The Niederhoffer Rule of 5%

The study of madmen can sometimes bring clarity

I sat down to review my June investment letter of 2008. There are two reasons. It feels timely. History doesn’t repeat but it’s sure chiming a lot with today. Second, it’s a bloody good piece. It kicked off a hurricane of many discussion points swirling inside my head.

I’ve also been re-reading Victor Niederhoffer’s 1997 classic, The Education of a Speculator. But, let’s be honest, only the first chapter is legible. The rest? Forgettable. You’d do better with The New Yorker’s digest.

https://www.newyorker.com/magazine/2007/10/15/the-blow-up-artist

I’m aiming to record a reading of the opening chapter, The Old Trader and the Yen, and send it to you over the next few days. I tried to do this at The Summer Camp but it was a debacle. To be fair, there are horrible misprints regarding the size of his $JPY trades and I wasn’t sure of the period that he was recalling. But I’ve got it now and it’s a toe curler, an absolute classic account of a deranged individual leveraged to the hilt with millions of dollars of other peoples money. Second time’s the charm, right?