Any thoughts on this article?
- Thread starter shneed
- Start date
I read this stuff with interest as I read Needercraper's (a trader friends of mine named him that) book with interest back when it was just a few days old. He had just done an interview with Ron Insana and they smiled knowingly about their reference to elephants. I thought I was about to read a book by an intelligent speculator who stole the name of his book from Rod Laver a childhood hero of mine. (perhaps Rod's was not the first book with that name either)
What I read was a bunch of disinformation from a a very arrogant and overconfident person. He was contrarian but in a stupid kind of way. I could not believe that a money manager would be claiming to be a statistician and then trading the yen as if it were a personal chess match. (With musicians in the background trading or playing the piano.)
If I had believed him I would never have attempted to make another trade because I could not ever get the only edge that was available to any trader and that was to be Victor N. I read all but the last 30 or so pages and put the book down-- guaranteeing my friends that I read a book by a man who would blow up. The guy did not even understand the most basic principle of investing which is to protect against the downside.
However, I am stunned he was stupid enough to blow up twice.
He is not a good trader he is a fool who allowed his risk taking to make him lucky at first before it wiped him out. A trader who wipes out is never a good trader. He was just lucky before he wiped out. Now if you wipe out a small account it was probably a risk you had to accept to try and become a big time trader. If you wipe out a large account you are a fool or a thief of other peoples money and trust. (By the way I have never blownup.)
What can he say to the people whose money he lost? Can he say anything other than that he did not really understand the markets? If he understood the markets then he would have not have taken the kinds of risk that blow up on such a predictable move.
I didn't blow up that day because even though I had made a mistake and discovered that I was accidentally long AIG after the close of the session before the WTC tragedy. I sold out my shares at a loss in the aftermarket session. I took a good aftermarket hit because I know anything can happen overnight. (and even during the day.)
As I sold my Aig after the close I even said something to the trader I was training about how much I could lose in the event of a tragedy. I did a little risk cost benefit analysis and said paying a little bit extra to get out more than outweighs the risk of being long overnight. So yes what happened that day could have been and was anticipated. I am not claiming to be brilliant only that the traders who trained me also made their traders to go home flat everynight. When Victor says that the events of 9/11 could not be predicted I wonder who he thinks was on the other side of his trades? People just trying to give him money or people who were hedging against their downside?
What I read was a bunch of disinformation from a a very arrogant and overconfident person. He was contrarian but in a stupid kind of way. I could not believe that a money manager would be claiming to be a statistician and then trading the yen as if it were a personal chess match. (With musicians in the background trading or playing the piano.)
If I had believed him I would never have attempted to make another trade because I could not ever get the only edge that was available to any trader and that was to be Victor N. I read all but the last 30 or so pages and put the book down-- guaranteeing my friends that I read a book by a man who would blow up. The guy did not even understand the most basic principle of investing which is to protect against the downside.
However, I am stunned he was stupid enough to blow up twice.
He is not a good trader he is a fool who allowed his risk taking to make him lucky at first before it wiped him out. A trader who wipes out is never a good trader. He was just lucky before he wiped out. Now if you wipe out a small account it was probably a risk you had to accept to try and become a big time trader. If you wipe out a large account you are a fool or a thief of other peoples money and trust. (By the way I have never blownup.)
What can he say to the people whose money he lost? Can he say anything other than that he did not really understand the markets? If he understood the markets then he would have not have taken the kinds of risk that blow up on such a predictable move.
I didn't blow up that day because even though I had made a mistake and discovered that I was accidentally long AIG after the close of the session before the WTC tragedy. I sold out my shares at a loss in the aftermarket session. I took a good aftermarket hit because I know anything can happen overnight. (and even during the day.)
As I sold my Aig after the close I even said something to the trader I was training about how much I could lose in the event of a tragedy. I did a little risk cost benefit analysis and said paying a little bit extra to get out more than outweighs the risk of being long overnight. So yes what happened that day could have been and was anticipated. I am not claiming to be brilliant only that the traders who trained me also made their traders to go home flat everynight. When Victor says that the events of 9/11 could not be predicted I wonder who he thinks was on the other side of his trades? People just trying to give him money or people who were hedging against their downside?
hello jem.
your disdain for niederhoffer is clear. however, your logic is flawed. your statements taken to the obvious conclusion would indicate that the partners who "blew up" LTCM are also stupid and fools. they are obviously not, and neither is niederhoffer.
surf:eek:
your disdain for niederhoffer is clear. however, your logic is flawed. your statements taken to the obvious conclusion would indicate that the partners who "blew up" LTCM are also stupid and fools. they are obviously not, and neither is niederhoffer.
surf:eek:
shneed -- i want to read what Taleb has written because I have an interest in the nature what we think of as 'randomness.' But the article was a cut at Dr. Niederhoffer, and that probably had nothing to do with Taleb. Most the criticisms of Dr. Niederhoffer made on this thread ran the gamut from arrogant to stupid -- certainly none were made with the benefit of first hand observations -- with a little 'pot calling the kettle black' thrown in along the way.
I don't maintain that Dr. Niederhoffer is above criticism. It's just pitiful to hear some 30 year old who's never had more than 10 million dollars at risk expounding on Dr. Niederhoffer's supposed glaring faults as a speculator.
I began by pointing out some logical inconsistencies in the article itself that were the author's responsibility, not Taleb's. The press can foul up anyone's story. And who knows, the author's probably a great guy too. Good logic is very hard to come by. It really doesn't make for compelling drama.
If (and I am not saying it is so) Taleb's attitude is that he has found 'the way,' I take exception to that. There is nothing new under the sun. Taleb is blowing up in slo-mo right before everyone's eyes, even as the article was being written ("we can bleed to death"). No one seemed to notice that. The question is, can some disaster bail him out in time?
Anyway, that's how I see it. What do I know? If I am wrong about everything else, I know Dr. Niederhoffer is not what some here -- who probably haven't given it a whole lot of reflection anyway -- seem to think he is. There is something in the human mind that repells from someone who's had a setback, as if he has leprosy. People are afraid it's contagious.
I'm glad you posted this article. I enjoyed reading and I learned alot about this board from the responses.
And you have a cool handle.
There are some who conclude that anyone who blows up, that is, anyone who is subject to the randomness that Taleb talks about (and every experienced trader is keenly aware of) is incompetent. It's easy to think that way before one's first major 'surprise.'
It's worth saying again, I think. Some people like to jettison anyone who's demonstrated some weakness. Some people think a setback is contagious like leprosy. That is superstition.
Well not exactly, I understand some moves are going to be so large they may take everyone down. But the moves that took VN down were not that large. Many if not most good traders survived those moves so the only conclusion that can be made is that VN does not know how to manage risk. He was by definition trading way too large while he said he was taking what he called acceptable risk. I think if you read his book you would suspect that these were not the only times he was trading too large and that these events were some of the inevitable events that were due to come and destroy his account. I am sure I could produce a nice track record by taking in premium whenever I had drawdown until I blew up also.
Or perhaps the other part of my statement may apply. As I suspect it does to LTCM. I suspect that the "masterminds" at LTCM knew the risks they were taking-- but they chose to suck up all those nickels until they blew up--- and they hoped to blow up later rather than sooner because they would be rich and they would be be stars. If you know anything about bond traders at Solomon you would probably be even more cynical about the smart guys at LTCM. Perhaps the the quants at LTCM got bullied by the big trader from solomon but I suspect they were willing con artists as well. So in my opinion when you blow up big accounts you are either a fool or a "thief". Perhaps thief could be substituted with confidence man. Perhaps one day the black swan will come and many will be neither fools nor theives but in recent memory you are either a fool, or thief (or trading too small an account).
Perhaps I am a bit jaded as I grew up in Greeewich and I knew some of these types and their families. But I have seen too many con men dressed up as businessmen. By the way I wrote my first statement against VN becasue I was offended by his book I was seeking to understand the education of a speculator and I felt that the author was patronizing and just trying to sell his services. I should have returned the book.
I also wrote this because I feel that the people on wall street have almost paralized the economy because they have made the public lose confidence in the integrity of the markets. Causing a ripple effects all the way through to the decsions by corporatations to not spend on their infrastuture. So when people want to pay undue credit to the people of wall street I challege them.
If you want to explain to me why I have misuderstood VN or LTCM I am all ears. I claim no monopoly on the truth. I would yearn to have VN problems serve as a education on this board. If he is a great person lets hear about. Who knows maybe someday I will meet him and tell him how wrong I was about him after reading his book. If you do not want to belabor this any futher that is fine too.
Cheers
Or perhaps the other part of my statement may apply. As I suspect it does to LTCM. I suspect that the "masterminds" at LTCM knew the risks they were taking-- but they chose to suck up all those nickels until they blew up--- and they hoped to blow up later rather than sooner because they would be rich and they would be be stars. If you know anything about bond traders at Solomon you would probably be even more cynical about the smart guys at LTCM. Perhaps the the quants at LTCM got bullied by the big trader from solomon but I suspect they were willing con artists as well. So in my opinion when you blow up big accounts you are either a fool or a "thief". Perhaps thief could be substituted with confidence man. Perhaps one day the black swan will come and many will be neither fools nor theives but in recent memory you are either a fool, or thief (or trading too small an account).
Perhaps I am a bit jaded as I grew up in Greeewich and I knew some of these types and their families. But I have seen too many con men dressed up as businessmen. By the way I wrote my first statement against VN becasue I was offended by his book I was seeking to understand the education of a speculator and I felt that the author was patronizing and just trying to sell his services. I should have returned the book.
I also wrote this because I feel that the people on wall street have almost paralized the economy because they have made the public lose confidence in the integrity of the markets. Causing a ripple effects all the way through to the decsions by corporatations to not spend on their infrastuture. So when people want to pay undue credit to the people of wall street I challege them.
If you want to explain to me why I have misuderstood VN or LTCM I am all ears. I claim no monopoly on the truth. I would yearn to have VN problems serve as a education on this board. If he is a great person lets hear about. Who knows maybe someday I will meet him and tell him how wrong I was about him after reading his book. If you do not want to belabor this any futher that is fine too.
Cheers
For what its worth, I also believe that the powers behind LTCM were complete idiots. Not in the academic sense. Ofcourse, they have their PhDs and their Noble prizes. But they are idiots in the most comprehensive way possible because what they lack in common sense they make up with hubris.
Ever thought about the logical leaps that Meriweather and his peers made to create and run a hedge fund that took advantage of market inefficiencies when their whole academic and professional lives were created at the altar of EMT?
Recommend "Inventing Money" re LTCM. Great book.
Ever thought about the logical leaps that Meriweather and his peers made to create and run a hedge fund that took advantage of market inefficiencies when their whole academic and professional lives were created at the altar of EMT?
Recommend "Inventing Money" re LTCM. Great book.
thanks for the response, your clarification is well taken.
best,
surf
best,
surf
lack of confidence in the markets hurts. but free people bounce back and move on surprisingly fast. This includes traders.
Some have said the difference between 'winners' and 'losers' (if we may oversimplify) is just that -- getting back up. It is understood that getting knocked down is common to all.
Some have said the difference between 'winners' and 'losers' (if we may oversimplify) is just that -- getting back up. It is understood that getting knocked down is common to all.