niederhoffer on the biggest market con games
http://www.dailyspeculations.com/vic/goodboy_interview.html
legendary speculator, market philosopher, gamesman, and racquet sport champion. He worked directly with George Soros and was ranked the number one hedge fund manager in the world for several years then disaster struck. In 1997, an overly expansive speculation in the Thai stock market caused spectacular losses in his accounts. Due to extensive leverage, his losses were magnified over and above his 50% loss in Thailand, and spillover effects from that debacle caused his fund to be well over its head in U.S. equities when they closed down limit on Oct. 27,1997.
In short, a combined sequence of events � huge declines in individual Thai stocks,losses in the Thai currency and the closing of the U.S. stock market and extensive up moves in the prices of options the fund was short; all came together in one day, in a short and disastrous coincidence. The loss, over and above profits made and withdrawals from the fund, totaled approximately $50 million. In addition to the losses in the funds, Victor had invested heavily in his own trading. To cover his debts and living expenses, after much soul-searching, he took out a mortgage on his house at an interest rate of 18% a year and sold his liquid assets, including his entire silver collection and his holdings in private and publicly held companies. He started again from the bottom. He scraped together a small trading stake and started plying his trade, slowly building back what was lost, determined never ever to allow the same mistake to happen twice. In a true example of the human spirit and his will to be a champion again, he is back in the game at a top level.
Since inception in February 2002, Vic�s current fund, �Matador, � had a three-year annualized return of 31%, placing it among the top five offshore funds. In 2004, Matador had a 50% return, the best of all offshore funds with more than $45 million in assets, according to the TASS rankings. Here�s a gentlemen who came from materially meager beginnings, rose to the top academically, athletically, and financially---lost it all, and is now back on top. He is truly someone we can all learn valuable market and life lessons from, since he has been and suceeded on the front lines in all capacities and levels .
Most investors and traders don�t realize the extent of the subterfuge, con games and outright deceit that occur daily in the financial markets. Victor and Laurel have extensively studied, researched and tested the commonly held beliefs of market participants. As described in their recent book �Practical Speculation�, they have discovered that many of these beliefs simply do not stand up to rigorous testing and are merely delusions that result in losses. In this interview, we will examine the biggest market con games and how you can profit from these popular delusions.
Dave: Welcome, Victor and Laurel, to Real World Trading.
Victor: Thank you for having us.
Dave: Let�s start off by talking about what first perked your interest in �stock market cons�.
Victor: Laurel and I have been working together on the philosophy of markets over the last 8 years. The ideas I will present are our joint work and some of them are touched on in our book, �Practical Speculation�. Laurel, would you please enlighten Dave as to the genesis of our research into the �Invasion of the Body Snatchers� concept.
Dave: Invasion of the body snatchers!? Isn�t that a sci-fi movie from the 1950�s?
Laurel : Yes, It�s a Jack Finney film from 1954. We believe it�s the perfect allegory for an introduction to the big market con. The film is about invaders from outer space that take over people�s bodies, making them hopeless and listless, ready to accept whatever propaganda they hear. It�s a perfect analogy of how investors are misled by market cons
Dave: I see. You believe that the public has been duped by the market�s propaganda machine, so to speak?
Victor: Part of the backdrop to our research was the concern about financial reporting and the corruption of corporate executives, as well as the normal issues with the economy like interest rates and international affairs. But there is always something wrong with the backdrop of the market, the economy and individual companies. The problem is, the public is generally mistaken in its enthusiasm for determining whether factors are bullish or bearish
Dave: Are you saying that it�s impossible to tell how the market will interpret various factors as positive or negative?
Victor: Yes. Retrospectively, after the market has gone down, it�s generally assumed that we are in a bear market and conditions are terrible. This causes the public to lose hope and refuse to take on risk.
Dave: Do bear markets even exist?
http://www.dailyspeculations.com/vic/goodboy_interview.html
http://www.dailyspeculations.com/vic/goodboy_interview.html
legendary speculator, market philosopher, gamesman, and racquet sport champion. He worked directly with George Soros and was ranked the number one hedge fund manager in the world for several years then disaster struck. In 1997, an overly expansive speculation in the Thai stock market caused spectacular losses in his accounts. Due to extensive leverage, his losses were magnified over and above his 50% loss in Thailand, and spillover effects from that debacle caused his fund to be well over its head in U.S. equities when they closed down limit on Oct. 27,1997.
In short, a combined sequence of events � huge declines in individual Thai stocks,losses in the Thai currency and the closing of the U.S. stock market and extensive up moves in the prices of options the fund was short; all came together in one day, in a short and disastrous coincidence. The loss, over and above profits made and withdrawals from the fund, totaled approximately $50 million. In addition to the losses in the funds, Victor had invested heavily in his own trading. To cover his debts and living expenses, after much soul-searching, he took out a mortgage on his house at an interest rate of 18% a year and sold his liquid assets, including his entire silver collection and his holdings in private and publicly held companies. He started again from the bottom. He scraped together a small trading stake and started plying his trade, slowly building back what was lost, determined never ever to allow the same mistake to happen twice. In a true example of the human spirit and his will to be a champion again, he is back in the game at a top level.
Since inception in February 2002, Vic�s current fund, �Matador, � had a three-year annualized return of 31%, placing it among the top five offshore funds. In 2004, Matador had a 50% return, the best of all offshore funds with more than $45 million in assets, according to the TASS rankings. Here�s a gentlemen who came from materially meager beginnings, rose to the top academically, athletically, and financially---lost it all, and is now back on top. He is truly someone we can all learn valuable market and life lessons from, since he has been and suceeded on the front lines in all capacities and levels .
Most investors and traders don�t realize the extent of the subterfuge, con games and outright deceit that occur daily in the financial markets. Victor and Laurel have extensively studied, researched and tested the commonly held beliefs of market participants. As described in their recent book �Practical Speculation�, they have discovered that many of these beliefs simply do not stand up to rigorous testing and are merely delusions that result in losses. In this interview, we will examine the biggest market con games and how you can profit from these popular delusions.
Dave: Welcome, Victor and Laurel, to Real World Trading.
Victor: Thank you for having us.
Dave: Let�s start off by talking about what first perked your interest in �stock market cons�.
Victor: Laurel and I have been working together on the philosophy of markets over the last 8 years. The ideas I will present are our joint work and some of them are touched on in our book, �Practical Speculation�. Laurel, would you please enlighten Dave as to the genesis of our research into the �Invasion of the Body Snatchers� concept.
Dave: Invasion of the body snatchers!? Isn�t that a sci-fi movie from the 1950�s?
Laurel : Yes, It�s a Jack Finney film from 1954. We believe it�s the perfect allegory for an introduction to the big market con. The film is about invaders from outer space that take over people�s bodies, making them hopeless and listless, ready to accept whatever propaganda they hear. It�s a perfect analogy of how investors are misled by market cons
Dave: I see. You believe that the public has been duped by the market�s propaganda machine, so to speak?
Victor: Part of the backdrop to our research was the concern about financial reporting and the corruption of corporate executives, as well as the normal issues with the economy like interest rates and international affairs. But there is always something wrong with the backdrop of the market, the economy and individual companies. The problem is, the public is generally mistaken in its enthusiasm for determining whether factors are bullish or bearish
Dave: Are you saying that it�s impossible to tell how the market will interpret various factors as positive or negative?
Victor: Yes. Retrospectively, after the market has gone down, it�s generally assumed that we are in a bear market and conditions are terrible. This causes the public to lose hope and refuse to take on risk.
Dave: Do bear markets even exist?
http://www.dailyspeculations.com/vic/goodboy_interview.html
