I don't understand this whole thread. Plenty of these guys are still very profitable. (Eckhardt, Seykota, Dennis, PTJ, Cohen, Trout, etc) Why is everyone making out that their strategies don't work anymore? Check the performance of their funds on the various websites if you don't believe it. Niederhoffer was never interviewed as a wizard and took (takes?) notoriously large open ended risks (i.e. short premium). Lots of the turtles go well still too. (Hawkesbill, Chesapeake etc). Where's the "strategy failing"?
Actually, I think traders have a strong argument: they've got a handful of billionaires who have done very well. Maybe not as consistently (and certainly not as large) as WB, but then WB is just one guy. Who do the fundamental people have really that have done that well? Again, just a handful and some of them built their fortune in the bull. I don't understand why trading doesn't do better in academia...Oh well, that's probably a good thing!
Thx! I looked at the top link and it's fantastic. JHenry and Quadriga are impressive. I'll check out the bottom link tomorrow - it's late. Thx again...
There is a simple way to test the "they got lucky" hypothesis - look at their combined cumulative career profits since the Market Wizards books were published. If you add up the combined profits, they are much higher than what you would expect from a random selection of traders, let alone a randomly selected proportion of the population in any field of human endeavour. And this is including the ones who "blew up", had poor results, stopped trading/retired, found their edge went away etc. So, someone selected a number of traders with excellent track records, who then gave clear explanations of definite methods they used to make money (some of which, especially in the last book, were obviously purely down to a once in a lifetime bull market existing). There is still the possibility of survivorship bias. Then, *after* the books were published, i.e. on a forward-looking experiment with no survivorship bias whatsoever, the Market Wizards make a collective net profit in the tens of billions. Anyone who calls that luck might want to take a refresher course in logic and statistical inference. As for Buffett, he is 20-30 years older than most of the "Wizards". Compound $1 billion at 14% for 30 years, and you get $50 billion. And remember that most trading markets, at that kind of size, become illiquid, so favour Buffett's long-term hold + corporate takeovers + insurance sales over short-term speculation; the tax system also has a big bias in favour over investing vs trading. But if any of the better Wizards, like Druckenmiller, Cohen, PTJ, Kovner etc wanted to keep on trading and investing professionally for 30 years, rather than retiring and enjoying the good life, then I'm sure they could manage a 14% return on their investments. P.S. regarding traders' edge disappearing - this is easily demonstrated by looking at, for example, mutual fund timers and time zone arbitrageurs (now there are industry-wide high switching costs, and the activity is borderline illegal), or floor traders (electronic trading removed their execution speed and information-flow edge). In each case there are specifically identifiable reasons why they had superior risk/adjusted returns. Those reasons then disappeared - thus their method no longer worked. That's a pretty open and shut case IMO.
He was a protege of Soros. He went on to found and manage his own global macro hedge fund and had terrific performance for a few years. He blew up spectacularly on a wrong way bet on the Thai Baht in 1997. He now manages a much more modest amount of money and has written a couple of books since his implosion, called "The Education of a Speculator" and "The Art of Speculation". I found the latter to be a good read. He also writes interesting pieces on his web site: http://www.dailyspeculations.com Despite the criticisms posted here (and they are valid IMHO) he does write some very good stuff if you can make it through all the "off topic" spiel he tortures you with.
I think you have to consider that Buffett manages 180billion in assets, so to say that someone like PTJ can compound his way up is misguided in my view. For PTJ to manage that kinda dough he probably would have to modify/change his trading methodology. Not to mention most hedge funds use leverage to add some octane to their performance. Good luck trying to leverage 180billion. Apparently PTJ is 'only' worth 0.65b which says something about his own confidence in his fund and ability.
that's the just inverse of saying "if it has value, it will be popular", a statement very few would agree with. value isn't determined by the "rightness" of the material, it's determined by what the reader gets from it.
not referring to "stationary" price action, referring to "stationarity", a statistical measure which is an entirely different beast.