Hedge Fund Market Wizards

Chapter 14

Jimmy Balodimas

Stepping in Front of Freight Trains

Jimmy Balodimas breaks all the rules. He sells into uptrends and buys into downtrends. He adds to losers and cuts his winners short. He is a predominant short in a market that is up the majority of days.1 By any of the standard guidelines for trading success, Balodimas shouldn’t survive in the markets, let alone thrive. Yet he is one of the most successful traders at First New York Securities, the prop trading firm at which he began his career 15 years ago, and he has never had a losing year.

I first interviewed Balodimas on February 22, 2011, a day in which the equity markets were down sharply in a selloff that ostensibly was triggered by the uprising in Libya, which led to a sharp rally in oil prices and market concerns over a disruption in oil supplies. The Libyan upheaval was part of the domino effect of Mideast unrest that began with the overthrow of the Tunisian dictatorship a month earlier. This down day in the stock market followed a three-month period in which the price advance in equities had been so unrelenting that neither the S&P 500 nor the Nasdaq index was able to go more than five days without setting new highs in the ongoing bull market that had begun two years earlier. The current month had been particularly brutal for shorts, as the market reached new highs almost daily, never taking more than three days to do so. Balodimas had been net short throughout this move. Watching the succession of near daily ...