Didn't realize this even existed, and just found out yesterday. For those that are interested.
Victor Niederhoffer Documentary - English Subtitles - 1997
- Thread starter The_Krakenite
- Start date
Did ET's MarketSurfer make a cameo? He was quite the VN fan and may have worked for him IIRC.
What risk management mistakes did Victor Niederhoffer make to blow up a few times? | Page 3 | Elite Trader
What risk management mistakes did Victor Niederhoffer make to blow up a few times? | Page 3 | Elite Trader
"On October 27, 1997, losses resulting from this investment, combined with a 554-point (7.2%) single-day decline in the Dow Jones Industrial Average (the eighth[20] largest point decline to date in index history), forced Niederhoffer Investments to close its doors. In a lawsuit that Niederhoffer later filed in the U.S. District Court for the Northern District of Illinois against the Chicago Mercantile Exchange, where he traded options, he alleged that floor traders colluded to drive the market down that day to force him out of his positions. Traders at the time said Refco may have been responsible for as much as $35 million of Niederhoffer's losses.[21]" https://en.wikipedia.org/wiki/Victor_Niederhoffer
-This is why you hedge. If he had hedged instead of doing naked shorts like the majority of the big shot investors, fund managers, traders and etc. who lost and blew up their accounts, his investment funds would've still survived. He might have still lost (very few people can survive a 7.2% drop in the market when betted the wrong way) but he would've still had money left to invest/trade.
Shorting options have extremely high probability of winning but when you lose, you lose huge, wiping out all of your gains. That's why the premiums are priced so high. Tail risk, my friend, tail risk. And the guy studied statistics. LOL Guess he fell asleep in class the day when they were talking about outliers.
At least he had the money to sue, this guy didn't after he did exactly the same thing 10 years ago: https://www.washingtonpost.com/arch...ped-out/090c57f7-fc75-4f02-9d22-585cf53c8548/
-This is why you hedge. If he had hedged instead of doing naked shorts like the majority of the big shot investors, fund managers, traders and etc. who lost and blew up their accounts, his investment funds would've still survived. He might have still lost (very few people can survive a 7.2% drop in the market when betted the wrong way) but he would've still had money left to invest/trade.
Shorting options have extremely high probability of winning but when you lose, you lose huge, wiping out all of your gains. That's why the premiums are priced so high. Tail risk, my friend, tail risk. And the guy studied statistics. LOL Guess he fell asleep in class the day when they were talking about outliers.
At least he had the money to sue, this guy didn't after he did exactly the same thing 10 years ago: https://www.washingtonpost.com/arch...ped-out/090c57f7-fc75-4f02-9d22-585cf53c8548/
Naw, I think only HelmHoltz showed up. Ohh-!
Finally read "The education". All I will say is what happened is the logical result of what transpires in the book : Huge ego, bizarre ideas( "trading and music" as a strategy, seriously???) and too much risk appetite. There are some interesting chapters though, but the most part is just intellectual garbage.
I have to watch this now.
I have to watch this now.
I have to confess, I also was so ... 'wtf, seriously?' by the time I got near the end of that book and hit the music chapter. On the flip-side, maybe I'm still too far to the left on the Dunning Kruger curve... just like typical leftist extremists always are. 
I watched the video earlier and really enjoyed it. I think with music he means a chart vs staff notation but the idea has obviously aged quite badly. I think it is from a different time when classical music was viewed as the highest of intellectual pursuits.
We also have the privilege of hindsight with all of us being shaped by the Asian crisis when it comes to tail risk and these events.
I wanted to see what the charts actually looked like and the Baht move is really crazier than anything else I can think of.
Selling puts on DJI though just makes no sense. These are closing prices so not sure how low the low was that day. Maybe he needed the premium because he knew redemptions would be coming? Otherwise, I don't understand why you would cap the profit if you thought things were way oversold on a huge down move. Why not just long the future? Maybe he couldn't risk a sideways market after the Baht loss with long futures or buying calls? I am sure it is hard to make the right decision after that Baht move with your career on the line.
We also have the privilege of hindsight with all of us being shaped by the Asian crisis when it comes to tail risk and these events.
I wanted to see what the charts actually looked like and the Baht move is really crazier than anything else I can think of.
Selling puts on DJI though just makes no sense. These are closing prices so not sure how low the low was that day. Maybe he needed the premium because he knew redemptions would be coming? Otherwise, I don't understand why you would cap the profit if you thought things were way oversold on a huge down move. Why not just long the future? Maybe he couldn't risk a sideways market after the Baht loss with long futures or buying calls? I am sure it is hard to make the right decision after that Baht move with your career on the line.
LOL. I can totally see that happen to him. It must be the 15 seconds he was talking about in the video. It seems it was a common occurence for him to get a margin call, talk about overleverage...His clients at one point were in awe to his 30% per year track record, not knowing they had a permanent 100% plus risk on their money.