Thanks for the article. So he wasn't long the currency. He was long the stocks and got killed by a declining market + currency devaluation. Thank you very much!
Here's a lengthy article that touches upon niederhoffer perception of market probability. Seems like he loves to sell premium and thats what got him killed. Rest of the article talks about another hedge fund that exclusively buys deep OTM options, a completely opposite strategy. http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm
I consider Education of a Speculator as one of the best book I've ever read, in any field. I couldn't care less if he blew up his fund. So what? Does that make the book worthless? It's completely irrelevant. I have gained much by the EdSpec, both in my daily speculation and my life in general. His opninion that everything that can be tested must be tested really took me by surprise. Obviously Niederhoffer is intelligent and he has read an awful lot of books. BTW, I also consider Fooled by randomness in the same rank as EdSpec.
That's one of my favorite trading quotes. South Africa is a country in self destruction mode. It is ruled by incompetant Marxist morons, so ignorant they even publicly deny that HIV causes AIDS. So How'd my heavy short S.A. Rand position do last year? How's this shit for irrationality: http://exchanges.barchart.com/cme/cmedrah3.htm
Agree, you can still learn something from him even if he's a repeat loser. Like some other poster wrote, all it takes is just one chink in your armor to make you blow up, but it doesn't mean all of your armor is useless.
Chronic fader and adder... any monkey can do that. Especially with OPM. And $110M ain't nearly enough to keep butting heads with the markets every day. So what... he's eccentric. Why do people confuse eccentricity with intelligence? He's an idiot for a trader. Risk control and money management is not a part of his vocabulary or his writings - and that, my friends, makes him a crappy trader. If he's not right, there is no end point, strategy, or procedure to pull his testes out of the fire.
My thoughts Tide, well said. The only part where I would differ is this: I will make it a must to read his new book... because learning from other people's foolishness/mistakes/great research/eccentric idiosyncrasies can't hurt, only help. Ok, leave the I-walk-around-in-my-office-in-socks flash of genius on the side for a sec... The fact that Nied is great at market research does not imply that he should be revered or glorified or included in the ranks of Market Wizards. Yes, we can learn from whatever data mining he does, if the fact that 90% of the time a CEO scratches his rear the stock rallies the next day by 1.3% gets you excited, all the power to you. No seriously, if you dig (pun intended) his testing and statiscal work then you can probably benefit from it. I'm looking forward to his new ideas in his new book, just to see what he comes up with as modus operandi after repeated massive failures. I'm amazed that he still finds people to back him. The more I think of people like him and LTCM, the more I am in awe of the fact that the market is the great equalizer of knowledge and respecter of no persons. The market doesn't give a rat's ass that Nied was a US squash champ, or that he was Harvard educated, or that he has done extensive testing, or that he worked a little while for someone he should have learned wisdom from, Soros. While I most certainly respect and admire these accomplishments and hope to learn from his perserverance/success, the market still doesn't care. A 125% loss should be a reason to warn all of the dangers of a lack of money management and risk control. As Tide and Mondotrader put it, the fact is that he blew up big. Rearden Metal also says that Dennis blew up too, so his status as market wizard is probably nullified. (Rearden, thanks for the info on Dennis, I'm sorry you had to lose that much, you are right that the system is overhyped. I still don't know how those turtles make as much money though. Maybe it's a coincidence that Dunn, Eckhardt, Abraham, Ragar, Cheval et al are making big cachingos) But imho, Nied was never a market wizard in the first place. Again, that doesn't mean we can't learn from his research/knowledge/brilliance. I guess the bottom line for me is that knowledge and wisdom are two different things, and as long as we can recognize and internalize that, we should all be safe.
>that Taleb's fund. Yep. Nice of Gladwell not to report Empirica's results. If Taleb couldn't make money in a -24% maket, when exactly might that happen? Maybe that's why the trader turned to philosophy. And denigrating "lucky" folk like Nied. Envy needs comfort. I liked the philosophy lessons in Fooled, but could have done without all that presumably biographical pseudo-fiction.
And Taleb implies that's he's a better trader/investor than Buffett the only reason he's not in Forbes is because he lives better, while Buffet lives frugally. Righttttttt!!!!!!!!!