An insurer can never be its own re-insurers in trading! And there is no re-insurers available in trading! https://en.wikipedia.org/wiki/Reinsurance
I own his two books and read each twice, one is a man whose shoes grew too big for him and the second was a financial styled "Tuesday's with Morrie", both contained valuable information every trader needs to reflect on.' Active Trader kept Vic and Laura less than a year, other Trader's Sites stopped their contract, why? I like his optimism about holding stock indices for generations, his second book quoted various sources proving Market Indices outperformed bonds and bank deposits over the last One Hundred Years, why did people hate him? We discussed this not to many years ago, some of us have high respect for his methods and others despise his lack of risk-management and overconfidence that earned him the name from the New York Times "The Blow Up Artist". http://www.newyorker.com/magazine/2007/10/15/the-blow-up-artist http://www.elitetrader.com/et/index...tor-niederhoffer-blew-up-again.283377/page-33
How many Hedge Funds do you think could compete with Victor during the Iran Crisis, Gulf War 1, Asian and Japan Real Asset and Stock Bubble (1989), add in a Fed fighting inflation by moving rates to 10+%, it was not chance how he made bank. Add in the US Stock Market Meltdown in 1987 and the Recession and the long Real Estate crash lasting till 1997. Victor kicked butt in treacherous times, that's how we need to learn to trade during this times and they will return again. Hedge Funds are losing money with I-rates at 0%, losing money at a time the Federal Reserve rapped the America People by turning their "savings accounts" worthless and transferring wealth to the ultra-wealthy in form of cheap money for "tax inversions", "buy backs", massive bonus and executive payoffs", Victor traded great when everything was stacked against him. You don't graduate with a PHD in Economic and have such a huge alpha. How many rumors did you hear about Jim Crammer, Darn Dorfman, Carl Ichan, Micheal Milikan and others? How many Trades did Victor buy where the company got bought out shortly after? Ackman's been making money by forcing companies to get bought out, same with the Fund gobbling up CAG. Ackman's forcing companies to merge, do tax inversions, how does this form of Capitalism represent anything Adam Smith or Friedrich Hayek outlined? Seam's like Capitalism now is different, I wish Victor had trained himself to bully stocks in to getting bought out at a time where I-rates are allowing companies to destroy jobs an waste money, Victor is still cool! http://www.fedprimerate.com/wall_street_journal_prime_rate_history.htm
What's VN's story now...is he like bankrupt...well not literally bankrupt, but relatively speaking to his higher flying/peak days? Marty Schwartz has a better/higher record. You can make more trading options , rather than selling them for premium.
OP question: What risk management mistakes did Victor Niederhoffer made to blow up a few times? Answer: All of them, i think
The market is always changing. I really don't know why VN blew up the second time. In our conversations, he seemed to fully understand his weaknesses and how to prevent blowing out-- so i have no idea what actually occured.