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neiderhoffer
- Thread starter terminator
- Start date
premium sellers.
Here is a quote (http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm) on how he wiped out his account:
A year after Nassim Taleb came to visit him, Victor Niederhoffer blew up. He sold a very large number of options on the S. & P. index, taking millions of dollars from other traders in exchange for promising to buy a basket of stocks from them at current prices, if the market ever fell. It was an unhedged bet, or what was called on Wall Street a "naked put," meaning that he bet everyone on one outcome: he bet in favor of the large probability of making a small amount of money, and against the small probability of losing a large amount of money-and he lost. On October 27, 1997, the market plummeted eight per cent, and all of the many, many people who had bought those options from Niederhoffer came calling all at once, demanding that he buy back their stocks at pre-crash prices. He ran through a hundred and thirty million dollars -- his cash reserves, his savings, his other stocks -- and when his broker came and asked for still more he didn't have it. In a day, one of the most successful hedge funds in America was wiped out. Niederhoffer had to shut down his firm. He had to mortgage his house. He had to borrow money from his children. He had to call Sotheby's and sell his prized silver collection -- the massive nineteenth-century Brazilian "sculptural group of victory" made for the Visconde De Figueirdeo, the massive silver bowl designed in 1887 by Tiffany & Company for the James Gordon Bennet Cup yacht race, and on and on. He stayed away from the auction. He couldn't bear to watch.
Also a chart for that period:
A year after Nassim Taleb came to visit him, Victor Niederhoffer blew up. He sold a very large number of options on the S. & P. index, taking millions of dollars from other traders in exchange for promising to buy a basket of stocks from them at current prices, if the market ever fell. It was an unhedged bet, or what was called on Wall Street a "naked put," meaning that he bet everyone on one outcome: he bet in favor of the large probability of making a small amount of money, and against the small probability of losing a large amount of money-and he lost. On October 27, 1997, the market plummeted eight per cent, and all of the many, many people who had bought those options from Niederhoffer came calling all at once, demanding that he buy back their stocks at pre-crash prices. He ran through a hundred and thirty million dollars -- his cash reserves, his savings, his other stocks -- and when his broker came and asked for still more he didn't have it. In a day, one of the most successful hedge funds in America was wiped out. Niederhoffer had to shut down his firm. He had to mortgage his house. He had to borrow money from his children. He had to call Sotheby's and sell his prized silver collection -- the massive nineteenth-century Brazilian "sculptural group of victory" made for the Visconde De Figueirdeo, the massive silver bowl designed in 1887 by Tiffany & Company for the James Gordon Bennet Cup yacht race, and on and on. He stayed away from the auction. He couldn't bear to watch.
Also a chart for that period:
Attachments
As I recall he mentioned one of his strategies was similar to musical notation.
Of course the band is playing only music he can hear. Strange guy. Learn what you can but I would definitely not emulate his risk manangement strategies.
Of course the band is playing only music he can hear. Strange guy. Learn what you can but I would definitely not emulate his risk manangement strategies.
Quote from terminator:
i've always been interested in VN. i mean hell the guy is capable of making >30% returns year on year, only other funds capable of that are rentech SAC and probably centaurus.
Any ideas as to how he actually trades? i mean what kind of strategies does he actually employ?
I maintain a library of dozens of books about trading, some good and some not so good, but I keep almost all of them and re-read them from time to time. One book I did NOT keep was Niederhoffer's. It went in the trash after the first read. One thing I noticed about VN that I no one else mentions is that he "tries" to be an oddball, when in fact he really isn't. Showing up to work barefoot, reading the Enquirer and requiring his employees to do the same. dont forget about the senile old coot he hired to give him checkers lessons, (during the trading day). Those are things, (I believe), he just deliberately did to give himself the reputation of an oddball. I don't think he's actually any more neurotic than any other trader. In other words, it was just a facade.
Niederhoffer is a perfect example of someone who is getting by on connections, not competence. His personality built by word of mouth is much bigger than his trading ability and he still has people who want to hand over millions of dollars to him. On a % basis, many of us are much better traders than VN. But his "reputation" precedes him.
Niederhoffer is a perfect example of someone who is getting by on connections, not competence. His personality built by word of mouth is much bigger than his trading ability and he still has people who want to hand over millions of dollars to him. On a % basis, many of us are much better traders than VN. But his "reputation" precedes him.
Quote from Rodney King:
.. Let us know when a group photo of the anonymous lowlifes who flame him on the web are available.. we can compare and contrast.. [/B]
indeed, we can't all look like we walked out of a GQ ad.
i'm sure many could make criticisms of mr. n and others that were not flattering but reasonably accurate. that doesn't really matter.
in my short tenure in this business i've come to respect those who stand up and take the big chance. it is rare and beautiful and these people should be celebrated at the end of the day.
Nice to see that Vic is so concerned with image that he has shills on Elite Trader posting bullshit on his behalf.
As they say "garbage in, garbage out."
How's this for a fund. Dedicated to Michael Jordan I'll call it the "23 Fund." Each month I'll go to Caesar's and bet on every number on a roulette wheel except 23. Each month I'll have around a 97.5% chance of making 3% in profits. Like any adept manager I'll certainly compound my winnings so after a year of no "23's" (hopefully) I can post performance numbers showing I made 45% on the year without drawdowns!! Of course I need to fool investors into thinking I strategically lay off the 23 hole. Maybe if I write a few pretentious, inane books trumpeting how smart I am people will fall for it. Naturally though, like Poe's Red Death (see Vic I'm literate!) Mr. 23 is always lurking around the next corner......
As they say "garbage in, garbage out."
How's this for a fund. Dedicated to Michael Jordan I'll call it the "23 Fund." Each month I'll go to Caesar's and bet on every number on a roulette wheel except 23. Each month I'll have around a 97.5% chance of making 3% in profits. Like any adept manager I'll certainly compound my winnings so after a year of no "23's" (hopefully) I can post performance numbers showing I made 45% on the year without drawdowns!! Of course I need to fool investors into thinking I strategically lay off the 23 hole. Maybe if I write a few pretentious, inane books trumpeting how smart I am people will fall for it. Naturally though, like Poe's Red Death (see Vic I'm literate!) Mr. 23 is always lurking around the next corner......
How competent can someone be when they "blow up" a fund that has hundreds of millions of dollars in it (or more, for that matter), and can't even cover?
Isn't investing, trading and money management also about ensuring there isn't a way that you are so leveraged to the risks in the market that your losses in any given day can't possibly come close to the amount that would force you to have to liquidate all your holdings and your personal assets, as well?
Is that too lofty a goal?
Isn't investing, trading and money management also about ensuring there isn't a way that you are so leveraged to the risks in the market that your losses in any given day can't possibly come close to the amount that would force you to have to liquidate all your holdings and your personal assets, as well?
Is that too lofty a goal?
Balda,Quote from balda:
His book was a total waste of time.
It is all about how good he is, how smart he is. Even his last name is a speculator in Hungarian. Do not think about sex while trading. Thinking about sex will make you loose. That is why he trades with his wife so she can relieve the pressure. And because he is the smartest person that is why he is the best. He is a champion of squash because he is smartest and his wife blows him every morning (and it is about two people that play squash in the world). And do not tell him about his blow ups because he is smartest.
Should you still decide to read his book DO NOT EAT close to the end of the book, I puked at the end.
I agree with you totally. Had his book and couldn't get through half of it.. All he talked about was his squash playing championship.. what is squash anyway???
Whats at the end that'll make you puke?? can you elaborate please.. I damn sure don't plan on picking that book up again..
thanks...