Farewell
then
(again)
Vic
Niederhoffer.
Randian,
empiricist
and most
excellent
squash player, (not
necessarily in
that order).
We won't
feel sorrow
because She
would've said:
"Pity is
for veaklings".
"The Trend
is your
friend",
was your
motto.
You (ooops!)
now have
another
data
point.
(With apologies to EJ Thribb & P.E.)
http://www.newyorker.com/reporting/2007/10/15/071015fa_fact_cassidy?printable=true
ReplyDeleteI'm assuming you saw this article, but just in case...
Maybe there will be a third chance...
ReplyDeleteR
Welcome to the Young Vic...putting on the same show as the Old Vic.
ReplyDeleteLike N.N. Taleb learned, the really difficult thing to come to terms with is being (or deeming oneself) smarter than everyone else and still having the shit kicked out of you by the market, and the simpletons, liberals, and altruist-sympathizers of which it is composed.
ReplyDeleteLet me say, he seems like a nice-enough guy to his disciples. ANd maybe he's also a good father. And I, too, am more or less an empiricist too when it comes to the markets.
But there is something creepy, neo-aryan, but distinctly wanting psychologically in the pseudo-superior drivel that his acolytes and disciples spew forth on Daily Speculations in an near-continuous attempt to validate and justify their self-asserted superiority, - politically, intellectually, and in terms of market methods. It is as if they are wearing this Randian cloak, yet not wholly comfortable with its fit and appearance, and so must constantly seek approval to help alleviate what is essentially their insecurity.
There is no schaudenfraude in watching another participant violently bite the dust, for tail or unexpected, and heretofore large unseen events that could happen to anyone (including oneself). But one leaves oneself decidedly splayed and prone when one for reasons of insecurity or false-pride, derisively denigrates other approaches, indeed different but not inferior, certainly no less valid, at least when viewed through the empirical eyes of backtests, and now confirmed when the actuals are viewed ex-post.
The biggest problem with Mr. Niederhoffer, it seems to me, is his willful ignoring of the boilerplate financial market saw that "past performance is not indicative of future returns."
ReplyDeletePut another way, the problem with data mining is that sometimes you dig up....a (land) mine.
My sniffer is cynical of results that do not have the benefit of reasonably plausible inferences for why. But this is (o should) elementary to someone clearly as accomplish, and with the resources of motivated disciples. I will confess to a belief that there may be numerical recipes for gaming recurring patterns I cannot neither fathom nor ferret out, and that strategies that bet upon may possess elements of the Philosophers stone. But position size, leverage, return forecast confidence, and most importantly when delving into the data-mined, risk-forecast confidence, which is all too-often ignored.
ReplyDeleteThe book "Triumph of the Optimists", should actually have been entitled: "The Triumph of those Survivorship-Bias Optimists (that fortuitously lived to tell the tale and trade another day)"
As Taleb pointed out in "Fooled by randomness" he observed many players in the options market who were short volatility and did very well over long (quiet and mean reverting) periods of time until their accumulated gains (as well as their careers) were wiped out by the inevitable fat tail
ReplyDeleteevent.
I feel the same can be said about Vic's approach. Most of the time short term price movements will oscillate around the price trend and these movements can be exploited, but you need to use leverage to make the numbers add up. Once in a while the market will do the unexpexted and it will then (thanks to the very same leverage) wipe you out.
In that sense the whole history of his fund(s) shouldnt really come as a big surprise. Or am I missing something ?
"There is no schaudenfraude in watching another participant violently bite the dust, for tail or unexpected, and heretofore large unseen events that could happen to anyone (including oneself). But one leaves oneself decidedly splayed and prone when one for reasons of insecurity or false-pride, derisively denigrates other approaches, indeed different but not inferior, certainly no less valid, at least when viewed through the empirical eyes of backtests, and now confirmed when the actuals are viewed ex-post."
ReplyDeleteThat was a hard paragraph to read. Now - heads or tails?