Premium Sellers vs. Option Buyers

Below is a copy of the top rated comment on the book, "Practical Speculation", and please note that the vast majority of the reviewers rate the book a perfect 5 stars out of 5.
Even though the book was written a decade ago, I'd still highly recommend it.

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http://www.amazon.com/exec/obidos/tg/detail/-/0471443069/002-7904697-8024029

Most Helpful Customer Reviews
127 of 137 people found the following review helpful
$120000000 tuition fee paid on your behalf by Niederhoffer
By A Customer on July 16, 2003
Format: Hardcover
This is literally the cost of the wisdom in this book.

Mr.Niederhoffer is back after his fund with $120 million under management,rated the best for 12 consecutive years,lost big and was forced to close in 97.
He`s back explaining what went wrong and how to avoid the mistakes he himself committed before learning (the expensive way)what not to do.

It`s hard for a small fish like myself who lost his small stake (relatively speaking) few times in his years of ignorance to recommend this book since,I consider it a hidden treasure no one has the right to benefit from in this cut throat business without paying at least the tuition fee I and my fellow traders paid switching from one losing system to the next.

This said,Do you accept the gift?
This book is the closest thing to a free lunch on wall street.

The best investment ideas are found in the most unlikely places.
Isn`t Practical speculation,a book written by a hedge fund manager who lost everything and mortgaged his house, an unlikely place to find great investment ideas? Well,think again.
Victor Niederhoffer is imho the world`s best trader.

Now,here`s the man`s REAL TIME track record that you can verify for yourself:
In March 2003,Niederhoffer was THE ONLY bullish trader I know of.
He published his opinion in a very insightful column on MSN -why the market should go up 19%? - while the Prechters,Abelsons and the other trend followers of the world were talking about a 10 year bear mkt and a crash that only Mr.Prechter can help us conquer.

Mr.Niederhoffer`s prediction was not contingent on any break of a trendline or a moving average crossover or a resistance level breakout like most technicians tell you to save face in case their prediction goes astray as it usually does.
No sir,his prediction was a straightforward 19% no strings attached.

At the date of this review,16th of july,the market is up more than 15% from the date the article was published.Now my friend,this is a real time prediction not a retrospective one (I told you so type).

In his short term swing trading using the VIC (a variation from the volatility index)and the stock/bond ration,he caught 960 dow points out of 1050 on 12 trades.
Experienced traders know that predicting reversals in the long term let alone the short term is the hardest task for a trader and that the probabilty of achieving such endeavour by chance variation alone is nil.

In fact,most of the successful hedge fund managers were at one point or another either his students or his employees.

If you already missed the 15%+ return in 3 months or the 900+ dow points, cut your losses short like good traders do and BUY THIS BOOK.
There are two things that experienced traders and squash players of this world do not want: a)being on the other side of Niederhoffer`s trades like the abelsons of 2003.
b)having to return a Niederhoffer`s backhand like the khans of the 70s.
While I was never locked in a squash court with Niedrhoffer,I found myself unknowingly on the other side of one of his IBM trades last year at the expense of my trading account.

Last word of advice,do not let Niederhoffer`s humility fool you.He`s not crawling back slowly up the stairs as he likes to say,he is taking monster steps that neither you or I are capable of taking yet.
Like all the greats,he only talks about his losses and hardly mentions his wins.
If you followed his writings,predictions and recommendations as closely as I did you would quickly realize that the misses don`t amount to more than a very small percentage of the hits.

Laurel Kenner on the other hand is the most shortchanged writer in history.Co-authoring a book with a giant like Niederhoffer is not an easy task.To her credit,her writings prior to joining Niederhoffer at MSN showed a great understanding of the financial mkts and contrarian views on different aspects of speculation (a trait you can`t do without as a trader).

My only minor disappointment was the lack of mention of Livermore.In my years of ignorance I traded using Livermore`s methods and was wiped out few times before realizing that I was feeding the system with my hard earned money by placing mkt orders and only buying on up days and new highs a la Livermore.
Mr.Livermore in my opinion disseminated more ill founded wisdom than Graham since his words became cliches in all brokerage ofices.

On a final note,whether you buy this book or not won`t affect my wealth in anyway SO,IGNORE THIS REVIEW AND THE BOOK AT YOUR OWN EXPENSE" *************]

(This is just the top rated comment by an Amazon reviewer, but there are scores of other positive reviews. I just am suggesting people to purchase this book or borrow it from someone to read because you can learn from a true expert how to become a student of the markets and develop a scientific method to evolve your trading. As Victor writes, whether you are premium selling or buying, any edges are bound to disappear, so your trading must undergo constant changes. Victor and Laurel call this the "ever changing cycles" of the market. )

 

Based on Value (Investment Capital)? How about Peak-To-Valley Drawdown?

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http://en.wikipedia.org/wiki/Victor_Niederhoffer

On April 6, 2006, the industry group MarHedge awarded [8] Matador Fund Ltd. and Manchester Trading, two funds managed by Niederhoffer, the prize for best performance by a Commodity Trading Advisor (CTA) in the two years 2004 and 2005.

However, Niederhoffer's funds were caught up in the 2007 financial turbulence and credit crunch, and the Matador Fund was closed in September 2007 after a decline in value of more than seventy-five percent.[9][10]
"

 

where are the mods on this, false advertising who gives a fuck, seriously get over yourself..

 

People in general have a tendency to take credit for pure luck. It goes both ways. Someone goes long at the right moment - well, it's his bottom-picking skills, not luck. Someone gets stuck with a large skew position and the market takes a dump next day - well, of course, it was by design. In general, you would see that most people like that have pretty lousy track record in terms of reproducing their "sucess", e.g. Nasim Taleb (Eurodollar calls?) has been bleeding money year over year and did not manage to make money in any of the recent crisis.

 

Didn't Taleb closed his Emperica (or something like this) fund shortly before financial crisis? He was waiting for a black swan for like 4 years and was suffering a death by thousand cuts.

 

When I think of Taleb and Niederhoffer, a couple of things come to mind.

Both wonderfully erudite people, probably a pleasure to spend time with and learn from.

Using physics as an analogy, both gentlemen theoretical physicists trying to make it in applied physics.

 

Taleb partnered with Fitznagel who has been killing it the last 4 years. I don't know where guys think Taleb is bleeding to death. Taleb's fund was closed in 2002 or so. He partnered with Fitznagel a few years after or so. Fitznagel has produced some pretty impressive returns. Regardless using Taleb is a strawman for premium buying. God with this much mathematical prowess on this thread let's please not data mine.

 

What is Taleb's track record ?

 

In 1999, Spitznagel and author and financial mathematician Nassim Nicholas Taleb together created the first ever “tail-hedging” fund. Taleb went on to popularize the “black swan” concept in his books and Spitznagel went on to modify and implement the strategy (which became a major hedge fund investment asset class) at his very successful hedge fund Universa. (Taleb also played a passive role at Spitznagel's Universa, though Taleb has no ownership interest and is a “risk adviser” that “doesn't know their positions” and is “not involved in trading.”)

http://en.wikipedia.org/wiki/Mark_Spitznagel

 

"Taleb is now principal and senior scientific adviser at Universa"

Read more: http://www.businessinsider.com/mark-spitznagel-2011-6#ixzz2dHXJOV00