OK, just some facts, JJ: <i>" everyone knew about VN's first blowout, how he totally fucked over his friends and business associates who trusted him with their dough, and irretreivably burned bridges that could never be created again."</i> ----> He didn't "fuck over" anyone. His investors all knew that Vic routinely took on heavy risk. He didn't run away with their money- He speculated with it in the markets, just like he was supposed to do. As for burned bridges, many of the original investors who suffered big losses in '97, returned to invest again in Matador. <i>They know how he went through a severe depression, decided to become an author to salve his EGO, </i> --->Nope, he wrote ed-spec while still at his peak, BEFORE the events of '97. In the book, he clearly disclosed the way he takes over-leveraged positions, leaving himself completely vulnerable and a few ticks away from ruin. His investors knew exactly how risky their position was before the '97 blowup- It was all public information. Those of you bashing Vic- I'm 100% positive that if only you were to spend a few days with the man and got to know him personally, you'd see that he really is a great guy despite all of his well publicized flaws.
If you can arrange the meeting I will do the flying. I personally would like to learn his rational for over leveraging.
I doubt he'd even <i>try</i> to rationalize that. My guess is that he does it for the thrill/excitement/adrenalin rush.
im just speculating here, but isn't high risk a needed component of high returns? VN's AUM kept going up, he, being a fierce competitor, pushed himself to stay on top despite the quickly growing AUM. remember, his investors PAY him to take risk and push limits. this required more and more risk, to the threshold of actually reaching an omega point of critical mass in a particular market. it appears to me, that this, combined with forces outside of anyones control combined creating the perfect storm of destruction. just an idea. regards, surf
Aren't we all? Depends on what you call 'high returns' as the term applies to a hedge fund, doesn't it?
Sure he's an interesting guy, but in this biz, luck, and the resulting survivorship bias, (ultimately) control much of the destiny of these trading "legends". Naive thinking? I don't think so. The trick is to get the hell out before you screw it up. Witnesses for the defense: Cramer, Stienhardt, Buzzy... VN and his huge ego stayed far too long in the game. Good trading to all.
I thought we already established that Matador wasn't a HF, but a bad insurance company. RM, it is not that we have issues with Victor (after all we didn't lose money in his experiences), but Surf's UNCRITICAL deffense of him...
Surf,I am not well versed in the very method Vic made/lost his fortunes,but from the little I do know,he was short an excessive amount of gamma/vega relative to his capital.If I am not mistaken Vic was not attempting to arb out the "theoretical edge" between implied vol and historical vol,but employed short options as a directional bet... Vic has repeatedly demonstrated that his ego is bigger than the market,and we know that is a one way ticket to financial ruin.It is not up for debate,as it is a fact that Vic shorts way too much underlying notional in his market bets.He has proven that he can not manage his gamma(assuming he even attempts to),and clearly does a very poor job of performing adverse price simulations under disaster scenarios... IMHO,great trading does not consist of selling the 95% spot put with two weeks left and leveraging 5+ to 1 in massive size.If trading is a game of good offense with great defense,Vic has effectively benched his defense in HOPE that his offense will carry the team.Simply put,Vic enters position that one cant defend. For whatever reason,you place Vic on a trading pedestal,while he should be used as the classic example of a trader who refuses to check his ego and bow down to the god of "size".
VN is human and makes mistakes. it's the vitriol and schradenfeude flung his way on every misstep that needs to be countered. the guy pushes the limits, that's what he is PAID to do--institutions and very high net worth people CHOOSE to invest with him, after doing due dilegence-- there is no ignorance here---they are aware of the risks. given the nature of the markets, one can't win everytime--doesn't take away from his talent, skill and ability. furthermore, he has extracted far more more from the markets than lost-- why this fact is swept under the rug, i have no clue. regards, surf