John Cassidy wrote a brilliant piece about Victor Niederhoffer for the New Yorker last week. I quote:
Even by Niederhoffer’s generous standards, going short a billion dollars of stock futures was a large bet, but it worked out well. Not long after the markets reopened on Monday, the bond yield climbed to five per cent, and stocks and stock futures tumbled. On Wednesday, the morning of my visit, shortly after the opening bell sounded on Wall Street, Niederhoffer repurchased the futures he had sold, making more than five million dollars.
Mr. Niederhoffer is, arguably, one of the best traders of all time. He has an intuitive sense of the markets combined with an amazing ability to process quantitative information as well. Everything I've ever read about him and from him has impressed me that he has a unique ability to combine these skills; the processing of math combined with a feeling about what the market is about to do.
The problem is that Mr. Niederhoffer has a tendency to blow up his hedge funds.
It's one thing to be a great trader. It's another thing to be a great money manager. He says of his own trading, and of managing money in general:
“The idea that you can make a lot of wealth in a steady, unspectacular fashion, with no great gyrations, is a canard ... If you are going to try and make forty or fifty per cent a year, tremendous variations are inevitable.”
Read the entire article here. And please don't risk very much on each trade that you take. Please.
