Niederhoffer new book

Quote from Rearden Metal:


These posts about whether Victor is a market wizard or not based on past performance crack me up. Mostly because they show such an incredible amount of niavete. Most of the guys profiled in Market Wizards either blew up or suffered huge losses at one point.
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"most"? the majority of them? wow. that would really be something. any names your friend would care to divulge?

Many of them have closed up shop (are you more brilliant because you stopped before you lost really big? Is Michael Jordan any less of a great b-ball player because he played past his prime?). Ditto New Market Wizards. One of the so-called brilliant guys in Stock Market Wizards turns out to have been a fraud (and I think one in New Market Wizards was also exposed as being bogus). Tom Baldwin was great on the floor. I understand his investments off the floor were not so successful. Does that mean he's an idiot?
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i think stopping before you lost really big does have to be taken into consideration.

as far as blowing up goes, we know from the book that richard dennis' accounts lost 50% of their value. that's a pretty big blow up. i would hesitate to call him an idiot though, because of the 'how' he done it.

as i understood it, accounting for the risk was a big part of dennis' (and the turtles) trading. dennis just got caught trading big size during a bad market. i think that's pretty excusable.

in niederhoffer's case, he makes no mention whatsoever of having any consideration of risk at all. in fact, he seems to thrive on barely staying alive in his positions. is that the mark of a great trader? hardly.
wasn't most of his 'success' really just a result of taking on these huge risks? i think so.
so in the end, his appetite for risk ends up killing him. no surprises there. isn't that exactly the type of trader you'd call an 'idiot'? i think so.

The other thing most of us don't know is how many market wizards came close to blowing up but didn't because some investment house or friend came to their rescue with an infusion of cash (and I know this was the case for one big rock star hedge fund guy) or chose to look the otherway when they should have been issuing a margin call. If Refco had looked the other way for 24 hrs. Niederhoffer wouldn't have blown up (not that I'm saying they should have but we all know clearing firms do this). If that had happened would Victor be more brilliant in these peoples' eyes? If they didn't know that he almost blew up would he be perceived now as being a wizard?
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as mav said, that doesn't mitigate niederhoffer's trading. it just means that there'd be less trading 'wizards'.

now, if you want to go ahead and say that the only way you're going to make it into multiple millions in trading is by taking on these huge 'make or break' risks, then do so.
it's not the way i feel, and it's not what my calculations show. but i haven't really been around for very long, so i could be dead wrong on that. if it really is the case that to get anywhere we have to cross our fingers and start betting big, then i'd realy have to re-evaluate my take on trading.
 
"No, the difference is I take them with my own money and he was taking them with other people's money."

AAintheBeltway, you have just indicated that Niederhoffer is infinitely smarter than you. :D

Isn't having a riskfree trade the ultimate ?

freealways
 
Quote from daniel_m:



now, if you want to go ahead and say that the only way you're going to make it into multiple millions in trading is by taking on these huge 'make or break' risks, then do so.
it's not the way i feel, and it's not what my calculations show. but i haven't really been around for very long, so i could be dead wrong on that. if it really is the case that to get anywhere we have to cross our fingers and start betting big, then i'd realy have to re-evaluate my take on trading.
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:cool:

agree... live by the sword die by it.

I
 
I am absolutely amazed to see so many people in this thread motivated to kick Niederhoffer in the head.

Their justification ranges from the absurd to the plain 'I have low self esteem, let me bash that guy a bit so I can make myself feel a bit better'.

Yes, I have read 'The art of speculation' and yes, he digresses a lot, but I can honestly say that I am glad that he was prepared to disclose the way he reasons and assesses the market.

Whether he went broke or not has got nothing to do with the knowledge he is prepared to share.

freealways
 
Quote from freealways:



Yes, I have read 'The art of speculation' and yes, he digresses a lot, but I can honestly say that I am glad that he was prepared to disclose the way he reasons and assesses the market.
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Thanks for sharing that.

Now, back to Niederhoffer.

His making it big wasn't as much a product of his market insights as it was of his mammoth risks.

Therefore, listening to his opinion on matters isn't a whole lot better than trying to gain an insight into the mind of a lottery winner.
 
That was a mistake of mine. Instead of saying ''The art of speculation'' I meant to refer to Niederhoffer's book 'The Education of a Speculator'.

Sorry,

freealways
 
finally found it on the bookshelves yesterday. been reading all night. I'll have a more thorough review later but i have to say, so far its brilliant.
 
After posting your thoughts (anonymously) on Elite Trader, some questions
have been asked:

" Clue me in - who/what in 'Market Wizards' was a fraud? Tom Baldwin? What
specifically are you refering to?

Thanks."

NO, NOT BALDWIN. WAS SIMPLY MAKING THE POINT THAT JUST BECAUSE SOMEONE
EXPERIENCES FAILURE THAT IS NOT A BASIS FOR SAYING THEY'RE AN IDIOT AND/OR
NO GOOD.

AS FOR THE ODD FRAUD THAT SNUCK IN UNDER SCHWAGER'S RADAR, READERS ARE
ADVISED TO DO THEIR OWN HOMEWORK. SEVERAL ARTICLES HAVE BEEN WRITTEN ON
THESE CHARACTERS IN THE PRESS, ONE RECENTLY.

AND WHAT ELSE GOES ON THAT WE DON'T KNOW ABOUT AND WHAT DOES IT MEAN? FOR
INSTANCE, THE SUCCESSFUL SAC MANAGEMENT IS BEING INVESTIGATED FOR INSIDER
TRADING AND POSTED SOME LESS THAN STELLER RESULTS EARLIER THIS YEAR. WILL IT
BE SHOWN THAT SAC PERFORMANCE WAS ABOUT INSIDER TIPS OR IS COHEN A BRILLIANT
TRADER? WILL COHEN CONTINUE TO HAVE THE SUCCESS HE'S HAD IN THE LAST
SEVERAL YEARS OR WILL HE HAVE A DOWN YEAR OR TWO? INSIDER TRADING
INVESTIGATIONS ASIDE, WOULD POOR PERFORMANCE AND REDEMPTIONS MAKE HIM AN
IDIOT?

These posts about whether Victor is a market wizard or not based on past
performance crack me up. Mostly because they show such an incredible amount
of niavete. Most of the guys profiled in Market Wizards either blew up or
suffered huge losses at one point.
----------------------------------------------------------------------------
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"most"? the majority of them? wow. that would really be something. any names
your friend would care to divulge?

AT SOME POINT JUST ABOUT EVERY TRADER SUFFERS LOSSES, SOMETIMES BIG ONES.
FROM RICHARD DENNIS TO SOROS TO JOHN HENRY. AGAIN, READERS ARE ADVISED TO
DO THEIR OWN HOMEWORK. THE IMPLOSIONS TEND TO BE VERY PUBLIC; THE BIG
LOSSES OR LACK OF PERFORMANCE LESS SO. THE POINT I WAS MAKING WAS THAT JUST
BECAUSE A LOSS OR POOR PERFORMANCE DIDN'T PLAY OUT ON THE FRONT PAGES OF THE
WSJ DOESN'T MEAN THEY DIDN'T HAPPEN TO EVEN THE GREATS. FROM MICHAEL
STEINHARDT TO JULIAN ROBERTSON TO GEORGE SOROS TO LINDA RASCHKE, THEY'VE ALL
HAD A MOMENT OF TAKING IT ON THE CHIN IN LOSSES (REPORTED IN THE PRESS
THOUGH NOT ALWAYS ON THE FRONT PAGES AND IN PLACES LIKE MAR). THE
AFOREMENTIONED MANAGERS AT ONE POINT CLOSED UP SHOP (SOME PERMANENTLY, SOME
JUST SELECT FUNDS). I AM NOT SUGGESTING THIS MEANS THEY ARE BAD TRADERS,
SIMPLY THAT BAD LOSSES HAPPEN TO ALMOST ALL TRADERS, GOOD OR OTHERWISE.

AS FOR THIS POST: But I will not praise the guy's trading record. It sucks.

MY RESPONSE IS: "REALLY? IF MAKING MILLIONS AND MILLIONS OF DOLLARS AGAIN
AND AGAIN SUCKS THEN I WANT TO SUCK LIKE THAT. YOU DON'T KEEP MAKING
MILLIONS LIKE THIS ON LUCK. ONCE, MAYBE TWICE, MAYBE EVEN THREE TIMES. BUT
NOT REPEATEDLY."

I UNDERSTAND WHY THE HEDGE FUND BIZ TOOK ISSUE WITH NIEDERHOFFER'S BLOW
UP -- IT PUT INSTITUTIONAL MONEY AT RISK FOR ALL OF THEM. HEDGE FUNDS AND
MANAGED FUTURES WERE CONSIDERED TOO VOLATILE FOR PENSIONS, FUNDS,
ENDOWMENTS, ETC. AND MANAGERS LIKE JOHN HENRY WORKED DILIGENTLY TO REDUCE
VOLATILITY. AN EVENT LIKE NIEDERHOFFER OR LTCM MADE ASSET GATHERING TOUGHER
FOR ALL THE PLAYERS. BUT OUTSIDE OF THE HEDGE FUND BIZ, I DON'T UNDERSTAND
HOW TRADERS CAN LOOK AT A TRADER LIKE NIEDERHOFFER AND SAY HE SUCKS.

ONE CAN TAKE ISSUE WITH NIEDERHOFFER'S METHODS -- THEY MAY BE PERCEIVED AS
TOO RISKY AND VOLATILE FOR SOME OR NOT MEET PARAMETERS OF WHAT SOME MAY
CONSIDER GOOD MONEY MANAGEMENT, BUT IT IS ILLOGICAL TO SAY HIS TRADING
RECORD SUCKS WHEN CLEARLY IT DOESN'T. LOSSES, EVEN BIG LOSSES, DO NOT
EVISCERATE SUCCESSES. PRIOR TO 1997, NIEDERHOFFER HAD ONE OF THE *LONGEST*
AND BEST TRACK RECORDS OF ANY FUND MANAGER AND HE'S CLIMBED BACK FROM
NOTHING TO AGAIN BE MAKING MILLIONS. I THINK THAT PEOPLE WHO DIS OTHER
PEOPLES' TRACK RECORDS OUGHT TO HAVE TO PUT UP THEIR NUMBERS -- AUDITED BY
THE LIKES OF MAR.
____________
 
Quote from freealways:

"No, the difference is I take them with my own money and he was taking them with other people's money."

AAintheBeltway, you have just indicated that Niederhoffer is infinitely smarter than you. :D

Isn't having a riskfree trade the ultimate ?

freealways
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Depends on whose money you lost. Some big investors might not be satisfied with a lecture on market probabilities.

Actually, this does point up a problem with hedge funds. At a certain point, if a fund is underwater enough, it is likely to dissolve anyway, so the manager has a perverse incentive to go for the Hail Mary.
 
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