Victor Niederhoffer's History
- Thread starter winarto_t
- Start date
I was wondering the same thing. But lets look at the recent past say he did 50% FOR FOUR YEARS IN A ROW.
Thats 1.5^4=5.0625
So if he had $1 to start its worth $5.0625.
Now he loses 70% thats .3*5.0625 left=1.51875. Giving a return of 51.875% over the last 4-5 years.
Or 11% per annum.
Of course I am unsure if he made 50% per year nett of fees etc etc.
But its possible that his investors just have not done well, but really have not lost money.
Thats 1.5^4=5.0625
So if he had $1 to start its worth $5.0625.
Now he loses 70% thats .3*5.0625 left=1.51875. Giving a return of 51.875% over the last 4-5 years.
Or 11% per annum.
Of course I am unsure if he made 50% per year nett of fees etc etc.
But its possible that his investors just have not done well, but really have not lost money.
Even if that were true, what does that tell you about the risk adjusted return?
And on top of that this calculation is based on the supposition that all the clients made the whole ride. In reality some clients will have made money and others will have lost.
Some guys might have tripled their account while others will have lost everything they had.
A professional trader does not blow up TWICE, although he can have a serious drawdown.
Professional trading is also about limiting the risk and protecting the capital. Otherwise it is pure gambling.
You are assuming that his fund stayed at the same size throughout, but it likely got bigger instead. I doubt he was trading with the same amount of $ in 03 or 04 as he was in 07'. Secondly, he lost more than 75% according to the article. Third, if we're talking about lifetime P&L, you also have to include his 1997 blow up and the gains he had prior to that loss of ~$140m.
Points taken especially about 1997.
Not sure what you mean by his funds got bigger, I assume you mean people gave him more cash?
Assuming you are its obviously impossible for me to know that info.
All I was trying too show is that even after a 70-75% blow its still possible to have generated a nett positive return.
The important word there being "possible".
I have not done detailed calculations, but it seemed to me that if you include the return of capital LTCM actually made a small amount of money.
But I may be wrong.
Not sure what you mean by his funds got bigger, I assume you mean people gave him more cash?
Assuming you are its obviously impossible for me to know that info.
All I was trying too show is that even after a 70-75% blow its still possible to have generated a nett positive return.
The important word there being "possible".
I have not done detailed calculations, but it seemed to me that if you include the return of capital LTCM actually made a small amount of money.
But I may be wrong.
It is possible, but it didn't happen. I posted Matador's chart in the other thread, look it up. It went back to zero after 5 years (breakeven performance for the 5 years). And Vic started out with only 10 million 5 years ago. Last year he had more than 300 millions AUM.
So if you do the math, there was more money lost than gained. Of course individual investors vary....