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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…
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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…
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Lady Gaga: 10 Things We Can Learn [about Apple Inc. and effective branding], from Victor Niederhoffer

Courtesy of Chopshop

As investors of all stripes continue to go gaga for the Cult of Cupertino (snap, crackle, AAPL), what can we actually learn from Apple, Inc.?

Lady Gaga: 10 Things We Can Learn [from Apple Inc. about effective Saatchi-esque Lovemark branding], from Victor Niederhoffer

Click here for the original "Lady Gaga: 10 Things We Can Learn, from Victor Niederhoffer" … reproduced below in its entirety.

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…
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Help One Of Our Own PSW Members

"Hello PSW Members –

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 jennifersurovy@yahoo.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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743"

Thank you for you time!

 
 

Zero Hedge

The Only Chart You Will Need To Trade Russian Sanctions

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

US and European financials faded notably after Europe and then US unveiled new sanctions against Russia today. Most notably, the decision to sanction Russia's largest banks (and ban trading and capital markets access) has ramifications for the global financial system's stability given the increasingly inter-connected nature of the world. For that reason, we thought Bloomberg Briefs' chart of the most exposed banking systems by nation to any systemic issues in Russia would be useful.

 

 

As Maxime Sbaihi reports,

...



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Chart School

The End of QE: Some Common Misunderstandings

Courtesy of Doug Short.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

I have discussed for some time that there are a couple of inherent misunderstandings about the Federal Reserve's ending of the current large-scale asset purchase program (LSAP), or more affectionately known as Quantitative Easing (QE). The first is "tapering is not tightening" and the second is "interest rates will rise." Let me explain.

The Federal Reserve has been running extremely "accommodative" monetary policies since the end 2008. The two primary goals of the Federal Reserve have been to artificially suppress interest rates and boost asset prices in "hopes" that an organic economic recovery would take root. As I quoted in "How E...



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Phil's Favorites

Oh Yeah, About That Con Con Con

Oh Yeah, About That Con Con Con

Courtesy of Lee Adler 

As usual, the Conference Board and all the major media press release repeaters put a positive spin on the highest reading of Consumer Confidence (aka the Con Con Con) since October 2007. None of the media echo chamber reports pointed out that October 2007 was the beginning of the worst bear market in US stocks since 1973-74. So I thought it important that the issue be given a little perspective (as I did recently with the Thompson Rhoiders Michigan Con Index).

First things first, the Con Con Con is an amalgamation of the results of two survey questions presented to “consumers” (aka real people). One question asks...



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All About Trends

Mid-Day Update

Reminder: David 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...

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Insider Scoop

Report: IBM Rejects Offer For Chip Operations

Courtesy of Benzinga.

Related IBM Blackberry Attempts To Rebound From IBM/Apple Deal The 10 Most-Respected Corporate Brands Can the iRally Endure? (Fox Business)

International Business Machines (NYSE: IBM) rejected an offer for part of its semiconductor manufacturing operations, according to unnamed sources cited by ...



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Option Review

Kellogg Call Options Active Ahead Of Earnings

Shares in packaged foods producer Kellogg Co. (Ticker: K) are in positive territory on Monday afternoon, trading up by roughly 0.20% at $65.48 as of 2:20 p.m. ET. Options volume on the stock is well above average levels today, with around 12,500 contracts traded on the name versus an average daily reading of around 1,700 contracts. Most of the volume is concentrated in September expiry calls, perhaps ahead of the company’s second-quarter earnings report set for release ahead of the opening bell on Thursday. Time and sales data suggests traders are snapping up calls at the Sep 67.5, 70.0 and 72.5 strikes. Volume is heaviest in the Sep 72.5 strike calls, with around 4,600 contracts traded against sizable open interest of approximately 11,800 contracts. It looks like traders paid an average premium of $0.37 per contrac...



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Sabrient

Sector Detector: Bold bulls dare meek bears to take another crack

Courtesy of Sabrient Systems and Gradient Analytics

Once again, stocks have shown some inkling of weakness. But every other time for almost three years running, the bears have failed to pile on and get a real correction in gear. Will this time be different? Bulls are almost daring them to try it, putting forth their best Dirty Harry impression: “Go ahead, make my day.” Despite weak or neutral charts and moderately bullish (at best) sector rankings, the trend is definitely on the side of the bulls, not to mention the bears’ neurotic skittishness about emerging into the sunlight.

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, incl...



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OpTrader

Swing trading portfolio - week of July 28th, 2014

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 ...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW in the comments below each post. 

Our weekly newsletter Stock World Weekly is ready for your enjoyment.

Read about the week ahead, trade ideas from Phil, and more. Please click here and sign in with your PSW user name and password. Or take a free trial.

We appreciate your feedback--please let us know what you think in the comment section below.  

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Digital Currencies

BitLicense Part 1 - Can Poorly Thought Out Regulation Drive the US Economy Back into the Dark Ages?

Courtesy of Reggie Middleton.

An Op-Ed piece penned by Veritaseum Chief Contracts Officer, Matt Bogosian

This past weekend (despite American Airlines' best efforts), Reggie and I made it to the Second Annual North American Bitcoin Conference in Chicago. While there were some very creative (and very ambitious) ideas on how to try to realize the disruptive Bitcoin protocol, one of the predominant topics of discussion was New York Superintendent of Financial Services Benjamin Lawsky's proposed Bitcoin regulations (the BitLicense proposal) - percieved by many participants at the event as an apparent ...



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Market Shadows

Danger: Falling Prices

Danger: Falling Prices

By Dr. Paul Price of Market Shadows

 

We tried holding up stock prices but couldn’t get the job done. Market Shadows’ Virtual Value Portfolio dipped by 2% during the week but still holds on to a market-beating 8.45% gain YTD. There was no escaping the downdraft after a major Portuguese bank failed. Of all the triggers for a large selloff, I’d guess the Portuguese bank failure was pretty far down most people's list of "things to worry about." 

All three major indices gave up some ground with the Nasdaq composite taking the hardest hi...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Promotions

See Live Demo Of This Google-Like Trade Algorithm

I just wanted to be sure you saw this.  There’s a ‘live’ training webinar this Thursday, March 27th at Noon or 9:00 pm ET.

If GOOGLE, the NSA, and Steve Jobs all got together in a room with the task of building a tremendously accurate trading algorithm… it wouldn’t just be any ordinary system… it’d be the greatest trading algorithm in the world.

Well, I hate to break it to you though… they never got around to building it, but my friends at Market Tamer did.

Follow this link to register for their training webinar where they’ll demonstrate the tested and proven Algorithm powered by the same technological principles that have made GOOGLE the #1 search engine on the planet!

And get this…had you done nothing b...



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