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 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.
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…
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.
“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.”
“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…
The great ascent of Lady Gaga from an also-ran performer in the Lower East Side techno-rock clubs a few years ago to number one selling recording artist in five countries, four million albums sold, and 20 million singles, rivals nothing so much as the ascent of Kilimanjaro in 5½ hours or Apple’s 4000% rise from 5 to 210 and the fourth largest market cap company in four years. Here are some of the things we can learn from her about how to be successful in the markets.
1.The Lady has a core of admirers she can always count on: the gay community. "I’ve got so many gay fans and they’re loyal to me. They’ll always stand by me and I"ll always stand by them." Apple’s loyal fans are those that started out with them making music on their first computers and the minority group that liked the Apple operating system over and above the mainstream Microsoft one.
2. The product must be packaged and designed with great care and verve. Gaga has a special team, the Haus of Gaga, that designs all her clothes and stage performances. "When I’m writing music I’m thinking about what I’m going to wear on stage." Apple’s packaging, its vivid colors, its compactness, directness, ease of use is crucial to its success.
3. You have to be technical to be a success. Gaga was playing by ear at the age of four, planning to go to Julliard at 13. She writes her own music and her voice was good enough to attract Akon to sign her. The companies that have had the highest returns are people by engineers and computer scientists with technical degrees.
4. You need a vision to be successful. Gaga didn’t try to be the world’s #1 singer or its most profitable. But she had a vision to combine glam rock with simple melodies. The best performing companies, Apple or Cisco or Whole Foods, have a product that makes…
Please review a collection of WWW browsing results.Date Found: Sunday, 11 January 2015, 12:52:21 AM
Click for popup. Clear your browser cache if image is not showing. Comment: Paul Gambles, co-founder of MBMG Group, says there is a lot of risk in the stock market that could see equities correct 60 percent. He admits that this could be "some years away".
Date Found: Sunday, 11 January 2015, 01:05:55 AM
Click for popup. Clear your browser cache if image is not showing. Comment: NZDUSD See the spring at 0.76, strength to 0.7786. Need to see it jump the creek over 0.785
Date Found: Sunday, 11 January 2015, 01:19:51 AM
Click for popup. Clear your browser cache if im...
As widely expected, the New Year has begun with plenty of volatility on high trading volume, as investors fear more than just a mild correction to start out the year. Despite the strong fundamentals here in the U.S., there are plenty of dangers around the rest of the world, and many fear that our cozy comfort at home simply cannot remain insulated for much longer.
In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-ranked stocks from the top-ranked sectors.
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.
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An interview with John Ehlers of Stock Spotter and Mesa Software
Ilene: John, in our last discussion about trading systems in general and yours in particular (Can trading be reduced to cycles, stresses and vibrations?) you mentioned Monte Carlo simulations and their use in measuring performance. Can you explain more about how you measure the performance of a trading system?
John: Let's start with comparing trading with gambling. The two have several things in common. In both ...
So as I was saying yesterday (Bitcoin: The Biggest Clown Show In History?), Bitcoin has several obstacles on the path to potential success as an alternative currency. But I forgot to mention hacking and theft at Bitcoin exchanges and other technical problems. This is related to the lack of government backing and the fact that the value of Bitcoins is based entirely on confidence.
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
PSW Members - well, what a year for biotechs! The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down! The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months. What could go wrong?
Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.
Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies. A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...
Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at email@example.com with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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