then panic that cut his intended position by 90%. Rob Carver, systematic trader and author, recounting his Q1 2009 UK bank-share trade in an April 2021 interview. Rob Carver explains: "Q1 '09, it felt like we were at the bottom. Best place for my money: UK banking shares, massively beaten down." "I understand banks as a business and can read the balance sheets, whereas with an insurance company I'd struggle." "It was a discretionary decision, but a good one. The problem is when it came to pulling the trigger, I panicked." "My timing was perfect. I probably was within like 3% of the bottom, something like that." "I could not force myself to buy the size I'd intended. I cut everything by 90%, bought one-tenth of the position." "Those shares probably went up by something like 350% in six months." "Even if you make good trading decisions, you still need a system to manage your risk and position size." "If you do think you can make those discretionary calls, you should still have a system in place to size them."

“There is no award in markets for consistency of narrative.” Menon on the Bob Elliott line that stuck with him—and why expectations move faster than the economy. Aahan Menon of Prometheus Macro, on ReSolve Riffs in December 2025, discussing signals and changing market expectations. Aahan Menon explains: "He tweeted that there is no award in markets for consistency of narrative. That’s really something I try to hold really true." "We’ve had an exposure on, it starts to work for a few months. I’m like, “Oh yeah, this is a theme.” I write about it, and it’s done in the next week." "These signals are meant to be predictive of asset markets, and asset markets are discounting machines." "The discounting changes way faster than the underlying conditions. Expectations for growth whipsaw every day. The actual growth doesn't change at all." "In traditional macro you're always trying to have a consistent narrative and position around it." "We're not trying to predict the macro narrative. We're trying to predict the markets. The predictions change every day, and that's just what it is."

Balyasny's founder Dmitry Balyasny on why uncertainty is the best market for a multi-manager: "When everything is clear, there's no volatility, there's no change, it's hard to get any dispersion. So that environment might be good for passive strategies, but not good for us." "So now there's a ton of money sloshing around trying to figure things out, and that's a great environment." "It's created a lot of relative value opportunities as you get different hiking cycles, different cutting cycles in different markets. That's great for macro." "In equity land you have all the changes not just from the economy but from AI, and how that's impacting tech but also impacting companies that are customers or gonna be run over because of AI. That creates great long short opportunities."

Haghani’s 50/50-investor example: a 1% buyback can require roughly a 2% price rise to restore the portfolio weight. Victor Haghani, Elm Wealth founder, explaining a hypothetical market of static 50/50 investors in October 2026. Victor Haghani explains: "Imagine the marketplace is only made up of static investors that wanna be 50% in stocks and 50% in fixed income." "Companies wanna buy back 10% of all outstanding equities. The only place they can buy them from is the static investors." "They have $50 of stocks, they have to sell $5, so they're left with $45 of stock and $55 of cash." "Their $45 of stock has to become worth $55 because they wanna be 50/50. They can't trade with each other, that doesn't help anything." "The price of the stock market has to go up, not by 10%, but by 20%, because we have to go from 45 to 55, which is $10 on 45. Call it 20%." "If companies are buying back 1% of their stock, stock prices are gonna have to go up 2% if the only investors are these static weight strategic investors, and if they’re a 50/50 weight." "If their asset allocation were 60/40 or 40/60 or whatever, it’d be a little bit different."

Fewer public companies isn't just a smaller pond for quants — the pond itself could get worse. AQR’s Cliff Asness, in June 2025, on lost breadth and a possible selection-bias effect whose direction he cannot determine. Cliff Asness explains: "You lose breadth, and a quant wants breadth. We don't know anything about an individual company." "We wanna make a lot of small bets based on average characteristics paying off over time." "Lose half your breadth, you might still have a good product, but it's not as good." "The bigger worry, which I don't even know how to sign, is selection bias: the stocks you used to make money on are the ones no longer going public." "Shorts won't get removed — the private world is a long world, not a short world." "If they're particularly good at figuring out which ones to keep private, it's not just a smaller pond, but the pond could be a little worse."

"Cut the risk" to what level? "Until it's a short." That's where risk management becomes discretionary trading. Rob Carver, independent systematic trader and author, recounting an unnamed fund’s risk override in an April 2021 interview. Rob Carver explains: "They had a position on, and someone comes over: ‘I think you should cut the risk on that position.’" "‘That's reasonable. To what level?’ And the guy said, ‘Until it's a short.’" "Now to me, that's crossing the line." "It's one thing to say the model doesn't know about a particular risk, so this position is too big." "The moment you're changing the sign of the position, you've moved from risk management to discretionary trading through the back door." "There’s a clear line for me, but before that there’s probably a big gray area."

Menon’s framework at Prometheus: carry, trend and reversion—with balanced exposure and macro-driven tilts. Aahan Menon of Prometheus Macro on his organizing framework for systematic macro (ReSolve Riffs, Dec 2025). Aahan Menon explains: "There are three big forces, and those are the only things that matter, at least to me." "Every T+1 exposure you have is a function of either carry, trend, or reversion — whether you're trading vol or the S&P 500." "We want dynamic but balanced exposure to those factors. You don't wanna go all in on one and have a lost decade." "What determines whether you tilt from carry to reversion to trend is some macroeconomic circumstance. The tilting is the secret sauce." "You can't take one set of rules and apply it to every market — that's not how it works." "Bonds trend very differently from commodities. Commodities have a preponderance of trend; equities are very mean-reverting." "We believe carry, trend, and reversion define all forward returns."

The cost of building and distributing a company has collapsed. Ken Griffin’s point: when capital, compute, and distribution are widely accessible, the harder moat becomes the people you surround yourself with. Ken Griffin, founder of Citadel, explains: "Access to capital has never been as straightforward as it is today." "The barriers to competition have come down dramatically — whether it’s generative AI, cloud compute, or access to the internet." "If you have a product, you can now touch hundreds of millions or billions of people in the blink of an eye." "This is the best of times." "Looking back on the 35-year history of Citadel, always try to surround yourself with the best and brightest people." "Don’t try to clone yourself." "Find people who are really bright but really different than you are." "The tension between you in debate and dialogue will make you much more effective as a leader."