Back up a bit. It must have been about 10 years ago — ’97 or so — when I last walked the streets of New York City. Whenever I’m in a great city — be it New York, San Francisco, Chicago, Paris, Tokyo, Hong Kong, Singapore, etc. — it is my consistent habit to be out and about fairly early in the morning. Lots of reasons why, but I suppose it’s primarily that I like seeing the things come alive as they do.
Back then, I recall grabbing a sausage, egg & cheese croissant, tater tots and coffee from a Burger King and then browsing the tables of a sidewalk book vendor. Fitting, I thought — seeing as I was in NYC — to pick up this book, The Education of a Speculator, by Victor Niederhoffer. But through some set of circumstances I no longer recall, I got sidetracked somewhere near the beginning of the book, put it down, and forgot about it. Then I saw it two weeks ago amongst my significant book collection that I keep up at the cabin. Seeing as I now trade virtually full time, I took it down, began reading, and began googling here and there about the man.
And he’s a most interesting guy. On the heels of the book being published, he lost it all. Tens of millions — his own money and clients’. Now he’s back on top, taking the hedge fund he started in 2002 from $2 million to about $350 million now. That’s of course both additional capital from new investors and capital gains. A $1 million investment in 2002 would be worth over $4 million today. Not bad. Of course, to invest in a hedge fund, you have to be an accredited investor — a silly, depression-era law that appears to be growing new legs rather than being dumped as it ought to be. On the other hand, in practical terms, it’s probably just as well. Nobody cares if a hedge fund loses billions for rich people. Indeed, most "working people" chortle with glee at the prospect. This affords hedge funds some measure of freedom in managing their own affairs and the affairs of their clients. "Too many" people are now reaching the $1 million watermark and it’s a virtual certainty that you’ll eventually have sob stories about moms & pops who invested their life savings in a hedge fund and lost it all, "not realizing" that the 50% annual returns imply sometimes huge risk.
Check out his reading list and note what comes first. What have I been telling you forever? Note also the Liberty Reading List at the bottom. Yea, I’ve read many of those myself. I know a few people who’ve read all of them.
He also maintains a blog, Daily Speculations that I have found quite interesting to have in my RSS. So bookmark accordingly, if it suits you.