Monday, July 7, 2008

Don Victor Niederhoffer (Don,not Down )

That's right. Don Victor just got Quixoted by the panel of judges at Luddic Research for this decade.. and going by his momentum the next decade's title looks sealed too.

Victor as we all know has shown untiring brilliance in volatile performances of many kinds in his personal, professional, sports, love and trading life that would have stretched the imagination of even Obama's pastor(of AIDs is a conspiracy of the US govt. against Blacks!! fame) into hitherto uncharted territory.
Victor was/is a brilliant mind that just kept on pitting his obvious(and harped on) brilliance against the oxen that populate the financial markets in (as is evident) not only emerging markets but also the most developed and sophisticated markets operated by man.
Now how these Oxen and other lumpen elements have managed to gatecrash the mathematical and well "counted" world of Vic is another debate- whether the entire volatile and non-rational behaviour of these markets can be educated into non-medieval impulses through proper vetting of IQ levels of the players thus enabling reward structures directly linked to the depth of thought in investment/ trading strategies.
Sample this..while the rustics and the bovine have been buying shares that go up and selling shares that go down to good effect .. Victor here has been spending quality time with trees in California (studying similarities between tree rings and market cycles), imagining identical flow and ebb between musical symphonies and market trends(he even took a violinist to a strategy pitch with his clients in his heydays), pinpointing structural replication of Cathedrals in chart formations, etc. when he is not taking cues from long dead fictional characters ( anything alive does not qualify as it would be competition and Victor is nothing if not superior).

So, Victor Q. had this simple(and as usual brilliant) money making trick.. keep selling long shot put options (a bet prices will not go down) in a rising market and pocket the premium every morning.. soon he was better than anyone in selling puts in daylight hours.. every time market fell he sold more puts and when the market rose( as it always does ) he made more money.The sheer brilliance boggled the watchers .. people shook there heads in amazement.
Then Oct 87 crash happened and wiped out Vic's little firm(and investors little cash) as also all the years of option premiums he had collected brilliantly.So he had to hock the family silver and all.. but that's not all..he was back a few years later and kicking serious ass with his volatile brilliance .
This time he was a far more Educated Speculator(having written a couple of books to that effect) and studied musical and sand patterns more vigorously to decode the mystical natural cycles of the stock market.
So some fresh turkeys gave him some money (to put an end to the violin performance at the minimum) and after a couple of years of heart pounding gyrations Vicky Q. promptly doubled down a bet that never came back.. leading to the last study of tree growth circles (circles which eerily resemble his worldIsMyOyster pet vision, which alas never materialized owing to poorly gated paddocks around the stock market) and the locals were witness to the sadly familiar sight of turkey meat deliveries from the Niederhoffer farms.
Down for the second time, Don Niederhoffer realized that only lesser men learn from failure and the better men do not learn from 2 failures, while the best of course never learn from anyone or anything (except maybe a cathedral or B-Flat minor).

DonVic's trading philosophy can be summed up in 3 words (Markets go Up)..because in between his tree ring study and musical model building he divined that markets have always ended up if you take a longer term view.. if it shows lower close,just increase your long term definition.
In fact, his "counting" showed that last century it was up a million % and why would it be different.. so always bullish is the way to riches.
Well Don has had to deal with certain irritants like various sets of "investors" left dead or dying on the wayside in the short term in his long term march to the million % returns , having to hock his family silver to get over some short term problems an finally to spend more time in the botanical gardens than trading due to lack of trading funds while lesser traders are rolling in billions of trading profits with zero insights into California redwoods.

So the Don( formerly called the Chairman or "chair" in his eye opening sight ) spends his time in reading and gently critiquing books wherein his intellect comes through clearer than whatever the original author was trying to say..and lapping up the sycophancy all other posters on his site shower him with ( actually dulls the pain of those daily maulings handed to him in the market).

What one finds on the website lately is the amazement and the surprised giggles of Victor Q. on a near daily basis at the fresh low the markets are making when he had ordained the markets always need to be bought.. if lower, more so.. if still lower, still more so.. till they come back up and prove you're the Daddy now.
As he potificates here :

..I kept wanting to say "Et tu, Tyler?" because I don't believe in bear markets, and always believe it's right to buy, especially at times like this.

Going through his posts on the site( apart from some fairly intelligent and many entertaining reads) one gets the picture Don Vic is like prancing about and brilliantly picking off pennies from the path of the SteamRoller that is unrelenting and unperturbed by the intelligent thought coursing through the brilliant prancer in it's path.. it knows it gets all in it's path..thinkers and non thinkers alike.

Now, after many an hour of analyzing this interesting example of human behavior Luddic Research has figured out that Don Vic Q. has figured it out correctly .. but his trading strategy is only suitably for investors with a 112 year investment horizon and ability to fund equity draw downs of 21,800% to 65,300 % in the ensuing years.. but he is right.. this strategy may well be infallible.

..and for his unerringly always erring vision he got the Don title for this decade hands (and markets ) down.

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