Niederhoffer's year end contest! ($2500 prize for 3 best 2011 trading ideas)

[1prometheus]

The odds are not that dim if you understand the dailyspec site.

The Spec site is put together by a group that has been communicating and exchanging ideas for years and years on a daily basis, often many times a day. When people communicate frequently within an "in group", they often pick up and begin to use similar words and speech patterns. If you start to read the site regularly you will likely find this is one of the first things you notice.

As Mr. Niederhoffer is the hub for many of these relationships and has even helped to educate a good number of the participants on the methods they use to make a living, it is even less surprising that after years of submersion in this "in group" similar speech patterns and vocabulary emerge. In Thoreau's case it seems he might have worked with Mr. Niederhoffer at some point (or currently does?) so in his case the similarity is even less surprising.

If you have ever been on a tight knit sports team or similar you will find the same thing often happens.

Thoreau has made some good posts. In particular he drew some good insight from the guy who was doubling down fighting the trend a while back. T

There are some great, great traders who post here mixed in with all the "entertainment" it is important to keep an open mind.

Quote from Pekelo:

Sir, since I am not a native English speaker, your posts greatly helped me to increase my vocabulary, and for that I thank you.

In no way I was indicating that it was an egotistic approach to posting, rather I just noted that your choice of words is rather similar to Victor's. Since you are most likely familiar with statistics and probability, the chances that your vocabulary,age, style and knowledge are the same as Victor's but you are not him is shall we say, dim. But anyhow, if you wish to stay incognito, so be it, I won't spoil the fun.

Looks like you had a good year, congratulations!

p.s.: Occasionally you mix up the I/he, watch out for that.

 

[salvador90]

Quote from thoreau777:

It appears that the returns varied from over 100% to one account multiplied 22 times. All these was done with a very low standard deviation of returns. The capture ratio and the "Up percentage ratio" were decidedly impressive.

I have an acquainted that usually he tells me and rubs in my face that he can get 100% in a month and that he has done that, and that he doeesn't want my 20-25% steady returns since he can do better than me...

My reply is, what worth is making 100 or 2000% if after it somewhere down the road you make -100% ?

He keeps making huge returns at times (I've seen him multiplying his acount 30 fold in a short period... but he has gone bust 4 times).

So what you preach of 2000% is of no value to what good is making 200% or whatever if then you blow up? Yeah big deal ...

 

[Pekelo]

Quote from 1prometheus:

it is important to keep an open mind.

To paraphrase it in the style of the everlasting George W.:

My mind is like a parachute, it is only open for a short period of time and useful only when I am falling. Or something like that....

I don't know about you, but generally people don't want their friends blabbing about their performances unless they don't mind to share it anyway. I don't think it has been shared on the dailyspec site. So it is safe to say that Thoreau has Victor's knowledge and permission to share such data. To keep my parachute working, let's just treat Thoreau as Victor's unofficial spokesman.

Now if you don't mind, I have to go and make a jump....

 

[1prometheus]

If it is a fundamental idea I like to do this exercise:

I look at past 5 years of SEC filings and track cash flow through the financial statements from quarter to quarter and year to year.
Because cash is the blood it can help tie all the moving parts together into a mental picture. I then try to match this with what the "manager summary" is saying and look for congruence/incongruence.

If the financial statements are very complicated or I see allot of capital markets activity (Issuing shares) I usually give the idea a pass.

In a few cases I might look to take a small flier because I think the person suggesting the idea is high quality and I have been impressed with their ideas in the past.

I am less keen on assessing trading or macro ideas as I have found that reading the fluctuations is what works for me, I prefer not to seek input that might disrupt my trading rhythm.

Quote from Pekelo:

The philosophical question of the day:



When you get 2 dozens of seemingly good tips, how do you choose which one to follow? Remember, only time will tell how successful they are.

If you hear only 1 good tip, you have a rather easy, take it or leave it choice. But when you have 20+? That is abundance disturbance....

 

[thoreau777]

Quote from Visaria:

I think Victor N. is not particular thorough in his research.

Apart from selling out of the money puts, he does have some other strategies. One of these was particular bad. He was going to short British companies which had "aristocratic" type figures on the board of directors, for example a Lord or a Sir. His theory was that the companies had these guys on the board so as to make them look respectable, sort of silver spooned guys who were just a bunch of upper class twits.

I don't know how his shorting went, but his theory was a bunch of hooey. The Lords and knights who are directors very much tend to be v experienced and successful business people who have been knighted or made into a lord BECAUSE they succeeded in business.

As Taleb said of him, he lacks method.

Dear Visaria,

With all due respect, are you under the influence of a mind altering substance? Nassim never said Victor lacks method. Link please?

 

[thoreau777]

Quote from EPrado:

All I know is VN blew out his hedge fund not once, but twice doing the same exact strategy. He lost ALL his clients money. His statistical studies told him that mkt goes up over the long term. So he does the 'easy" thing which is to sell SP puts. As long as there is not a fierce correction he would be ok. Brilliant strategy, picking up nickels in front of a steamroller. The hilarious part of his whole ordeal is he whined that it was the guys on the trading floors that caused him to get blown out.

VN is a very smart man, who has no idea how to trade or manage risk. The second time around he again thought he was too smart for the markets and got blown out. Pretty sad that he didn't learn his lesson the first time.

As far as this poster Thoreau....doesn't matter if it's VN or not. Like VN you act all high and mighty and talk like a professor at Harvard. That's great. But in the world of trading you can take your degree....your statistical studies......and unless you know how to manage risk, they don't mean a thing. I think the story of VN's failure should be told to every aspiring trader. Is a great example of what not to do and how to fail at trading.


And don't worry about your kid's future. As long as you weren't one of the investors in his first two funds their college money should be ok. IF you were, I'm sorry that VN lost your money and that some of you will have kids that will have big old college loans to pay out once they graduate.

Dear EPrado,

The Matador Fund did not go down 100%. Please get your facts straight. Multitudes of investors still ended with a net credit after their investments at Matador depending on their involvement and duration. And the last painful performance in the last difficult period were indeed the result of collusion by certain market participants. A lawsuit ensued, and was won in court.

You are still missing the point. My involvement here on this website is to share my knowledge as I am mostly retired from active management of funds. I am merely hoping to spread my own knowledge in order that people can learn and employ a better methodology to trading. It is my way of "giving back". I urge you to visit www.dailyspeculations.com and educate yourself. Victor writes almost every day and loves to share his wisdom. If you cannot understand this, then I feel nothing but pity for you... and your parents.

 

[thoreau777]

Quote from EPrado:

["Is a great example of what not to do and how to fail at trading."]


Dear EPrado,

To restrain myself at your continued false assessments aimed at Mr. Niederhoffer is an arduous undertaking. I am extremely familiar to your personality cluster. Or should I say personality "disaster"? While it seems effortless to swing completely false insults at someone like Victor, I portend that your words will fall on a phlegmatic and a listless audience here...because your motives are clear. Victor pioneered the hedge fund "playbook" while you were hanging around likely tailgating and intimidating others in your pickup truck while racing to your minimum wage job, after watching an afternoon of MTV. I understand this is a psychological release of your kind to do this. I augur that after you are completely at a loss (mind and account), you will employ methods that people like Mr. Niederhoffer has espoused.

 

[Visaria]

Quote from thoreau777:

Dear Visaria,

With all due respect, are you under the influence of a mind altering substance? Nassim never said Victor lacks method. Link please?

No, but i certainty believe you may be.

"While Niederhoffer had a publicized hiccup, some of his trainees fared well because they added rigor and methodology to their statistical inference. In other words, Niederhoffer's empiricism missed just a modicum of methodology."

page 101, Fooled by Randomness, Nassim Nicholas Taleb, 2001 Hardback edition

(available from Amazon and all good bookshops, I suggest you buy a copy)

 

[EPrado]

Quote from thoreau777:

Quote from EPrado:

["Is a great example of what not to do and how to fail at trading."]


Dear EPrado,

To restrain myself at your continued false assessments aimed at Mr. Niederhoffer is an arduous undertaking. I am extremely familiar to your personality cluster. Or should I say personality "disaster"? While it seems effortless to swing completely false insults at someone like Victor, I portend that your words will fall on a phlegmatic and a listless audience here...because your motives are clear. Victor pioneered the hedge fund "playbook" while you were hanging around likely tailgating and intimidating others in your pickup truck while racing to your minimum wage job, after watching an afternoon of MTV. I understand this is a psychological release of your kind to do this. I augur that after you are completely at a loss (mind and account), you will employ methods that people like Mr. Niederhoffer has espoused.

Man, you do go on tilt rather easily. It's probably why guys like you/VN blow up. Facts are facts. I am not personally acting VN. Just stating what happened. He blew out his fund twice. He employed a basic strategy that returns a lot of small winning trades, but is open to that one blow out trade. Unfortunately for his investors he blew out twice. I know he came out and said how sorry he was...but in the end it was his risk mismanangement/ego that lost his clients money.

As far as his site? I have seen it. Is a bunch of guys who played dungeons and dragons during their youth and who all have now grown up and want to talk about it. I'll pass.

 

[gaj]

matador = -70 or 75% (or around there). to me that counts as second blowup.

there is a high probability that 2008 / 2009 would have resulted in another blowup or two if matador had not already been impoded.

and citation for where the case was won, please? i saw it was sealed:
http://www.thestreet.com/story/10247380/4/embattled-refco-dusts-off-the-white-flag.html

and it is not in the law records as a completed case, so thestreet.com is likely correct.

discussing a sealed case is a definite no-no.


money and risk management. the most important skill a trader can learn.

EDIT: this thread is also worth a read, where baron was told by v.n. that "Matador is very much viable. Has much cash and positions in excess of all requirements. And has no need to liquidate positions"
http://www.elitetrader.com/vb/showthread.php?s=&threadid=102468