"But regrettably, duplicity is very, very important in life. The direct approach always creates tremendous obstruction and friction from the adversary, so often the indirect approach is necessary." Thoreau, "the eagle"
Taleb has never been considered a highly talented trader, never has he been portrayed as such either. Niederhoffer has fallen victim to his own overblown ego and arrogance, someone who failed that often and blew away the investments he was supposed to safeguard and still believes he is completely misunderstood by the rest of the world is probably supposed to be hammered down by his creator like a nail each time it sticks out. At least he comes across as a guy who has an extremely hard time to learn from mistakes because he does not believe those were mistakes in the first place. So much about two people who both will never end up in the traders' or investors' hall of fame. Re your comment on the correlation between consistent gains and the application of scientific and statistical approaches to trading, I think you are a little too naive. Could you have possibly forgotten some other elements? What about prudent risk management, patience, the correct reading of fear and greed (something that I have thus far not seen properly priced by any algorithm that I have ever come across), among others. That is precisely the point why Niederhoffer goes down time and again, because he thinks he has it all figured out with his competitive character and Harvard degree and S-Plus and Spreadsheet statistical approach to markets, while being completely ignorant on proper risk management, alas pulling the emergency exit string. P.S.: Its utterly funny how a guy still believes a huge dump in global markets was connected in whatsoever way with his positions he was holding at that time.
I understand why taleb may not end up in the trader's hall of fame but why not in the investor's hall of fame?
Doubt it. You perceive investors wanted to "take a flier and go for broke" with the money they had with him. And if they lost it all, oh well. They may have SAID that in the beginning, but what they REALLY meant was "make me a BIG return, but don't lose my money"...
So what? If he blows up and loses it all, having made bank in prior years means nothing. I can tell that you have never managed OPM. You're all talk and no experience.. just like Obama and his administration.
So, let me see whether I understood you correctly: You understand the risk-return relationship, bravo. And diversification is no foreign term to you, even better. That things can go bad is a probability certain sophisticated investors take into account, agreed with you. However, Magic Vic fuxxed up 3 times to such large order that he lost his investors hundreds of millions of dollars. There is something that is called maximum draw down. That is why Tiger closed certain funds, thats why Soros closed certain funds because max drawdown was reached. Vic, however, could not overcome his ego and had to double down and rather go for total defeat. After all he applied what he learned. There are only winners or losers, nothing in between. Not only did he do it once, not twice, three times, and thats only what is documented in popular media. The problem I have with this guy that he is blaming the rest of the world for his mistakes, yet he learns fuxxing NOTHING. He is not even aware of his statistical fallacies. He steadfastly believes that he is right and the markets figured it all wrong, thats the funny part. What I DONT UNDERSTAND is people who still entrust this guy with a dime. From now on, those who invest with him deserve to lose. Enough said!!!