YouSaid · the spoken record

Victor Niederhoffer

lines on the record: 60
first: 2017-09-15
most recent: 2017-09-15
sittings or episodes: 1
sources: podcast

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“What I'm getting to is that was it. No more, no more 100% bid ask spreads, no more being forced to liquidate in a panic where the $100 million of positions I had in order to get out would have cost me $400 million. I don't have a hedge fund and I'll never go down that road again. Let me say one thing. That's the real story about why I lost not what Nassim Telev says and not what”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you had to put up that. Qualitatively what you say is true. Unfortunate and very reasonable dissatisfaction of my investors who were withdrawing funds. Tremendous bit ass spreads the The raising of margins, the setting of prices that were totally out of line with What they should have been in terms of normal volatility in pricing, plus about 10 other mistakes I made. I was able to shoot myself in the foot, did myself in I I was forced to. And to say nothing of the clearing firms who were very upset by the potential for great losses fortunately, in the case of 2000... There was not any my clearing firm made a fortune from my trades and I was able, I ended up The hall, but I of course had made hundreds of millions beforehand and in total it was profitable. So it was a tragedy and a debacle.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“They raised margin so that, and then, of course, when they also set the prices and often the market would stay the same, but the underlying market would stay the same, but the prices of my options, which I was short with, often go up by 20, 25%, my investors were very upset. Because the market hadn't moved. And as they'd say, you know, when the market goes down, you know, you make 5 or 10%. When the market goes up, you make five or ten percent when market goes down, you lose 20 to 25% in a day And how could that be happening? What was I? I couldn't get out of the positions because there was a 50% normal bid air spread if you ever tried to liquidate it would be 100 or 200%, let alone what would happen if you had to liquidate during a panic.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“And the normal bidass spread. Is 50 to 75 percent. The kinds of things I traded might be. Bid at a half and offered at seven eighths. Doesn't sound like much. And if you do it in terms of volatility, it might be like 28% volatility versus 29%. But in the meanwhile, it's 100% bid-ass spread. So that if you try to get out of these positions at any time, and often I had a position with market value of 100 million or more, you immediately lose $50 million. Now, when the market goes against you, the people on this market making Pit were also on the margin committee. So they would raise the margins which happened to me by”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Look at Janine Wood Anyway, a flexion is someone who... Has his hand in many different areas in the government that someone who's a consultant, who's a Politician who's on the board of He's on the board of various. And NGOs, a professor at a university, he's a writer for the big publications. And there are a lot of them, former. Former executive at a big military firm or a big lobbyist. So the flexions are people that you can't, they're very flexible, you can't really pin what their position is. And anyway, the reflexions in the markets that I traded. And these flexions We're on the margin committees.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“There are some grave technicalities. Involved in my downfall And the technicalities have to do. With the fact of what is called flexionic Activity”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“You had a very good summary. I'm very impressed that you were able to encompass. Gestalt, the gist of My downfall. However,”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, it was from a very small base. Nothing. Be overly proud of, but in any case, I did have a good run to 2007, but I made some terrible mistakes there also. Made some very...”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, now from 97 to 2007, it was that roller coaster is a pretty good run, as I say, twice during that period I was voted the best trader in the world I got trophies.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Was doing the wrong thing with Soros. I gave him, I said, look, we got to stop this. We'll still play tennis and chess together. And I love you. But that's it. And fortunately, his first book before he severed relations with me, he wrote, I was the only guy who ever gave him back his money and stopped trading for him while I was still way ahead. So that was true. But in any case, after 1997 and after 2007, I realized that Dysfunctional harmful for me to have a fund that I do much better trading for myself. And that's the only thing I do. I trade for myself. I have a bunch of very loyal and competent assistants”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“All right. I'm going into that. I realized Brother is a lot smarter than I am, a lot more successful than I am. He's now the chair of the New York City Opera, which he brought out of. Bankruptcy, and he plays 22 different instruments. He's brilliant, very fine guy like my father. But... He once said to me now look, suppose you were In a situation where whenever you made a trade You told it to someone else and he traded a hundred times. As much as you Before that, you received 10% of The prophets. What would that do to your executions and would you make whose money? I said, no, I certainly, if I had to trade a thousand contracts rather than 50, I certainly... Give up the VIG would be. spread would certainly reduce my profits to zero. And he says, so why are you doing it? And at that time I fortuitously realized that”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“I created Equilibrium. I prevented moves away from the Normal workings and the balance, the harmony of the markets. The markets are always in. Harmony. And if one gets out, then the Federal Reserve or the central banks would try to. Reduce the disharmony, but instead of their having to work, I was doing it for them. And very frequently when I traded the central banks of Japan, And of Germany would be trading at exactly the same time, not only because they were trying to equilibrate, but also because in those days they had squawk boxes. The squawk boxes would immediately lead to their doing exactly the same thing. So I became very much a Disequilibrium. Homeostatic playing trader. And that is no good.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“And the quality of prints. It made me very short-term oriented when I had a prophet. I was very quick to take it, and I was very quick to get in, and you can't get into a big position like that unless it's going the opposite way. So when the market went down, I'd buy it. When it went up, and I became, I thought the Federal Reserve should have paid me a... Endowment because I maintained equilibrium in homeostasis in all the markets.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Position 5 million. Market value in bonds are 10 million in. Currencies was big. I had 200, 500, sometimes a billion that had to go in front of me. So I became very... Very”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“So there would be when I'd make a trade and then it was also my own trades. So if I made a trade. Um, The quid pro quo is I'd make the same trade for him, give him the same prices, and for the fund. And for his own account. So there were three levels of trades. My trades might have been in those days for stated market value of 20 or 30 million but For his fund would be for $200 or $300 million comparable for his own account. When I traded 20 contracts for myself, there'd be 400 for the Paripasu boys. So it got to be. So I was always when I had a position, I was always frightened because how was I going to get out of this position? Because when I did in those days a 50 contract”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Analyses. Now, some of those statistics again are, again, not very meaningful because it's a lot easier to make money when you're trading a few contracts. Then when you're trading a lot My experience for Soros was not altogether positive. In the sense that He liked not only to have me trade for him, but He would trade parry passu, he liked to call it for his fund on the things I was trading with plus. Parry Pesu for his own account.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I was Favorite But He steered me through it and Help me keep my scholarship. Help me defend my thesis. He was my thesis advisor and got me my first job at Merrill Lynch. first cl President of Sunbeam. His daughter Became a trader under Chicago Options Exchange. And then she worked for me for fifteen years. Is Eric Jim once came to my office whenever he came to New York and he was on ten different boards in New York he would stop by. And he said, Victor, if you had told me that Twenty years ago, that my daughter would be working for you if all your regularities Predictive patterns, I wouldn't have believed it. That to me is the greatest compliment that I ever received that he was able to say that his daughter would find a proper home in my Multivariate time series programs and”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Not only is it the huge database, but along with Dimson, Marsh, and Stunton, it's the Most important thing for The investor to comprehend and hopefully to read. In any case, He helped me get through my thesis with all the detractors and haters that were always around trying to do me in.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Now I have to talk about a great man. Men I loved Name was James Laurie. Without him I wouldn't be in business he gave me my first job and he He was the founder of the first major statistical study of returns in common stocks. They called it CRIFS, the Center for Research and Security Prices”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the Aspects of Of life is that sometimes a Tremendous quantum Which is seemingly very good can have negative consequences and vice versa from adversity often comes great success. From racquet sports almost every good racket player will tell you that the most important lessons and the most the greatest improvements in their life came after tremendous defeats. After my Various debaccles which, as you know, I've been trading for 50 years. 55 years. So I've had some great successes and”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, in those days to only lose 50% was pretty. Pretty good. And Reuben about 20 years later said to me, no, Vic, I remember that game. And when we came back for the third game, you seemed like a different person and you weren't so, you seemed so preoccupied with other things. It was easy to beat you that way.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there was one player in the New York City Erie who could give me a game in racquetball. His name was Reuben Gonzalez. He is still at 60 years old. He's in the top 10 in rackball. He was the pro in the Staten Island court club. I went to Staten Island one day during the morning and I... Two games and one all. I made a call to the office and they said you just lost half your... You just lost three quarters. Your steak and you're out of the mark. I said, What? Are you crazy?”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Fortunately, I also had learned a little something from my forays into gambling. In racquet sports. And most people make the mistake. Putting a limit on how much they're going to lose. And they tell the partner before they start gambling, you know, Dirham. I'm out of here regardless and no matter what I say, don't listen to me. Put the earplugs in your ears the way the Ulysses shipmates did on his travels before the Scilla and Charybdis and the sirens. And I fortunately had a Had a remembrance of those that sounded sensible. So when I got up to 20 million, I told all of my Colleagues, including Future Mrs. Niederhofer. I said, if I ever get down to 10 million, if I lose more than half, Liquidate me regardless of anything I say, don't listen to me because I'll probably be begging you not to get out at that time.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Very much. Over my head, and it was just fortunate that during that period. I had a foundation where I believe that Sort of the way A lot of people do now that the world was coming to an end and that gold was going to go from 200 to 1,000, which it did, and that the yields on bonds were going to go from $1,000. Those days 6% to 12%. And during that six months, it did.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a lot of easier as you May know when I started out in business, I knew nothing and I took 50,000 into 20 million in about six months.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I had a lot of people who mistakenly thought that because I was so good in racket sports and because I had a very good academic reputation that I might be good at. Invest I did have a good track record for many years. It was in 19, as I mentioned in 1996.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well again I I had some, as my wife likes to say in her Curriculum Vita, she's The director of some of Firms related to John Mackey's Whole Foods. Operation in conscious capitalism as she likes to say, and she's been the director of on the board of every Montessori school that We've sent our kids to her that she's been associated. And some of the years we were the best performing fund and in some of the years we were the worst performing fund. And then when I had the tobacco in 1987, she offered to resign from all her boards, but they didn't accept her resignation because she was too good at what she did.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, one of my men deserving Riddell. Always said the market will always be there the next day. I should have known that my grandfather told me, don't get in. Over your head. From my rackets career, I should have known not to play the other person's game. I should have learned that from Soros escaping from Hungary.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“There's no such thing as a proper valuation for Internet stocks, for technology stocks, and that it's based upon, it should be based upon views and potential. He went whole hog and tremendous percentage of his fund into The companies with multibillion dollar market values and no earnings and little sales at that time. And I believe that Soros had the same reaction that he did in 19 Just liquidated the entire position, thought that survival was at stake. I believe that was the key. The key. Key reason that their partnership ended at that time.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly, exactly. I remember as mentioned. We spoke fifty, sixty times a day continuously for about 10 or 12, fifteen years. Remember during the October 19th, 1987 crash. On Thursday, October 22nd. He sold all of his stocks just liquidated them at the open he made. He'd made. So many traders on the floor of the mercantile exchange, multimillionaires with that trade. It occurred to him that he could face destruction. And he did what he had to do, he liquidated his entire position, took a Huge loss thinking that survivor was more important than anything else. And I believe he did the same thing with Mr. Druckermayer in the... 2000 period when Drug Miller. Conference in which Mentioned that”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a metaphor for life. You have to look at the big picture. Don't worry about the ephemera. Of course, in my day I play tennis every day with my father, and we would shovel snow off the courts in Coney Island to play, and to have one new tennis ball Considered And the idea that you could actually have spend money for two cans. Alacrity was astonishing to me.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Because if you have one can, which used to be three bowls, then you spend half your time chasing Whereas if you have two cans, then 90% of the time can be play and you can let the balls.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, he taught me... Quite a few things Most important was that You should always use two cans of tennis balls when you were playing.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“They call it multiple comparisons. It's implicitly to have numerous hypotheses that they're testing or that they know about and then they try to fit that to a very small number of observations. I read that you're a great believer in Indexing? Well, for”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, then Copernicus and And Tico de Brack came up with various equations, and they call those equations epicyclic because they were overdetermined and they had. Too many equations for the variables that they were trying to By the way, that's probably the biggest mistake that the systematic and the amateur trader makes in the market to over.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the planets orbits of the planets, and they'd come up with Ptolemy came up with about 30 different equations. To finally calculate how the planets moved before Newton.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I'm not talking about the selfish gene and the fact that all our activities are designed to maximize the fitness of our replicability. And survivors Prevalence of genes. I'm talking in the old days. The astronomers used to try to calculate the.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“And yeah, and he knew a lot of the unpublished rags. And he was the treasurer of Irving Berlin's publishing studio in 1907. Had the unfortunate experience of being liquidated during the 1907 crash, which was very similar to the 2008 crash in the...”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“It really used up a lot of my capital, my liquidity was tremendously reduced and I was not able to, well, I'll tell you something that's very important. We were talking about my Before my grandfather once told me that the worst thing In the market is to get in over your head.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Regrettably not. I did extrapolate it. It seemed like I had everything the cigarettes, the brothels, and the commissions and the prices, the price of a Coke was something like two cents. There at that time. And so I got in and”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Construction at the fourth floor. But in any case, it was the worst performing market. It was down about 25% at that time when every other market was up 10%. And I had done some work that the worst performing groups in the New York Stock Exchange during the next year always were the best performing in the subsequent years. It went from the worst to the best.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“He had a number of indirect indicators like that. But in any case, they promised low commissions and the brothels were very clean and they didn't use strong arm tactics against the... The visitors, the way they did on his previous visit, he didn't tell me that 80% of the buildings had stopped.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“I had the model of George Soros, who I was very intimate with at that time. We must have spoken 30, 50 times a day. And he always said that he made more money from things he didn't know about than things he did know about. And I unfortunately ran with that idea and I didn't know anything about emerging markets. But I sent my before mentioned friend Hobokley. Around the world to visit every emerging market, and he came back with the idea that India looked good, but they charge you half a percent or 1% on every... Transaction and they had some high barriers to To entry But he really favored Thailand because on his previous visit, the brothels were in much worse shape, and they had really cleaned up the brothelac, and he felt that.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Commodity futures traders and I got another award in 1997 right before the debacle that I believe is on the tip of your tongue.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it was with a small amount of money, and it was certainly unsustainable. But during that period, two or three times I won the award as the Best performing managed account.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's another story, but as an... The business school was. Situated in a place called Haskell Hall at that time. And One time I was coming down from the third floor and Speech echoes up and Four or five of the random walkers, including two who have subsequently won Nobel Prizes, were talking and they were studying us. Some computer output on stock spl And I heard one of them say, We're really in trouble if we find some regularities here. This could defeat our Ideas I memorialized that conversation and I did not neglect. Elicit it in some of my presentations.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“It was about nine times as likely for there to be a short term reversal as a continuation. And I wrote an article on this and it was published in the... Journal of the American Statistical Association was the lead article and I applied what they called some Markov processes to it. So when I went to Chicago, I had this under my belt and it created... Tremendous negative feedback, hysteria and tremendous hatred from the random walkers who then were following the idea that everything was efficient. And they manifested this hatred in many ways.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“That's what I noticed, of course, the markets are ever changing and I wouldn't say that's True today in general, but I then looked at a And one of my forays in the evening, I've always been like to read late in the night, Harvard had bound copies of all magazines, all scientific journals, and one of them was called The Monthly Weather Review. And in a 1916 article. They had an article about runs and sequences. Turning points in weather. And it occurred to me that it would be useful to look at runs and classified by the length of run in the market. So I started while I was competing on the squash and tennis team. I would take the ticker tapes, the Francis Emery Fitch Sheets and I'd start counting reversals and continuations. And I found that”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Go into the stacks of libraries. And fortunately, the Harvard business library had one of the best libraries in the world. And I would add I've been fortunate to be associated in my three stints at education at Harvard, Chicago, and Berkeley. Each one had a great library, which I used to the foremost. But I used to look at the Harvard had something in those days which no one else had, which was the Francis Emery Fitch sheets, which had the record of every transaction, which in those days were about 20,000 transactions a day on the New York Stock Exchange and the American Stock Exchange. And found that there was a tendency to reversal at the microscopic level and to continuation at the Macroscopic level. Now I know.”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we were all bunch of ignoramuses. In those days, and they had some crutches in old sores that they like to use based upon Distributions with Distributions And their acts. Their bias at that time was that everything was random and that all known information was immediately encapped in the market and there was no way to make a profit. I've always loved to”
2017-09-15 · Masters in Business · Victor Niederhoffer: Lessons of Making and Losing a Fortune · IDENTIFIED FROM THE TRANSCRIPT · source