Neiderhoffer

Quote from steve46:

Sorry Risk, I wasn't ignoring you I thought we were done until I saw your comment.

As I mentioned in previous posts, I won't post content on the site until Baron makes a few changes, but I will say the following

Most folks here don't enough background to appreciate what hedging involves on this level. If you were to ask Marketsurfer what moments 3 through 6 represent, aside from what he could learn googling it, he would have no clue. Even in your own comments, I sense that this isn't your cup of tea.

While it may not be easy to hedge the position that Pabst talked about it could have been done. Hedging a short put position isn't just about trying to offset using futures. There are in fact many types of hedge techniques including timed hedges, graduated hedges and tranche hedges using other option positions, using other related instruments. As an example, in institutional markets (like CDO's) the most efficient hedges are "like kind", that is you offset a tranche of CDO's with another tranche of CDO's using a reduced form normal copula or structural variance gamma models. In my view, what is the point of trying to talk about it with folks who aren't really interested. From the beginnig this thread was really about whether "Mr." Neiderhoffer's fund blew out or not...and thats fine, I can take it for what it is.
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sure steve, there are probably many like me here who want to see a dissection of what happened and could have happened as accurately as possible.

why all the fascination is as you know; its a very compelling story! i would love to read more discussion between you and atticus on how vn could have averted this incident from happening.
 
Quote from LMeyers:

LOL. Its pretty easy for someone with his mindset to hedge this sort of a position. He hedged himself perfectly by using OPM. If things go his way, he gets to make a ton of money for himself. If the outcome is not so rosy, he simply walks away from the mess to go play squash for another five years - just like the last time. :)
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You win LM. He sold the Mar puts at 6.00 as a standalone long index trade. I can't arrive at a position which would maintain a bullish posture and substantially reduce his risk. Risks that include EVERYTHING up to Nitro's 4th moment. You simply don't sell duration at six-handles on SPX. You don't buy index futures while maintaining an inventory of short puts. It's INSANITY.

Edit: My wife sold puts on her 30,000 shares long ALGX, so I stand corrected. At least it wasn't an index trade and she's still seeking treatment.
 
Quote from nitro:

...Until we know what VN position was, we won't know what he did "wrong". To me the most interesting thing will be if he had been doing the same thing for years, and then the black swan got him. Or, did he just role the dice one time?
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I don't know about black swans, but there is no denying that he got goosed.
 
Quote from atticus:

You simply don't sell duration at six-handles on SPX. You don't buy index futures while maintaining an inventory of short puts. It's INSANITY.
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I always thought the so-called Texas Hedge was a joke, that no one with 2/3 of a brain would consider that a workable strategy. Guess I was wrong in underestimating the hubris of some in this business.

Peel away the Ph.D., the self-serving books, the arrogance, the eclectic personality, and what does one have left of the guy (VN--not you, Beck)?

A degenerate gambler. A reckless, helpless degenerate gambler.

He has a problem. And he needs help, one step at a time. Until he gets help, he should stay away from OPM, and, quite frankly, from his own.

I wish him and his families the best. May he get the help he needs, and may he find some comfort in the fact that there are more important things in this life than money.
 
Quote from marketsurfer:

fact is== VN returned more to his investors, over the years, than he lost this time. why is this irrelevant?
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Assuming that the investor was in early enough to profit. What if you only recently invested? Opportunity cost?

This also doesn't sound like an argument that would win if you insert any other fund in here. Worldcom, Enron and Tyco all made more money for me over the past 10 years than I lost when they went under, so their executives are off the hook?
 
<i>"A guy whose current net worth is still higher than everyone who participated in this thread put together."</i>

Which means exactly what? The fact that he kept some fractional gains as personal wealth confirms what?

For awhile this gossip topic was interesting to me. Now it's run the course. In all reality, what impact does VN have on any of our lives? None. What do we stand to gain = benefit from his ascent and/or demise? Nothing.

I don't know him at all, just what I've read from the books before they became intolerable to turn another page. But I have seen him dozens of times before, via others who gambled in similar ways.

His story solidifies one important fact for me: imperative to remain unbiased in market direction and be equally skilled in trading all three distinct trends: up, down and sideways. Failure to do that = no long-term success as a trader.
 
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