Don't hold it against him, he is still reeling from being voted a MORON by a count of 29-3. We even identified the 3 idiots who voted in his favor.
Thank God there is some sanity on ET yet.!!! Yes Vic made a market call this weekend, showed us stats to support, after a bounce in a huge 23-25 trading day downtrend in S&P. And was wrong , or early after an apparent Sizeable May Drawdown. 28% alleged. Why do Vic supporters bash the messengers of these FACTS..... you guys are cult-like. Why does this KoolAide maker get to change his prediction on his popular Website at least once after the FACT!!! He has a fiduciary responsibility does he NOT to be honest or admit a mistake; He is a trusted Hedge Fund Manager, to be Truthful after he gloats, allows articles, and Blows up a hedge Fund once that we know already. Why cant you see our point? What is in that KoolAide you guys drink? I ask should we turn the other cheek? Let it slide because of a nice 3 year run with lower capital and a brand new Fund? I dont think we are out of line in any respect. Why resort to verbal barbs to faceless posts? Answer the facts we present here all throughout this post. Victor does not admit to his apparent flaws. He makes himself public. We Dont!!!! He does.
Mr. FBI, I mean Mr. Riskarb..would you know if he covered after the rally or BEFORE the rally. I hope he participated in the 2 day rally.
OK, a serious post deserves a serous answer. It seems you are testing stuff at least. First of all there are many complex issues here, not least of which is volatility and margin. This tends not to be a problem for small traders, but when you're a big fund it's totally different. Simply put, you can't compare what you're doing to that of a large and highly aggressive fund. Secondly, nobody is talking about profits. I notice that 'Ubertrader' went away as soon as I mentioned them. Thirdly, nobody is talking about the odds of a turnaround after a big fall, and some of these trades have a huge success rate (I'm talking about near 100% winners) PROVIDED one can stay with them. I don't know what you were testing for, but there are ways of handling things which scew the percentages vastly in favour of buying and buying more. Invitably this is linked to other factors, such as your broker's margin requirements. These are all factors which just haven't been considered on this thread, everyone seems rooted in the kind of dross you see in trading books without even attempting to think outside the box. Ultimately the key is returns, and you're quite right to ask for VN's sharpe ratio. I think this is probably the best measure of a trader's strength. OK I don't have it, but I'm sure there are some other people here who have his month by month % returns. Let's compare notable traders who've been mentioned and see how the perform according to this criteria. I'm all for it. Then let's see who's the best.
Very good post. The Sharpe Ratio is a useless statistic and "more" useless with short gamma strategies...but still loved by the "sophisticated high net worth investors and institutions"
The idea that you can't do it because nobody else does it is laughably typical of a sheep. I think it's a great idea by giggling cynic.
OK, we seem to be back with the Arseimedes line of reasoning of pursuing his 'arete' (excellence supposedly) but without any clearcut method of measuring it. Except of course by the agreement of a self-congratulating frog pond of losers.
In the end, any measure of a trader's past is going to be limited by the fact that (1) the future cannot be predicted; and (2) there is no guarantee that past returns will be reflective of future returns. That said, if the returns of a trader--over the LONG haul-- are highly volatile, that may suggest that the trader is using too much leverage. Wild swings in returns are a warning sign. That said, a lack of volatility over the short term is also a warning sign. Gamma sellers are a notable example. Steady returns over months, and then, wham, down 15% or more in a month.
http://www.thestreet.com/_tscana/markets/hedgefunds/10292247.html Niederhoffer's Second Act Has Plot Twist By Matthew Goldstein Senior Writer 6/16/2006 1:11 PM EDT The May selloff in stocks couldn't have come at a worse time for hedge fund manager Victor Niederhoffer, who's been working hard to put his infamous 1990s boom-to-bust story behind him. In May, Niederhoffer's four-year-old Matador Fund posted one of its worst months ever, industry sources say. The fund, which specializes in trading stock futures and stock index futures, lost nearly 29% as the U.S. markets began to unravel, reducing the value of Matador's holdings to about $247 million. As of the end of May, the so-called commodity trading adviser fund, which was once up 31% for the year, was 6% in the red since the end of December. Results for June, which is shaping up as another harsh month for investors, could not be determined. Niederhoffer, in an email response to TheStreet.com, confirmed Matador's big percentage loss in May, but noted the fund has registered gains in 29 of the past 32 months. "As of May, we were close to even for the year,'' says Niederhoffer. "Considering everything, after three years where ... we were at or close to the top-performing CTA, I consider that well above what one might have hoped for.'' Niederhoffer's horrendous month comes as some on Wall Street are proclaiming the 62-year-old trader, who lost it all in the October 1997 market meltdown, back at the top of his game. Matador was up 56% last year and the fund's outsized performance in 2005 recently earned Niederhoffer a hedge fund industry award and a favorable profile in Bloomberg Markets, the news service's glossy magazine. On April 6, MARHedge, a hedge fund industry trade group, named Matador the top-performing CTA for its past performance. The group, during a ceremony at New York's swank St. Regis Hotel, noted that Matador not only posted a 56% gain in 2005, but that the fund has managed an average annual return of 41% since its inception. At the awards dinner, Niederhoffer, who is also a writer, told his hedge fund peers that he appreciated "the difficulty and the courage it took to give me an award, since I once went under,'' according to the Bloomberg article, which was published before Matador's May returns came to light. To be fair, May was a brutal month for stocks, with the S&P 500 falling 3%. Hedge funds, which had been enjoying a banner year up until May, were not immune from the carnage. Barclay Trading Group, a hedge fund tracking firm, estimates that 70% of hedge funds lost money in May, with the average fund dropping 3%. Barclay notes there were a number of funds that lost more than 20%. Clearly, Niederhoffer isn't the only manager seeing red on his trading screen these days. Still, Niederhoffer's bad month is an illustration of the high-risk trading strategy that the Connecticut-based hedge fund manager is famous for. Matador's tumble in May also reveals how easy it is for the tables to turn on a hot manager, especially when he's making big bets with borrowed money. Matador has a history of volatile trading months. Early in its life, the fund, which is open only to offshore investors, lost 30% in July 2002, according to Bloomberg. It was Niederhoffer's appetite for risk that led to his undoing in 1997 and the collapse of his former $130 million fund, which imploded when the Dow Jones Industrial Average plunged 554 points on Oct. 27, 1997. The selloff was sparked by a worldwide panic over an Asian currency crisis. The fund, which heavily relied on margin to make its bets, got caught on the wrong side of those trades and couldn't get out of those positions fast enough. The fund collapsed when Niederhoffer couldn't come up with the money to pay down the margin calls from his broker. The broker was Refco (RFXCQink Sheets - news - research - Cramer's Take), the once-giant commodities and derivatives firm that collapsed last October in an accounting scandal, allegedly engineered by former Refco CEO Phillip Bennett. Refco filed for bankruptcy shortly after it revealed that Bennett had been hiding hundreds of millions of dollars in old customer trading losses in a separate. Bennett allegedly hid the uncollectible debt in order to burnish Refco's books in advance of its August 2005 IPO. TheStreet.com and other news organizations reported last fall that some of the trading losses Bennett was hiding may have included debts that Refco couldn't collect from Niederhoffer's fund. But Niederhoffer has denied the allegation, saying his firm and Refco resolved all their claims a long time ago. Before the 1997 market plunge, Niederhoffer was considered one of Wall Street's top hedge fund managers -- at least to himself. In 1996, he published an autobiography, The Education of a Speculator, in which talked about his success as a rough-and-tumble trader with much bravado. Niederhoffer clearly hasn't lost his swagger. Despite Matador's lousy May performance, the hedge fund manager says he's not about to change his investing style. He says there's only one way to make money on Wall Street: taking risks. "Regrettably, I don't know how to make money without risk,'' says Niederhoffer in his email response. "If I ever do learn, my customers and I presumably will be much wealthier. I don't expect to learn.