Niederhoffer new book

Why someone should read Victor's book:

a. he TESTS everything, every statement out there about the markets, including a lot of the theories and gurus talked about in these message boards. As a trader its worthwhile getting his take on the testing of market theories, particularly since he's been doing it for some 35 years.

b. . he trades every day, day in and day out, like the rest of us. He's not like Prechter, who wouldn't know a quote screen from a toilet (although maybe he thinks they are the same). Or Shiller in academia, or even some of the guys in the chatroom spouting off trades that never work. Victor trades and has been to hell and back. I definitely can learn from a guy like that.

c. Here's a guy who built up a successful business in the 60s and 70s, became US Squash champ for 10 years on the side, traded for Soros, started his own successful hedge fundm written two books, and still pours his heart into his work and trading every day and has apparently been doing better than ever and then some. Again, please god, let me learn 1/10 of what this guy knows.

d. Many of the top hedge funds out there in terms of assets under management, have "descended" from Victor including funds run by Monroe Trout, Roy Niederhoffer (his brother), Toby Crabel, Weston Capital, etc. These guys as a group have a much higher success record than just about any other group of funds you can combine. They must have learned something from Victor.

What else can I learn from this book? I don't know. Thats why I'm going to go out and get it today (assuming its hit the bookstores already).
 
Quote from joethemoustache:

Exactly my thoughts. Having read Taleb one cannot help but think that the ones surviving in the game til their retirement somehow also mastered the destructive human traits that tend to bring disaster after success. I have a large quote in front of me when I trade that says "WINS MAKE YOU WEAK" to remember that the worst drawdowns tend come after you scored big. Not to quit when on a winning streak, but to remember to fend off overconfidence.
More...
This is exactly what Taleb was saying. The concept of fat tails is a little more complex that saying 'shit happens.' The reason that there are fat tails in the prob distribution is that one pattern of market behavior ends and another begins. There is no clear signal as to what pattern you are in now, nor is there a clear signal that a change is about to occur.

It seems paradoxical that a big loss happens after a series of wins. It more than a matter of hubris. The reason is that when a trader is successful with the current pattern, he over learns that pattern and levers the heck out of his position. When the pattern changes, he has trouble recognizing the change and does not cut back his leverage.
 
you got it puffy.

Besides, I used to read Vic's column on msn investor every time it came out, and I never heard so much useless crap in my life. He was bullish for the whole of last year and never admitted he was wrong even once. He was bullish on Worldcom all the way to zero. He's a quack.
 
Quote from Vishnu:

Why someone should read Victor's book:

a. he TESTS everything, every statement out there about the markets, including a lot of the theories and gurus talked about in these message boards. As a trader its worthwhile getting his take on the testing of market theories, particularly since he's been doing it for some 35 years.
.....
What else can I learn from this book? I don't know. Thats why I'm going to go out and get it today (assuming its hit the bookstores already).
More...

Quote from MondoTrader:

you got it puffy.

Besides, I used to read Vic's column on msn investor every time it came out, and I never heard so much useless crap in my life. He was bullish for the whole of last year and never admitted he was wrong even once. He was bullish on Worldcom all the way to zero. He's a quack.
More...

could it be that every time he analyzed Worldcom it was even more undervalue than the first time he analyzed it.
 
Quote from acrary:
Anybody have a link to how he got in trouble with the Thai currency. All I've been able to find is some info. on his last gasp attempt with the SP puts gamble (which looks pretty dumb).
http://www.derivativesstrategy.com/magazine/archive/2000/0800play.asp
More...


Niederhoffer is a mean-reversion trader, same as LTCM, which imho it's an approach no different from the Gambler's Fallacy, which makes you win small amounts of money in casinos for a long time but when it fails, fails big.

Niederhoffer loses $50m in Thailand
By Jane Martinson, Investment Correspondent
Financial Times
September 17, 1997, Wednesday LONDON EDITION
SECTION: FRONT PAGE - COMPANIES & MARKETS; Pg. 31

Victor Niederhoffer, the colourful US financial speculator, lost $ 50m - almost half of his funds under management - by taking a bullish stance on Thailand this year.

Last month Niederhoffer Global Systems, the largest of his four futures funds, suffered the worst loss with a 50 per cent fall in value to about $ 25m. The fund has since recovered by about 17 per cent but is still down on the year to date.

A friend of George Soros, the hedge fund guru, Mr Niederhoffer has about $ 110m under management. In spite of the losses, Mr Niederhoffer remained confident of his stance yesterday.

"I consider this to be a temporary market setback in a marketplace designed to shake weak people out of a great position."

Mr Niederhoffer, who is famed for his contrarian approach to investing, was nearly ruined by the 1987 stock market crash but has made good returns since.

Last year Niederhoffer Global Systems made a return on funds invested of 46.35 per cent.

He moved heavily into Thailand at the beginning of the year partly because it was the world's worst performing stock market in 1996.

But since the beginning of this year the Bangkok SET, the main Thai stock market, has fallen 37 percentage points while the Thai baht has lost 30 per cent of its value against the US dollar.

Rather than liquidate his holdings, Mr Niederhoffer has consolidated by withdrawing funds from other markets.

"We have circled the wagons and we consider this to be an ideal time to be in Thailand."

He believes that Thai banks, which dominate the stock market and which have suffered sharp losses in recent months, are a sound long-term holding.

He defines long-term as one or two years but believes the situation in Thailand will improve within "three to six months".

The contrarian approach to investment can be very successful over the longer term but disastrous in the short run, especially as speculators typically borrow to finance their positions.
More...
 
Can't be bothered reading a new book by him. I have never seen anyone else that I can both wholeheartedly agree on some principles and theories and yet still have serious reservations about other thoughts they might have. Can't get by the arm-flexing caginess that is Victor. Sorry but the 1st thing I was taught about running OPM (other peoples money) is that "You have to be able to come back tomorrow." Apparently noone had that conversation with him. There is NO excuse for losing 125% of your equity. Thats right, MORE than you actually have. Shouldn't be mentioned with the greats in the beginning of this thread is right, how 'bout right up there with the guys at LTCM. He won't go into books as 'Market Wizard' - will go down as just another example of what greed/leverage combo can do to even the smartest.
 
I was looking for a little more detail. All I've been able to figure out was he was long the baht and his position was levereged 7:1. About the same as allocation of 30k per SP biggie contract. The currency was devalued by 7% by the government and his position lost 50% because of the leverage. In other articles he said he was so levereged because the bhat had not dropped by more than 3% in any day in the previous 5 years. Just seems like a risk management mistake...

I know he's back through a firm headed by his wife - Manchester Trading LLC, and he got hurt by 911 by being short naked puts again.
 
You must log in or register to reply here.
Back
Top