VN was a child prodigy in math, and developed algo's which he used to measure expected market volatility. These algo's worked for a long time ... until they didn't. All he needed to do was either manage his risk or his leverage in a more conservative fashion, compund his returns, and he probably would be in the trading hall of fame. As a trader, I think this latest blow-up is pretty sad. It's hard to know what people will think of him now. JJ
Congratulations Pabst One has only to re-read the first few pages of this thread to get a real education, not about options or risk management, but about human nature... The friggin idiots who doubted you and tried to put you down end up looking like battery operated dildos buzzing away on a table. Brilliant!
fact is== the rumour was on the street long prior to the anonymous pabst posting his hedged statements here. why is this brilliant?? fact is== VN returned more to his investors, over the years, than he lost this time. why is this irrelevant? fact is== the actual story, was given to and broke by this writer, then retracted by the source. i don't know why, im guessing the timing wasn't correct upon further thought. not having any "direct information" other than what i am told---what else could i do? this is a game of risk, very very few can make it anything else. apparently these gifted few all gather on elite trader. surf
Its just the the same old story. People who lose in this game - particularly those with big egos and beginners - place their trading focus on being right. But this game is not about being right but about trading right.
nicely said, nattdog. VN was paid to take risk. only on elite trader are men such as VN villified by anonymous flamers who take great glee in the setbacks of others toiling in similar trenches. surf
Quotes from George Soros about VN, from 1995. "He doesnt have a proper fail safe mechanism". "[VN] Looked at markets as a casino where people act as Gamblers" This is not a good belief for a trader to have. Its likely that VN subconsciously considers himself a gambler. And thats why he always ends up a loser.
vn's return is not a fact until u post documented evidence. " apparently these gifted few all gather on elite trader." baron will be glad to hear that fact?
<i>"You clearly do not understand the Neiderhoffer Hedge (tm). You are obviously not on the Spec List. Here is the strategy: Sell OTM Index Puts. Hedge with LONG futures."</i> I knew several men who applied that type of market brilliance during 1999 ~ 2001. They sold naked puts on momentum tech stocks and bought long calls with the credit proceeds, all on margin. While markets were rising, their cumulative returns in the six to eight-figure range blew VN performance away by comparative %. They printed money faster than our Federal govt. The result of that was mentally & emotionally intoxicating. They became heros, legends in their own minds. Family, friends & strangers envied them. Watching massive amounts of $$ pile up in their accounts was the validation as successful traders that they sought. Can you imagine how good it felt to be them, right at the very top? Of course they were all warned of the dangers and consequence to such tactics. Do you think that reality, explained by the science of math and history was well received? Why would it be? When living out their fiscal fantasies in real life, their tactics of naked puts - long calls resulted in real money in real accounts. Why bother worrying about what might happen... look what's happening now! * Then the markets went from dipping to dropping. 2x long positions built on leverage were puked out or left to hemorrhage accounts dry. Not one of those traders I knew who played that game ended with any profits left from the overall effort. Some finished in actual debt after months ~ years of profitable "trading". Most of these guys were at the very least equal to much greater "traders" than VN. It doesn't take a rocket scientist IQ to play the double-bull game. Not hardly. Given the same money to play with, I'm quite sure several of those short put / long call operators would have easily out-performed VN. He hasn't done anything remarkable or unique in his career... his cumulative action was easy to duplicate or exceed by many men, perhaps even you. The fact that he is eclectic and makes for a fascinating story is irrelevant. The aura of mystique that he's some ten-foot indian legend means nothing. Going long leveraged in an uptrend makes everyone look like a market genius. Those who go longest the mostest appear to be biggest genus of all. Then market action reverts to the mean. It always does, in the end. Same end always awaits each one of these guys, non-traders the whole lot of them.
Very well put austinp. However, it's not accurate to call those with the failed strategy you described "non-traders." Some traders trade for thrill, some to make money. Those who trade for thrill are often lacking in risk management.