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Rumor: Vic Niederhoffer Blows Up… Again at Trader’s Narrative




Rumor: Vic Niederhoffer Blows Up… Again


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vic niederhoffer matador fund.pngThere is a rumor that the (in)famous trader, Vic Niederhoffer, has blown up… again.

For those that aren’t familiar with Niederhoffer nor his history, click here to read his wikipedia entry.

For those keeping track, this monumental blow up makes it 2 for 2. Vic came close last summer when he suffered a debilitating loss of around 30% !

Incredibly Matador (his hedge fund) clawed it’s way back from the brink and survived.

But the rumor is that this time it is definitely over.

According to the unsubstantiated rumor, Matador has lost 93% of its funds! Their prime broker apparently forced a liquidation of their positions.

Seems the fund was short 15,000 1000 strike August ‘08 puts.

The same source is claiming that the Wall Street Journal will be coming out with an article about this. So keep an eye out for it.

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24 Responses to “Rumor: Vic Niederhoffer Blows Up… Again”  

  1. 1 LP

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    Isn’t this the third time. I read Fooled by Randomness in which Taleb accounts for two blow ups. The last one happend around Sept 11. Get super rich or blow up trying.

  2. 2 Dave

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    I’ve been looking all over the Web for any such story but can’t find it. Can you post a link?

  3. 3 Shepard

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    Hmmm…I don’t see any mention of it on Vic’s web-site. 93%, eh…that’s…a … lot. Ouch (if true).

  4. 4 Shepard

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    Hmmmm..well, there’s a bit of activity over at the Elite Trader forums. This explains why the original thread was deleted

    quote

    Baron wrote on 08-26-07:

    I have corresponded with reps from Manchester Trading and Matador, including Victor Niederhoffer himself, and they all say that the speculations posted in the previous thread regarding Matador’s positions and liquidations, are completely false. Furthermore, Victor said “Matador is very much viable. Has much cash and positions in excess of all requirements. And has no need to liquidate positions.”

    That’s why the thread was deleted.

    quote

    There’s quite a large thread about the current information here

    Very interesting reading. I wonder if people dislike Vic because of his past success or because they think he’s arrogant? I hope Vic didn’t blow up. I never wish for anyone’s demise.

    /~Keith

  5. 5 Dave

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    It looks like Niederhoffer posted a book review yesterday on hia site. Seems unlikely he’d permit himself to be seen writing book reviews instead of attempting to recoup losses if it was true he’d sustained serious losses.

    What purpose is served by further disseminating these rumors?

  6. 6 Shepard

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    Dave wrote:

    “What purpose is served by further disseminating these rumors?”

    /QUOTE

    Actually, I think it’s very instructive to talk about this type of rumor. It deals with a fatal fundamental flaw in most traders’ plans: the lack of proper risk/money management.

    Mr. Niederhoffer has for years flaunted the fact that he doesn’t practice any reasonable amount of risk management or position sizing … or so it seems to me. It would seem he has a habit of being over leveraged in some area and “swinging for the fences”.

    I think it’s instructive for beginning & intermediate traders to view such grandiose and very public blow ups as a point of reflection … a time to make sure you aren’t setting yourself up for just such as blow up … a time to learn proper position sizing if you haven’t.

    As for the rumor, I guess we won’t know until or if the WSJ article comes out, or if Mr. Niederhoffer posts a clarification of his situation on his web-site.

    Just my 2 cents. :)

  7. 7 Dave

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    You’re changing the subject. What’s instructive about discussing a “fatal fundamental flaw” that may not have even exist? Last we heard, Steve Wisdom had put checks and balances to make sure Niederhoffer didn’t get out of control. Do you know what those checks and balances were? Probably not, so where’s the utility in speculating at all about undue risk?

    What other traders would it be illuminating to consider on the rumor mill? Is it more or less instructive to ponder whether Jim Simons’ fund blew up in the past several weeks?

    I want to be clear that I am no apologist for Victor Niederhoffer –his propensity for self-congratulation and his radically displaced assessment of value investors such as Ben Graham and Warren Buffett make me want to throw up. But he and other traders ought not to feel compelled to formally address these kinds of rumors each time one starts on boards such as EliteTrader.

    Can’t see much difference between disseminating rumors and, well, gossiping.

  8. 8 MarketScooper

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    ORIGINAL POST 8/25/07: Scoop for weekend 8/25/07:

    Ok, its time to break the story about Vic— you heard it here first at Elite Trader:

    Matador’s directors got concerned after the February decline and requested that Matador fold in May. They really turned against Vic, since they had been OK with the long dated contracts until that point. This was a dumb move by Octane, which they did before the worst drop since 2002. Their was also a cabal on the CME to give unfair marks–which stopped last week after an inquiry was made. Octane wanted the fund wrapped up by the end of August, an almost impossible task, however Victor was able to pull it off. He is happy to have gotten away from Octane and is still surviving nicely with his own account.

  9. 9 Aaron

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    93%? Goodness! He certainly is no stranger to huge moves in either way. Making huge bets like that can look great at times, but over the long run it can really bite you in the rear. Interested to see more news on this story come out.

  10. 10 Ken

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    Internet gossip nonsesne!

    There’s no evidence that anything has happened to Niederhoffer.

    If people want to learn anything in this story it’s this:

    It’s not that a lack of money management does most people in, it’s their preoccupation with the successes and failures of people they don’t even know.

    I believe that most people are collectivists at heart simply because most are under-achievers. They want to blame their lack of preparation and life efficiency on some unseen force. When that force doesn’t materialize they focus on those that aren’t lamenting that fact…the winners.

    That being said, no one wins all the time. If you look at the business world those that go broke and keep trying are considered “persistent”, “tenacious”, and “confident”.

    The forlorn hate any trader that has ever accomplished anything. They can’t do it so why should he/she!!!

    How did they do it so fast!!! I hate them!!!

    All the while, life passes them by. They’ll die depressed and angry.

    Quit worrying about Victor Niederhoffer. I have a feeling he can take care of himself.

  11. 11 paolo

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    I think you should not talk about people you do not know. Victor Niederhoffer is a person to respect for he has managed to do in his life. I wish you could demonstrate what you are saying instead of talking about rumours. It really makes no sense.

  12. 12 Marketwizard

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    Obviously the author of this blog is totally clueless not only on the facts but also on the history of Victor Niederhoffer. For if the rumor was true, it would be the THIRD time, not the 2nd, furthermore, the rumor is nothing but a rumor, and I hope Niederhoffer sues you for slander.

  13. 13 Babak

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    Marketwizard/Pejman Hamidi,
    I suggest you take Mark Twain’s advice: “Better to keep your mouth shut and be thought a fool than to open it and remove all doubt.” As for your free legal advice, it is certainly worth the price you put on it.

    I refer you to the New Yorker article.

    In which it says: “Meanwhile, rumors circulated on the Internet that, for the second time in a decade, his funds had “blown up.””

  14. 14 oops!

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    What spin will Niederhoffer put on his latest blowup?
    I guess he didn’t tell the truth about his fund last month.

  15. 15 Markus

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    Babak,
    this post seems to be jamming your blog ,-).
    Are you on vacation or is there any other reason why you are not posting since Sept. 28th? Perhaps I missed a notification.

    Cheers,
    Markus

  16. 16 AlfaMike

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    Babak is right. Niederhoffer has imploded for the 3rd time. Take a look at that New Yorker article. It’s quite a good read, that man has led an interesting life. Sad that it looks to be ending this way.

  17. 17 Stephan

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    Selling OTM puts IS a great strategy for a hedge fund. It can generate consistently positive returns and good performance statistics over many years (there’s a fine paper by Andrew Lo in which he discusses such a hypothetical HF named Capital Decimation Partners), thus generating immense gains for investors and fees for the managers. Sooner or later, the fund will get wiped out during a period of falling price and rising volatility, but so what? Sure, the investors will lose their money, but the managers still have all those fees from the good years, and after a few months or years, they can just open another HF and do the same thing again.

  18. 18 LP

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    This blog is great…so back of beeyatches….

    Babak…let concentrate our efforts on this latest bit of crap in the markets…is this the start of a new bear market? (hmmm…I seem to have heard this a month or two back)

  19. 19 Thetruth

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    Let’s face it folks, Niederhoffer got what he deserved. For many years he has played by his own rules and by hook or by crook, eliminated all those who questioned his methods. I personally know several who have worked with or for him and know him to be completely unethical and manipulative. He has ruined many lives along the way, I hope for the sake of society that his is ruined now as well…..

  20. 20 Questionable

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    I just finished reading the New Yorker Article about this man and wonder this:

    If he is married to Susan Niederhoffer and he is married to Laurel Niederhoffer does that infer that Susan and Laurel are…………?

    Oh well, maybee there Mormans…

  21. 21 tls

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    very interesting

  22. 22 Beirut

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    How can anyone with a sane mind try to adopt Niderhoffer’s trading style? Three belly-ups testify to the sad truth that he is at heart a gambler. Anyone out there who wants to entrust a gambler with his money??? This is beyond me.
    Do I want a sound money manager with well-based capital protection policies - or a glamorous ex-Harvard, ex-squash champ? Give me a break.

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