In Charles Ponzi's case, some of the investors got their money back.
http://en.wikipedia.org/wiki/Charles_Ponzi
Victor Niederhoffer--- Rare Silver Auction Catalog
- Thread starter marketsurfer
- Start date
In Charles Ponzi's case, some of the investors got their money back.
http://en.wikipedia.org/wiki/Charles_Ponzi
You have asserted this point repeatedly over the years. How do you know? Can you actually prove it? Remember, a 100% return one year and a 50% loss the next year brings us to an average return of 0%. Further, your assertion about VN's returning "far more" to his investors than he lost for them suggests absolute dollars. Therefore, you must adjust annual percentage returns for the various years by the amounts under management to validate your repeated claim.
You keep saying it. Now prove it!
P.S. How much more is "far more?"
P.P.S. Taowave, I see that you remarked on the absolute dollar issue before I did, while I was still writing my post. I acknowledge your splendid insight.
I think you know how much I wish that were the case.
However, my first loyalty is to the <b>truth</b>.
Surf, in the entire history of the stock market, has there <b>ever</b> been one single decade without multiple 10%+ market corrections? Had Vic fallen victim to a true Black Swan event this year , I'd defend his use of leverage all day long.
(I leave myself vulnerable to Black Swan events all the time- Most traders do.)
Reality is, there was no Black Swan market movement this year; Just a plain, normal and orderly 10% down move over the course of a few weeks. <b>Multiple moves of this type happen every single decade.</b> Tighter margin requirements during such periods are standard practice- No big surprise there either.
He was simply way overleveraged... by at least 250%, IMO.
I think he knew it was a mistake on an intellectual level, but let his emotions override his better judgment.
Good post, RM. It suggests that if VN traded with proper leverage and risk control, then he would generate fairly middling returns at best, quite apart from his periodic catastrophes (which would admittedly be moderated). What, then, makes him so great in his own mind? His willingness to not give a shit?
It appears that VN is a very ordinary trader who is desperately striving to be an extraordinary trader at his own peril and that of his clients. (That, and gaming the system for what it's worth.)
It appears that VN is a very ordinary trader who is desperately striving to be an extraordinary trader at his own peril and that of his clients. (That, and gaming the system for what it's worth.)
Sure, he's got AC/DC sized balls- But that's not what makes him so special.
His brilliance is his <b>creativity and originality</b>. He finds useful ways to mine and interpret data that no one else has ever thought of before. He's able to look at the market from all sorts of unconventional angles, seeing data not as numbers or lines but as musical notes, living creatures, and god knows what else.
His creativity is contagious- He makes you use your mind in ways you've never used it before. That's why he's such an inspiration to so many traders, at every skill level.
That's all well and good. But at the end of the day, look at his performance and the underlying risk he took to achieve it. True, he has amassed more money than I can ever hope to accumulate in my own shoe box, but his actual trading is decidedly short of inspiring.
I didn't get anything from reading either of his books. You, apparently, did. I don't deny that you are a better trader than I am, so perhaps it's me and not VN or his books. I have no qualms with his wanting to be a philosopher king of the trading world. There's always room for one more. But, if I am not mistaken, he regards himself as the greatest speculator of his time. That's where I beg to differ.
RM,
I can fully appreciate Vics insight,creativity and genius,but all I am hearing is he is(should be) a masterful research analyst whose greed/fear ratio is skewed just enough to go the way of the dinosaur should the markets move in a manner which he deemed "improbable"...
What I would like to know is what makes Vic different than any other premium seller who has sold way too much underlying notional should the shit hit the fan??
your point is taken, rm. however, i believe there was more to this situation than meets the eye. were not the margin requirments increased multiple times while VN was in the positions with huge size rendering a prompt exit impossible? i am not familiar with exchange rules, but it seems odd to me.
would there be another way for him to return the gains DEMANDED by the investors without submitting himself to the extraordinary size/risk?
just speculating again, but it appears to me that there were layers of risk controls and management in place indicating that this situation was truly beyond reasonable control.
surf
yes, well said, Rearden.
regards,
surf