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Breaking news: Niederhoffer still in business after market correction!
- Thread starter just21
- Start date
Quote from Reckoner:
OK, so why are you testing your trading ideas using stats, or any other method based around historical data. Why not tea leaves?
You ARE going back on what you said before, and you know it.
Your reasoning is an example of the informal fallacy known as false dilemma.
You apparently think that either statistics are extremely valuable or of little to no value, that there is not some in-between.
I think that statistics can be used to understand the past behavior of markets. In that limited way, they have merit.
But that is it.
They may or may not be useful in understanding the future. But I don't know this, and neither do you.
Why?
Because it is impossible to test the future.
A manager with a respectable Sharpe ratio over a number of years probably has a healthy respect for risk.
But that does not guarantee future success.
The claim that VN is a great trader can be supported or refuted by looking at his long-term Sharpe. If he has a Sharpe that ranks him in the top tier of managers IN THE LONG RUN, then it can be said that VN IS (right now) a great trader.
But the future is unknowable. One must still take the Sharpe with a grain of salt. The same goes with all statistics and backtesting.
Quote from smilingsynic:
Your reasoning is an example of the informal fallacy known as false dilemma.
You apparently think that either statistics are extremely valuable or of little to no value, that there is not some in-between.
I think that statistics can be used to understand the past behavior of markets. In that limited way, they have merit.
But that is it.
They may or may not be useful in understanding the future. But I don't know this, and neither do you.
Why?
Because it is impossible to test the future.
A manager with a respectable Sharpe ratio over a number of years probably has a healthy respect for risk.
But that does not guarantee future success.
The claim that VN is a great trader can be supported or refuted by looking at his long-term Sharpe. If he has a Sharpe that ranks him in the top tier of managers IN THE LONG RUN, then it can be said that VN IS (right now) a great trader.
But the future is unknowable. One must still take the Sharpe with a grain of salt. The same goes with all statistics and backtesting.
Actually we're more or less in agreement! Congratulations! Your last post confused me as you did seem to be backtracking.
But now you have a serious problem with your pals...
since when has RISK become a bad word for traders/speculators? i can see the "nanny/big brother be safe" cultural meme has infected all segments of the population, even the supposed entrepreneur/risk taking class--whom i thought made up the majority of participants on elite.
what seems to missing in this discussion is that risk is required to make outsized returns. yes, a manager can plod along making average/above average returns for years and years with what is considered a good sharpe. however, if you want this--buy a mutual fund--its safer.
most people invest with hedge funds to achieve outsized returns and accept the risks involved. remember, we are dealing with high net worth individuals/institutions who allocate their substantial capital across a spectrum of managers/risk profiles--- these investors understand that without risk there can be no great reward. there is no free lunch.
surfer
what seems to missing in this discussion is that risk is required to make outsized returns. yes, a manager can plod along making average/above average returns for years and years with what is considered a good sharpe. however, if you want this--buy a mutual fund--its safer.
most people invest with hedge funds to achieve outsized returns and accept the risks involved. remember, we are dealing with high net worth individuals/institutions who allocate their substantial capital across a spectrum of managers/risk profiles--- these investors understand that without risk there can be no great reward. there is no free lunch.
surfer
trendmomentum
Registered: Jul 2004
Posts: 76
06-14-06 09:25 PM
And for the record in Elite history, a quote from the original article "Briefly Speaking, by Victor Niederhoffer", which appeared on the 11-Jun-2006 on DailySpeculations.com
"Eventually this decline will pass. I'll go on record with a prediction -- supported by the statistics on the table -- of what happens to stocks the next few days after five declines in a row, and what happens to them when bonds close at a maximum and stocks at a minimum. The prediction: the rise will start Monday."
This was later changed to:
"Eventually this decline will pass. And statistics on the table -- of what happens to stocks the next few days after five declines in a row, and what happens to them when bonds close at a maximum and stocks at a minimum -- suggest a rise is coming on Monday."
Now, you know what the fuss is all about. A childish attempt to erase a foolish and simplistic interpretation of the theory of runs, suported with voodoo correlation by the speculator.
Enjoy.
---------------------------------------------------------------------
As of late Friday June 16 I see Vic now has the original Post from Sunday up. WHEW Finally!!! So yet another change , but at least back to the original post ; so new readers can ask what all the fuss is about on ET... Of course Vic won't provide us an explanation why so many changes after he was OFF on a market call during a Bad Drawdown in his Fund. Nope did not think so. NONE NADA... Thats an admission of wrong, failing, ugh huh Vic.
I guess ET serves some purpose other than a Bitchfest, because his original post is back. What tomorrrow or the rest of the week brings on Vics Posts on his website I am sure are subject to change after the fact. Why? he gives no explanation for his multiple Market Call changes. Trendmo.... called him OUT on ET and deserves a damn atta' boy, and proved Vics changes on this thread. I really doubt the original post Prediction would be back if We werent persistent Since Wednesday on this thread. Why ? He even stated on his site that his guys are already on ET. He reads this, as well he should. Like I said early on Vic, its okay to make a call and be wrong on your website. No Trader is right 100% of the time. THATS WHY WE CUT OUR LOSSES! at predetermined levels. They are the equivalent of a Variable business expense, and we like to preserve our winnings, not play roller coaster, Russian Roullette with them. Guess what? I have no PHD either to figure that out. Its not IQ stuff, nope, but takes some EI to face your losses....just EI Vic.
Post on your site what EI means to traders Vic. Teach us young Bucks, Professor... When the Shit hits the FAN, and the market tanks against your position, is it best to FREEZE? VN is it? Justify you were right each day, each tick against, each hour, each day? Ride that downwave to who knows how far? Look at backward looking Statistics/probabilities? Any winning trader knows that in this BIZ you win a little , lose a little, win a lot, but NEVER want to Lose A lot....NEVER....takes too long to make it back... Never a lot.
Registered: Jul 2004
Posts: 76
06-14-06 09:25 PM
And for the record in Elite history, a quote from the original article "Briefly Speaking, by Victor Niederhoffer", which appeared on the 11-Jun-2006 on DailySpeculations.com
"Eventually this decline will pass. I'll go on record with a prediction -- supported by the statistics on the table -- of what happens to stocks the next few days after five declines in a row, and what happens to them when bonds close at a maximum and stocks at a minimum. The prediction: the rise will start Monday."
This was later changed to:
"Eventually this decline will pass. And statistics on the table -- of what happens to stocks the next few days after five declines in a row, and what happens to them when bonds close at a maximum and stocks at a minimum -- suggest a rise is coming on Monday."
Now, you know what the fuss is all about. A childish attempt to erase a foolish and simplistic interpretation of the theory of runs, suported with voodoo correlation by the speculator.
Enjoy.
---------------------------------------------------------------------
As of late Friday June 16 I see Vic now has the original Post from Sunday up. WHEW Finally!!! So yet another change , but at least back to the original post ; so new readers can ask what all the fuss is about on ET... Of course Vic won't provide us an explanation why so many changes after he was OFF on a market call during a Bad Drawdown in his Fund. Nope did not think so. NONE NADA... Thats an admission of wrong, failing, ugh huh Vic.
I guess ET serves some purpose other than a Bitchfest, because his original post is back. What tomorrrow or the rest of the week brings on Vics Posts on his website I am sure are subject to change after the fact. Why? he gives no explanation for his multiple Market Call changes. Trendmo.... called him OUT on ET and deserves a damn atta' boy, and proved Vics changes on this thread. I really doubt the original post Prediction would be back if We werent persistent Since Wednesday on this thread. Why ? He even stated on his site that his guys are already on ET. He reads this, as well he should. Like I said early on Vic, its okay to make a call and be wrong on your website. No Trader is right 100% of the time. THATS WHY WE CUT OUR LOSSES! at predetermined levels. They are the equivalent of a Variable business expense, and we like to preserve our winnings, not play roller coaster, Russian Roullette with them. Guess what? I have no PHD either to figure that out. Its not IQ stuff, nope, but takes some EI to face your losses....just EI Vic.
Post on your site what EI means to traders Vic. Teach us young Bucks, Professor... When the Shit hits the FAN, and the market tanks against your position, is it best to FREEZE? VN is it? Justify you were right each day, each tick against, each hour, each day? Ride that downwave to who knows how far? Look at backward looking Statistics/probabilities? Any winning trader knows that in this BIZ you win a little , lose a little, win a lot, but NEVER want to Lose A lot....NEVER....takes too long to make it back... Never a lot.
Quote from Thunderdog:
True. However, some paid lunches provide better value than others. I don't know what the market is for a two-fisted, "Damn the torpedoes," in-your-face risk taker, but I guess we'll find out in due course.
Risk is all relative. What would any of us do faced with a 1987 style crash in which there are no bids? Stop losses don't even get filled in that kind of situation.
The safest way to trade is totally unleveraged with money you can well afford to lose. But you don't get rich that way.
The big question in all of this is how close to the wind can one afford to sail? Everyone has there own idea about this, but lower risk means lower profits.
Anyone want to talk about profits? Seems that there's not much interest in profits round here.
Quote from Reckoner:
Risk is all relative. What would any of us do faced with a 1987 style crash in which there are no bids? Stop losses don't even get filled in that kind of situation.
The safest way to trade is totally unleveraged with money you can well afford to lose. But you don't get rich that way.
The big question in all of this is how close to the wind can one afford to sail? Everyone has there own idea about this, but lower risk means lower profits.
Anyone want to talk about profits? Seems that there's not much interest in profits round here.
excellent post.
the retail trading community has been trained not to embrace risk but rather avoid it to preserve their capital while enriching the market infrastructure at the same time. allow me to explain-- frequent trading which results from tight fixed stops increases the brokers bottom line, not the traders while giving the illusion of preservation of capital. its a slow grind down for many who follow the supposed wisdom in trading books/courses--no they will not blow up, but niether will they make enough to make it worth the effort. managing risk does not mean cutting your losses at all times, but rather managing the inevitable losses based on your market analysis. taking risk is the only way to succeed in the trading game. if you avoid losses at all costs, why not just get a job??
surfer