Niederhoffer In Trouble..... Again !!
- Thread starter cosmokramer
- Start date
Its maybe that I always valued wisdom a lot more than cockiness and an arrogance that prevents one from admitting mistakes. I rather die wise than rich, and I really mean that. My passion and success (albeit not as successful as VN in his earlier years) let me gain wisdom, something I can absolutely not detect in VN. He stubbornly refuses that even he has to adhere to market forces. Funny...
So what is it... that makes a person a target on ET.
Its the b.s.
As traders we are unconvinced there was anything special about a good marketeer raising money doubling down and blowing up multiple times.
So when people come here touting such a record, as genius... we give that person a hard time.
In reversion to the mean markets... it is not hard to make money if you double down and sell options until you blow up.
So most of us collectively say big deal.... you blew up just like you were supposed to, there is no alpha there. In fact we suspect the more a manger pretends his methods are esoteric, the more likely the manager is full of PR drivel, or perhaps sadder, believes his own PR. Once you trade for a long time you realize that those who think their methods are special are most likely working with a high degree of "bonehead to alpha".
As a side note.... contrary to his conclusion in the Slate article.
I would say that someone who played a very stead slice backhand game would see that selling premium was the same game.
Very steady players are usually people who despises making mistakes and refine one tactic rather than developing an all around federer type game.
An all around federer type player analyses an opponents strengths and weaknesses and then deploys the most fitting strategy for that opponent. He will adjust as the game advances.
A steady player might not even care to analyze the opponent. (He might not care to see that some markets go through streaky phases.)
Selling premium could be the same program as a steady slicer. Refuse to accept or acknowledge little defeats along the way and just take your satisfying slice. There is something very tempting about hitting great ken rosewall type slices on a consistent basis.
Its the b.s.
As traders we are unconvinced there was anything special about a good marketeer raising money doubling down and blowing up multiple times.
So when people come here touting such a record, as genius... we give that person a hard time.
In reversion to the mean markets... it is not hard to make money if you double down and sell options until you blow up.
So most of us collectively say big deal.... you blew up just like you were supposed to, there is no alpha there. In fact we suspect the more a manger pretends his methods are esoteric, the more likely the manager is full of PR drivel, or perhaps sadder, believes his own PR. Once you trade for a long time you realize that those who think their methods are special are most likely working with a high degree of "bonehead to alpha".
As a side note.... contrary to his conclusion in the Slate article.
I would say that someone who played a very stead slice backhand game would see that selling premium was the same game.
Very steady players are usually people who despises making mistakes and refine one tactic rather than developing an all around federer type game.
An all around federer type player analyses an opponents strengths and weaknesses and then deploys the most fitting strategy for that opponent. He will adjust as the game advances.
A steady player might not even care to analyze the opponent. (He might not care to see that some markets go through streaky phases.)
Selling premium could be the same program as a steady slicer. Refuse to accept or acknowledge little defeats along the way and just take your satisfying slice. There is something very tempting about hitting great ken rosewall type slices on a consistent basis.
you still dont get it. You are absolutely right, you can do that as much as you like with your own funds, and you can also shoot for the big stars as hedge fund or bank salaried trader until you either hit the lottery or get your ass fired, but its highly unethical plus a testimony to the inability to generate alpha when blowing up 3 times by taking outrageous risks and after completely failing as prudent risk manager when managing money for other individuals. As someone else put it earlier, you misunderstand something: Most investors are very keen to have at least their initial investments returned, no matter what risk you take. As prudent risk taker you build your p&l slowly before you increase risk, that is something I have learned from my first sell-side trading position onwards. VN went in full throttle and that three times, and three times he blew up big time. It does not matter what wealth he built for himself on the side, because all it means is that he gamed the system. He took outrageous risks, collected couple times, and the other times he ran away while his investors has to pick up the couple dimes on the dollar they invested. If my memory serves me right then I recall that VN promised to make whole each and every one of his investors. Isnt it funny he is still sitting in the Hamptons while his investors are still waiting?
You utterly confuse the special fiduciary responsibilities you undertake when managing others' finances with cowboy attitudes that you can employ when running your own savings or play big boy for a bank (others there make sure your ass gets kicked out a lot earlier than when VN closed his doors).
You utterly confuse the special fiduciary responsibilities you undertake when managing others' finances with cowboy attitudes that you can employ when running your own savings or play big boy for a bank (others there make sure your ass gets kicked out a lot earlier than when VN closed his doors).
I find jem's analysis extremely intelligent and insightful. As a premium seller who has had mostly great success, and a few bad drawdowns over the last 15 years or so, I find he is right on point in pinpointing the stubborness against acknowledging that big market streaks do occur and that creates huge problems for premium sellers who double down. Until you have been humbled by one of those moves to a degree that effects your business, the natural tendency is to not adjust your methods. However, premium selling is an art, and like Rosewell's slice will be extremely effective done right. When attempted by a player with a 3.0 rating it will be a recipe for disaster when the market decides to make a protracted move. There are ways now to more cheaply insure the profit area without giving away that much from inside the sweet zone. This is due to the multiple expirations per month and the greater ability to protect positions from overnight moves by having greater access to the option market. Just my 2 cents. I make a comment every couple of years here. I did enjoy reading your post Jem,thanks for the well written thoughts.