An American Hedge Fund: Book Review & Giveaway
Published December 26th, 2008 in Reviews Tags: An American Hedge Fund, book, daytrading, gift, giveaway, hedge fund, money management, prize, proprietary trading, prop firm, raffle, review, risk, tech bubble, Tim Sykes, trading.If you would like to receive a free copy of Tim Syke’s book, An American Hedge Fund, leave a brief comment below (making sure you leave your correct email). I have TWO copies to send to two of my randomly chosen readers as a Christmas [slash] Hannukah [slash] New Year’s gift.
Timothy Sykes’ book An American Hedge Fund takes you through a conversational, breezy account of how he took $12,000 of Bar Mitzva money and traded it to $1 million. Although Tim peppers his book with specific trades, the book doesn’t have any charts. This is disappointing because it would have been so enriching. Maybe for the second printing 
While I respect and admire Tim’s drive as a trader, I can’t help but think it was sheer luck that he didn’t completely blow up before he made serious money. Although the story takes place during the tech bubble of the late 1990’s, when turkeys flew like hawks, his complete disregard for risk is breathtaking.
The string of luck catches up to him when he sinks 33% of the capital under his management into Cygnus (now Accesso) a private company that later in the story goes public on the pink sheets. This is not only a continuation of his disregard for risk management, it is a colossal style drift, taking him from trading short term price patterns to long term investment into an illiquid holding.
I don’t recall every reading about any thought of capital allocation or money management. That is, measuring trades using R to standardize the risk that was taken to provide the resulting return.
To Prop or Not to Prop
After his initial success, while considering the options available to move him away from casual trading to a more serious undertaking, Tim decides against joining a proprietary trading firm because it “would only serve to increase [his] risk, not reduce it.”
As I mentioned, the largest lessons that Tim’s story offers is risk management, or lack thereof. He repeatedly and flagrantly disregards the most important aspect of trading: money management - with devastating consequences. One is left wondering why he can’t learn this simple lesson.
It is especially ironic then that the one situation that would have impose an external risk management control on his trading is so nonchalantly dismissed. Were he to have joined a quality prop firm he would not only have been taught the importance of risk and money management but even more importantly, he would have been forced to follow them.
I suspect that it was his self confessed arrogance that blinding him to this opportunity. Instead he takes the decision to start a hedge fund. From there the story gets really interesting as we delve into the process of starting a fund, attracting capital, trading the capital to produce juicy returns (to attract investors) and how it all goes awry.
Tim Oil
Tim has a knack for self-promotion and has successfully marketed himself as a brand. So much so that on a few trading boards he is hounded constantly and derided for being a “snake-oil salesman”. There’s nothing wrong with being good at self-promotion. But it does strike me a bit ironic that he is now making much more money selling advice and seminars than from trading when in his book he says:
… I thought of publishing my trading strategies and making money from subsequent book royalties and seminar fees. My earnings probably wouldn’t stretch into the millions, but the seminars would definitely be a cash cow and I would earn a decent living for years to come… it was the cowardly way out… Besides, my time was too valuable to waste on telling other people how to make money. I needed to find a way to become a true financial professional.
Persian Parable
In this end, this book is a worthwhile read for novices who are starting out in trading or investing. It reminds me of an ancient Persian parable. I’m probably going to mangle it since it loses much in translation… the story goes that there was a man of singularly upright character and manners. He is approached one day and asked, how it is that he came to acquire such virtue? He responds, from sinners.
When his questioner is puzzled at the answer, he explains. I learned my piety and polite manners from knaves, liars and charlatans - as they did and said, I did and said the opposite.
I get the feeling that Tim wrote this book as much to get publicity as to exorcise some demons and to engage in self reflection. At times he is disarmingly charming and honest in his self-deprecation. I hope he gained much from writing the book because I’m sure that many reading it will.
2 Books to Giveaway
If you would like to receive a free copy of Tim Syke’s book, An American Hedge Fund, leave a brief comment below (making sure you leave your correct email). I have TWO copies to send to two of my randomly chosen readers as a Christmas [slash] Hannukah [slash] New Year’s gift.
This is my last post until the new year.
Wishing everyone happy holidays and a wonderful new year!
An American Hedge Fund, book, daytrading, gift, giveaway, hedge fund, money management, prize, proprietary trading, prop firm, raffle, review, risk, tech bubble, Tim Sykes, trading
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48 Responses to “An American Hedge Fund: Book Review & Giveaway”
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ZZZZZZzzzzzzzz. This doosh is cut from the same cloth as Bernie Madoff, in more ways than one. Logic dictates that if he really had a proprietary methodology to create alpha, he would keep it to himself, especially given his chosen environs of pink-sheet stocks. Great investors invest. They don’t profit from the opiated masses by hawking CDs on the web. Appreciate the entertainment value though Tim.
I’d love to read his book and it’s not in the library so please toss me onto the list. Not sure what to make of him but unlike so many traders who talk big, he’s at least made something of himself once and is now publicly trying to repeat. Luck? Easy to underrate how important that is.
A friend has his first DVD set and apparently it contains some stuff about his trading past in there as well. I’d be interested to compare the two.
I’m interested.
I think the ‘Stock market Wizards’ book by Schawger that was published in the late 90’s with addendum’s added post .com crash is a fascinating study in ‘lucky fools’, there are plenty in there mixed with genuine wizards I have since discovered.
I’m impressed with Tim’s marketing ability, he’s good.
Andrew.
I am curious; Would like to explore this book.
Happy Holidays!
Thanks for the honest review, the book is not meant to be technical, thats why I have DVDs with charts aplenty! But I do have the charts for the stocks mentioned in the book.
Also, there’s lots of luck involved in 1999, 2000, the rest was all pattern recognition, the same thing that has propelled me to 250% return this year
Not so much interested in the book offer, although it is probably a great read, but you cited an earlier blog entry concerning R. The second paragraph of your earlier entry is either a bit ambiguous or I lack some basic understanding of the matter (more than likely, the latter). You start off describing R as a method of quantifying risk with the implications of calculating R before entering a position and/or setting a stop-loss point to exit a trade; specifically, R = entry$ - stop/loss. You end the paragraph by describing R as a ratio of what you risked being in the position to your gain/loss on exiting the position, i.e. 1pt risk to 5pts reward = 5R.
Do you calculate different Rs dependent upon what you are referencing, pre- or post-trade?
You have read the bloomberg´s post
in the one that recommends 8 companies for the long term using Ben Graham’s system
This could be a good read… isn’t the auther an elitetrader.com member?
Merry Christmas and thanks for all the great blogs!
Happy trading and New Year 2009
Based on his post I’m guessing risk management is still largely unexplored territory. But it’s hard to find too much fault with the approach since that’s what sells and if you are playing with others people’s money there is really no downside (just ask Congress).
nah, now i cut my losses quickly/immediately nd only use 20-30% of assets per play as opposed to 100%…thats why i’m only up 250% this year….tough to argue with a strategy that has proven over a decade to win 80-90% of the time…only downside is lack of scalbility, which is why i’m teaching others now
I’m interested. I don’t like Tim’s voice so a book would be perfect, LOL.
FYI there’s also an audiobook
don’t worry, not my voice, i got a pro!
Hi Babak, I’d love a copy of the book. From “Reminisces of a Stock Operator” to “Market Wizards”, books which expose trader’s predilections are always a fun read.
Regarding trades, oil has continued to plummet while the market has been moving sideways for some time. Any chance that you might blog about a potential trade in brent crude?
Cheers,
Evan
Chip, once the trade is over, you can then express it as a ratio of R. So if it was positive, you have a 1, 2, 3, etc. +R. If it was negative and you kept your stop loss -1R. If you didn’t, then it would be -2R, -3R, etc.
Tim, charts would have made the book much more interesting because they would have allowed the reader to “see” what you saw and to hypothetically apply their own trading to it.
Babak, i wrote the book knowing i would be blogging, u dont get everything in the book, YOU HAVE TO come to my site to better understand everything….marketing 101, one of the many reasons why i’m making 50k/month off the site
Would like to add my thinking:
Apart from internalizing the habits of successful trading, top is risk
management to maximize profits and minimize losses.
In a nutshell, the Risk Reward ratio must be positive.
Agreed that tim is an excellent publicist and his products seem wildly popular with his subscribers, i won’t be convinced until I read his book. The tv show he was on painted him as a pompous trader whose mom still cleaned his apartment. Its also hard to argue with his covestor returns so the jury is out
Would love to take a gander.
Tim, as a fellow Jew, I tip my hat to you sir
looks like i missed the train…
happy hanuka anyway (well it’s the last candel)
Gilad, the train is still at the station - entries will close on the 9th of January.
Thanks for the great posts. I love reading your site.
Hey — great little gift to your readers!
Thanks for the opportunity, and keep up the posts.
Take care and holiday wishes!
interested in your book offer, love the blog, ciao ciao!
Promoting Sykes book is about at the same level as drawing fan lines from a different apex- a little disappointing.
I know someone quite like this kid. I wouldn’t mind comparing the two - the book would make a good read.
I recall some tech guy who went into day trading full time during the internet bubble and wrote about it. He had a mantra when he entered a position:
“Little baby Jesus in a buckskin yurt, please get me out before I get hurt”
Is he still trading?
The day trader? No, I think it was more an experiment than anything. That was back in the days when your portfolio could blow up in the time it took you to go to the bathroom. Hey, that sounds somehow familiar…
Joey Anuff is the author. Dumb Money.
I would like to read the book to understand the Persian parable first-hand.
Add me to the list. I love any contest that is free with real prizes. I already read that crazy entertaining book, but loaned my copy out to a friend. So, I doubt I’ll get back.
Keep up the great work Babak. Happy New Year.
I’d like to receive the free book “An American Hedge Fund”. Thank you.
Interested in the book offer.
I know Tim is a polarizing personality and I’m not sure we’d even get along, but it’s hard to deny the man’s results and I always appreciate having the opportunity to learn from him - the good and the bad. I don’t mind the brashness or the self-promotion, I just care about the quality of the “product”, being knowledge in this case.
Hedge fund regulation is likely to increase as Congress passes more laws with the intent of regulating the capital markets. Starting a hedge fund, like Mr. Sykes, will become much more difficult in this new regulatory environment.
This is a good book..I’m glad I found it but I did not learn anything.. I did learn a lot about hedge fund trading strategies from 2 other great books. Hedge Fund Trading Secrets Revealed..by Robert Dorfman..and Confessions of a Street Addict of course by Jim Cramer..written before he got really famous..both are riveting and very informative. You should check them out if you like reading behind the scenes stuff about hedge fund and what methods they use..….. following Dorfman’s strategies my winning ratio is now better than ever
Hey,
Thanks for the post and the offer. I’d love to read it.
t.
I would love to get my hands on this book!
Thanks for the offer; I’m interested in reading the book.
I think if he was determined to do private equity, it’s difficult to diversify. Vision is much more important than diversification in the case of private equity.
I broke my left-leg over Christmas, and as such the book would be a good read whilst recouping in bed! I have not come across Timothy Sykes’ works before; and now is a good time as any to see what it is all about.
That should be a fun read.
hey
thanks for sharing. I’m interested in reading the book ,and I’m a trader of china , may i make friends?
my MSN:zfly2088@hotmail.com
Have read reports trashing the man, would love to hear his side.