Never confuse a bull market for brains.
Breaking news: Niederhoffer still in business after market correction!
- Thread starter just21
- Start date
Never confuse a bull market for brains.
When I checked it some time ago was there, mmhh...makes me think...
Good RM commentary from Altucher today. A lot of Niederhoffer lemmings, er, followers out there.
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Volatility selling hedge funds exacerbating the decline?
James Altucher
...volatility is back. For the past few years we've been used to futures being up or down 1 or 2 points at this time of the morning. Now being down 5,6, or even 10, is starting to become the norm. But more unusual is the fact that the S&P futures are down more than the Nasdaq futures.
This is important because it tells me that the market is not just down because of inflation jitters or worries about earnings or the economy. Last year, in my context running a fund of funds, I probably received proposals every other week or so from hedge funds that were raising money to sell volatilituy. In other words, they would sell puts on the S&P 500. Since volatility has gone straight down since March 2003, these funds have been enormously successful, usually putting up returns of 1-5% every month, up or down markets. I even heard of one fund of funds that only invested in volatility-selling funds.
Well, that period is over. These funds, despite all the risk management in the world, are unwinding their positions at heavy losses while they get margin calls. It's not unusual to see them down 10-50% per month at this point. Many of these funds are going out of business. What happens then? Well, they have to buy back their puts, causing volatility to spike, and the S&P to artificially go down while the market absorbs all the put buying and hedging which occurs. When this phenomenon is over, I expect the market to roar back. I would be a buyer here, while these funds are liquidating.
-------------------------------------
Volatility selling hedge funds exacerbating the decline?
James Altucher
...volatility is back. For the past few years we've been used to futures being up or down 1 or 2 points at this time of the morning. Now being down 5,6, or even 10, is starting to become the norm. But more unusual is the fact that the S&P futures are down more than the Nasdaq futures.
This is important because it tells me that the market is not just down because of inflation jitters or worries about earnings or the economy. Last year, in my context running a fund of funds, I probably received proposals every other week or so from hedge funds that were raising money to sell volatilituy. In other words, they would sell puts on the S&P 500. Since volatility has gone straight down since March 2003, these funds have been enormously successful, usually putting up returns of 1-5% every month, up or down markets. I even heard of one fund of funds that only invested in volatility-selling funds.
Well, that period is over. These funds, despite all the risk management in the world, are unwinding their positions at heavy losses while they get margin calls. It's not unusual to see them down 10-50% per month at this point. Many of these funds are going out of business. What happens then? Well, they have to buy back their puts, causing volatility to spike, and the S&P to artificially go down while the market absorbs all the put buying and hedging which occurs. When this phenomenon is over, I expect the market to roar back. I would be a buyer here, while these funds are liquidating.
i guess you need to include: tony crabel, roy niederhoffer, and monroe trout among several others managing billions in your lemmings comment.
28% in one month.
Unreal. He spends years making money and probably gives back everything he made in one month. The assumption being that while he had low equity he had great returns and then with his returns leading the pack he probably took in a great deal of money. Now poof. Add up all his gains on smaller amounts and then wack of 28% on a very large amount and poof
The other day surf quoted him as saying he deserves to be consider one of the best traders ever. In reality he has probably lost more money in short periods of time than any trader in history. He quite possibly is one of the worst traders in history, losing more money than just about anybody we know.
He is running a fantastic legal scam and he has guys like surf thinking he is a good trader and a good guy.
Unreal. He spends years making money and probably gives back everything he made in one month. The assumption being that while he had low equity he had great returns and then with his returns leading the pack he probably took in a great deal of money. Now poof. Add up all his gains on smaller amounts and then wack of 28% on a very large amount and poof
The other day surf quoted him as saying he deserves to be consider one of the best traders ever. In reality he has probably lost more money in short periods of time than any trader in history. He quite possibly is one of the worst traders in history, losing more money than just about anybody we know.
He is running a fantastic legal scam and he has guys like surf thinking he is a good trader and a good guy.
one of the primary ways to judge someones ability is to observe the results of those who studied under his/her tutelege. in niederhoffer's case--- a multitude of highly succesful money managers have emerged from his firm/associates. see my post above for several names.
let's wait untill the end of the year to throw the dirt. one month tells us nothing.
surfer
Quote from marketsurfer:
one of the primary ways to judge someones ability is to observe the results of those who studied under his/her tutelege. in niederhoffer's case--- a multitude of highly succesful money managers have emerged from his firm/associates. see my post above for several names.
let's wait untill the end of the year to throw the dirt. one month tells us nothing.
surfer
When you predict the business model (scam imo) you can say I told you so.
Here is just one recent example.
http://www.elitetrader.com/vb/showthread.php?s=&postid=1100178#post1100178
you are very wrong. your conclusions are based on incomplete and/or erronerous information.
surfer