I skimmed most of it but I think it is interesting that the New Yorker article pointed out that with the exception the days post 9/11 his fund has lost money every month since last April. I wonder if he can make his strategy work long-term because it seems that all the options guys are using tweaked probability distributions with "fat tails" for their option pricing. I would think this erodes his edge. But then again he runs a hedge fund and I just run my mouth... Scribe
I have a subscription. Been reading the stuff for years, and I grabbed whatever I could find at the library to read the rest. Yeah, they're far from perfect and often irritating. They reflect a certain NY bourgoisie. Ohhh! They wish so bad that Gore could have been elected. But every 2 weeks or so, sometime every week for a while, there is a little gem of an article in there. They have been going down somewhat the past couple of years. Way before it was fashionable to talk about germ warfare (like 3-4 years ago), they had two articles that gave the skinny. One by a guy who wrote a fabulous piece on the variola virus (smallpox). And one on that Soviet guy now living in the States who was the chief scientist for the Soviet germ warfare program. And on and on about many different subjects. A few good pieces by Seymour Hersh recently. You can disagree with the guy, but who else is publishing his material? The trick is that the NY has many contributors and they don't censor them. So you get the good deeply researched pieces. That piece last week on the Lebanese option trader guy, that wasn't bad. You need to read it between the lines a little bit (hell, where's all that money coming from they're losing in deep out-of-the-money options?) but interesting. You won't see that kind of stuff in Time or Newsweek, these worthless sold-out PC rags. The Updike stuff, and quite a few others like him, you can skip without missing anything. The NY do publish a lot of crap. But for 40 bucks a year or so, they are a bargain for the amount of good material. By the way, there was a New-Yorker writer from the 40's called Joseph Mitchell. Look for his books. Wonderful little pieces about the NY fauna from the era. Anyway, that's my 2 cents. Elvis
Well, Updkike I can do without Hey, do you remember that piece about the Turkish rug merchant, a couple of years ago? I never cared or knew about rugs and yet that was so deeply satisfying and profund. Typical New-Yorker stuff Elvis
I've thought about it more and it seems that Taleb and Neiderhoffer are each wedded to their beliefs in a very dogmatic way. Each holding the opposing view. Each believing that they are 'right'. As Taleb whittles down his capital he is also reducing his ability to earn a return. I wonder if Taleb has quantified (I know he loves to calculate everything) the risk that he will run out of money before volatility bails him out? What if he does? Will he re-evaluate his beliefs? Which is worse? blowing up in a dramatic way once or bleeding everyday until they carry you away? Neither. There are times that are best suited to being long volatility and others when you should be selling. Which time is which is the big question. But to hold the belief that there is only black and white is very simplistic. And by the way, why does the author of the article think that when you sell volatility you are opening yourself up to unlimited loss? Ever heard of a spread? (I presume Neiderhoffer hasn't)
Great link, as a foreign liberal capitalist trader I found the whole article facinating and educational. Where did I once read that pride commeth before a fall and a fool and his money are soon parted?