Why is everyone 'blaming' these locals/traders for taking advantage or 'conspiring' against VN during a period when he is in trouble? Isn't that what traders do? Last I understood, the objective is to take other people's money when they are caught wrong-footed and in a position of weakness. Maybe these floor traders should have just asked VN nicely if he would give them some money so that they can be as successful as he aspires to be? "Please Mr. Neiderhoffer, you have much more money and influence than us, will you be kind enough to throw us a few bucks so that we may live the American dream as well?" What about poor George Soros who sold out a huge amount of S&P 500 futures at the bottom of the market during the crash of '87. Nobody pushed the market to cause liquidations then? It's nothing personal, just a bunch of sharks smelling blood and doing what sharks do. If you dont want to get 'conspired against', don't allow yourself to 'bleed' and be in a position of weakness.
Still not a number but the beginning of an answer. Let's take Matador. You blew up 80% or so of the funds in the end, so were the remaining 20% more money than you ever took from investors for this particular fund ?
Why don't we define - competent trader profitable trader great trader competent manager profitable manager great manager Lets baseline our definitions against "...the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information publicly available at the time the investment is made.... .... In strong-form efficiency, share prices reflect all information, public and private, and no one can earn excess returns. If there are legal barriers to private information becoming public, as with insider trading laws, strong-form efficiency is impossible, except in the case where the laws are universally ignored. To test for strong-form efficiency, a market needs to exist where investors cannot consistently earn excess returns over a long period of time. Even if some money managers are consistently observed to beat the market, no refutation even of strong-form efficiency follows: with hundreds of thousands of fund managers worldwide, even a normal distribution of returns (as efficiency predicts) should be expected to produce a few dozen "star" performers." quotes are from http://en.wikipedia.org/wiki/Efficient-market_hypothesis IMO to be a notable trader or manager... you must at least show that your performance escaped the event horizon of EMH.
I agree the facts do speak for themselves. To me you have pointed out VN may be a great mentor, friend or trader guru. I find some of his writing interesting. I would not be surprised if he were a great mentor and friend.
I say, let's play spot the Smurf! Another too often used Surf apologist excuse. According to this, Victor only knows how to teach, but not how to trade. With friends like Smurfy, who needs enemies? Of course there could be a 3rd explanation. Victor had a great edge back in the old days and when it went away, he switched to selling insurance. Either way I would rather want to invest with the students, not with the mentor....
Maybe by the fact, that your fund's performance looked like one without hedging. But since you made us curious, if there was hedging and safety valves involved, how come the unfortunate events took place? There must be some kind of technical explanation....It would be very helpful to know, so maybe we could avoid the same fate in the future...
Do you understand the "black box" system enough to understand the risks inherent in their model? All else being equal, I would stay far away from any option-based model unless I have a deep understanding the probability distribution they've designed into their system. Any daytrader clicking away on their screens has (very roughly) a 50/50 chance of making a winning trade every time they enter the markets. If someone is able to show consistent profits for a number of years, there is a very good reason to suspect they have real skill. On the other hand, option sellers are able to tweak the odds they're taking dramatically. Instead of a 50/50 bet, they might be making decisions which are 99/1 in nature. Unless you understand this, you might be misled into believing in skill when there's nothing but luck involved. Even decade-long winning streaks might be nothing but decent luck in the hands of an options trader.
The black box/white box paradox was an obvious analogy showing, that no matter how complicated a system is, if it can be very closely approximated by a much simpler system, then one might as well just use the simpler system. 1. What number of years is statisfying for you? Both LTCM and Matador had 4 good years before blowing up. Did they have real skill or see point #2... 2. It COULD simply mean that one is using a strategy that is perfect for the market conditions of the time. Once the market changes, there goes the neighbourhood...