Posts Tagged ‘Victor Niederhoffer’

Victor Niederhoffer Thinks He Caused The Stock Market Crash Of 1997

Victor Niederhoffer Thinks He Caused The Stock Market Crash Of 1997

Victor NiederhofferCourtesy of Courtney Comstock at Clusterstock 

Victor Niederhoffer thinks he caused the stock market crash of October 27, 1997, when the DOW dropped over 550 points.

In an interview with Slate Magazine, Nierhoffer explains his theory:

They all knew that if I was hurting in one market, I’d have to liquidate in the other markets.

Whenever someone’s in trouble, it circulates around Wall Street; you’d be amazed how just one small fish is enough to stop the wheels of commerce for long enough to relieve that person of his funds. And then the market goes back to doing exactly what it was going to do beforehand.

I still think that the crash of Oct. 27, 1997, was basically due to brokers running my position against me, knowing that I was on the ropes. The market had its greatest drop in the previous 10 years that day. And then the next day, once they were able to force me out, it went up more than it dropped.

Let’s compare his hypothesis with what some other financial experts think caused the crash.

Bernanke

Bernanke says that October is just a crazy month for the markets.

“Classically, October has always been the month for financial problems,” Mr. Bernanke told the WSJ in 2007

Krugman

The Asian markets were overvalued and the bubble burst - (Urbi Garay’s paper on the crisis)

Malcolm Gladwell

He sold a very large number of options on the S. & P. index, taking millions of dollars from other traders in exchange for promising to buy a basket of stocks from them at current prices, if the market ever fell.

It was an unhedged bet, or what was called on Wall Street a "naked put," meaning that he bet everyone on one outcome: he bet in favor of the large probability of making a small amount of money, and against the small probability of losing a large amount of money-and he lost. On October 27, 1997, the market plummeted eight per cent, and all of the many, many people who had bought those options from Niederhoffer came calling all at once, demanding that he buy back their stocks at pre-crash prices.

He ran through a hundred and thirty million dollars — his cash reserves, his savings, his other stocks — and when his…
continue reading


Tags: , , ,




The Art of Being Wrong

The Art of Being Wrong

Courtesy of Bill Luby at Vix & More

Wrong Way

Kathryn Schulz, a self-described ‘wrongologist,’ is the author of Being Wrong: Adventures in the Margin of Error.

I can’t say that I have read her book, but I think her interview with Victor Niederhoffer at Slate, Hoodoos, Hedge Funds, and Alibis: Victor Niederhoffer on Being Wrong should be required reading for all investors. One of the most difficult things to do in life is to learn from the mistakes of other people – and while Niederhoffer is famous mostly for his two large blowups, he is also reflective, insightful and a fun read. Perhaps more importantly, outside of those two blowups, Niederhoffer has a superb track record and is highly regarded for his trading skills. Many think that Niederhoffer’s blowups should negate the value of what Niederhoffer says. I think quite the opposite. Here is a trader we can all learn from, including both his successes and his failures.

For instance: 

“Unfortunately I was so successful for so many years in that particular field that I began to believe in my own success. I thought that because my method worked in markets that I knew about and had quantified, I could apply the same methods to something I didn’t know about.” 

And later:

“I didn’t have the capital to be strong enough to provide a backup in the case of unforeseen events. I didn’t have a proper foundation. I was playing with adversaries who were stronger than me and who actually made the rules. My base of operations was not diversified enough, and I was vulnerable to forces I couldn’t withstand. I was too vainglorious. In my opinion, those are recurring errors behind most disasters.”

But don’t stop at these excerpts. Click through to read the full interview at Slate.

If you are interested in Schulz’s thinking in a broad range of subjects outside of the investment world, Slate has captured a great deal of her content in her column The Wrong Stuff.

Many others have written about Niederhoffer. One of the better pieces I have encountered is John Cassidy’s lengthy feature in The New Yorker from October 2007 (coincidentally, right…
continue reading


Tags: , , ,




 
 
 

Zero Hedge

Oops! The Economy Is Like A Self-Driving Car

Courtesy of ZeroHedge. View original post here.

Submitted by Gail Tverberg via Our Finite World blog,

Back in 1776, Adam Smith talked about the “invisible hand” of the economy. Investopedia explains how the invisible hand works as, “In a free market economy, self-interested individuals operate through a system of mutual interdependence to promote the general benefit of society at large.”

We talk and act today as if governments and economic policy are what make the economy beh...



more from Tyler

Phil's Favorites

Zero Percent Down Loans in a Raging Bubble: Didn't We Try This Before?

Courtesy of Mish.

Australian parliament member Andrew Broad wants banks to accept zero percent down loans.

New.Au calls the proposal a “creative idea”.

Please consider First homebuyers with a good rental history shouldn’t have to save a deposit, Federal MP says.

IS THIS the lifeline struggling first home buyers have been waiting for?

Well, it’s certainly one of the more creative solutions to the country’s housing affordability crisis.
Federal Nationals MP Andrew Broad has suggested banks should forgo a deposit from first homebuyer...



more from Ilene

Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.



Date Found: Wednesday, 13 July 2016, 03:17:09 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: .."But, investors truly wonder if the moves are sustainable. As we have stressed, the valuation on Utilities looks stretched..."... RTT: No kidding!!



Date Found: Monday, 18 July 2016, 03:28:53 AM

Click for popup. Clear your browser cache if image is not showing.
Comment: Catherine Austin Fitts-The Debt Game Is Over youtu.be/feW-iDhkoiA



Date Found:...

more from Chart School

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Commodities Have Been Down So Long It May Be Time To Snap Them Up (Forbes)

The post-crisis years have not been good for real assets, the catchall term for commodities, energy, real estate and other investments based on selling real things instead of clever ideas.

A trader psychologist who consulted on Showtime's 'Billions' reveals the biggest mistake traders make (Business Insider)

Denise Shull is a decision coach and performance architect who consulted on Showtime’s&nbs...



more from Paul

ValueWalk

GNC Suspends Dividend: An Important Lesson on Dividend Safety

By Simply Safe Dividends. Originally published at ValueWalk.

GNC (GNC) surprised many income investors when management recently announced that the company’s dividend will be suspended.

After all, GNC has been in business for more than 80 years, maintains a payout ratio below 40%, generates solid free cash flow, and even increased its dividend every year since it began paying one in 2012 – including an 11% boost just last year.

These are some of the qualities we look for when evaluating companies for our Conservative Retirees dividend portfolio.

None of these strengths mattered, however.

GNC’s double-digit yield was wiped out immediately, adding insult to injury after the stock’s 70%+ decline over the past year.

...

more from ValueWalk

OpTrader

Swing trading portfolio - week of February 20th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Digital Currencies

How to Use, Trade, Store and Invest in Bitcoin Digital Assets - Step by Step, Part 1

By Reggie Middleton

(Originally published on Zero Hedge)

I will teach novices and experts alike how to fit Bitcoin into an investment portfolio safely and with the optimum risk-adjusted potential - along with step-by-step guides, instructions and tutorials.

This first part of the series starts with the basics, obtaining and managing your bitcoin.

What is Bitcoin?

First off, we need to know what Bitcoin is since most media pundits and even experienced financial types truly do not know. Bitcoin (capital "B") is a protocol driven network (very similar to that other popular protocol-based network, the Internet). This network is a blank tapestry upon which smart and creative actors can paint a cornucopia of applications (just like applicat...



more from Bitcoin

Kimble Charting Solutions

Fear Indicator; Hitting highest levels in history, says Joe Friday

Courtesy of Chris Kimble.

Markets have been on a steady rise and the same can be said for Inverse Fear ETF (XIV). Below looks at Inverse Fear ETF (XIV) since the lows in 2011.

CLICK ON CHART TO ENLARGE

What a difference a year can make! One year ago this week, XIV was testing rising channel support, as relative momentum was hitting levels last seen at the 2011 lows.

...



more from Kimble C.S.

Members' Corner

Save Your Relationship?

Courtesy of Nattering Naybob.

Once again it's "in the Toilet Thursday" or "Thursday's in the Loo".

Our last episode How to Poop At Work? answered the question, what to do when your at a big fancy pants meeting, when out of nowhere, you need to download a brown load?

This week's installment, Save Your Relationship, demonstrates that people will do just about anything to save their relationshits...

...

more from Our Members

Mapping The Market

NSA May Be Withholding Intel from President Trump

By Jean Luc

These GOP guys were so worried about Hillary's email server and now we find out that we had something close to a Russian mole in the White House. In the meantime, Trump keeps on using his unsecured phone, had high level conversation in his resort in front of dinner guests! It's getting so bad that rumors are now circulating that the NSA is not sharing information with the WH:

NSA May Be Withholding Intel from President Trump

By 

….Our spies have had enough of these shady Russian connections—and they are starting to push back….In light of this, and out of worries about the White House’s ability to keep secrets, some of our spy agencies have begun withholding intelligence fro...



more from M.T.M.

Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



more from Promotions

Biotech

The Medicines Company: Insider Buying

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

more from Biotech

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David



FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>