Victor Niederhoffer

In April 2006 Niderhoffer Victor (Victor Niederhoffer) appeared on the evening in a New York hotel St. Regis, which brought together some 300 leading fund managers of America. Passing under the gilded chandeliers in a blazer the color of lavender, he felt that once again raised at the summit of success. In 1980-90-ies. Victor Niderhoffer created for himself a vast fortune and a reputation as one of the most prominent hedge fund managers in the United States. But his undoing excessive love of risk: before the Asian financial crisis, he played in improving Thai shares, and during the crisis – on the rise in the index Standard & Poor’s 500, using the naked option on the index. When the markets collapsed, Victor Niderhoffer overnight, lost everything – $ 130 millionth Fund and almost all of their own savings. It seemed that life has dealt him a crushing blow, but he managed to overcome the way up the second time. Speaking to the financiers, honored him in St. Regis, Niderhoffer stressed how highly appreciates “the difficult and courageous” decision to reward him after he had once failed.

Victor Niderhoffer said that “rose from the ashes of” the other person. If its a fiasco in 1997, largely due to arrogance and self-confidence, the defeat had taught him humility. He no longer thinks he can win in any market, and refuses to play in the markets in remote areas of the world such as Thailand, where he lost $ 50 million instead, Victor Niderhoffer almost entirely limited to its operations market options and futures on the index Standard & Poor’s 500, saying that “trying not to break the stars.”

Nevertheless, Niderhoffer not lost his passion for risk, which, according to colleagues, he has simply uncanny tolerance. As in the 1990’s. He prefers to “bullish” position. In an effort to play on short-term fluctuations S & P 500, he buys and sells various futures and options on this index, making 20 transactions a day. Typically, Victor Niderhoffer saves every position from one to five days. In order to increase profits, it uses the typical hedge fund leverage, which makes it vulnerable to the downs of the market. In his book “The practice of speculative attacks”, published in 2003, Victor Niderhoffer said that “life is like and markets, offers the biggest rewards to those who are willing to take risks. Risk means uncertainty, anxiety and possible losses. However, it also reveals the best that is in us. ”

Victor Niderhoffer directs the operations of the two hedge funds from his mansion area of 1858 square meters, located in the bucolic Weston, Connecticut. Around the mansion stretched mansion, covering an area of 5,26 hectares. Along the narrow access road apart dozen wooden bulls and bears. To the right is court, where the owner, multiple-time U.S. champion squash, tennis work out blows. Growth of six feet two inches, with close-cropped gray hair, Victor Niderhoffer prefers sports jackets and pants in pastel colors – pale pink, light blue, peach, yellow, and never wears shoes in the house.

On the second floor of the mansion Niderhoffer Victor and his team of traders working at wooden desks in two rooms connected by a door. Niderhoffer known for recruiting young and exceptionally talented traders and teaches them the art market the game, encouraging the development of their own trading strategies. What is happening in his office looks more like a scientific laboratory work than the traditional trading company.

Near Niderhoffera, whom colleagues call “President” ( “The Chair”), sits with his right hand – 45-year-old Steve Wisdom (Steve Wisdom), nicknamed “Mr. Wizard (” Mr. Wiz “). Only these two are trading using the money of investors. Other team members are testing the idea of using the funds in the $ 50 million account, which is part of personal wealth Victor Niderhoffera, regained thanks to successful investments. Nobody in this office is not shoes, and no one is talking. Sitting opposite each other, communicate with members via e-mail. Stereo quietly playing songs from Broadway musicals. From time to time someone goes into the kitchen to eat or make tea for Niderhoffera. And sometimes the two disappear to play squash on a home court, located just outside the library.

Library Niderhoffera consists of more than 15000 books. He owns, in particular, the first edition of “The Wealth of the Nation” by Adam Smith and the outline of the light bulb, made by Thomas Edison. One of the authors whom Victor Niderhoffer particularly admires – Sir Francis Galton (Francis Galton), the naturalist of the Victorian era, which introduced the concepts of correlation and regression and is widely used these statistical methods in his research (among other things, he invented a method of identification using fingerprints fingers). His portrait hangs in the library, and in his honor Victor Niderhoffer named the eldest of his six daughters Gal’t (Galt). The third daughter is named Rand (Rand), given to her in honor of Ayn Rand (Ayn Rand) – Another extremely important for Niderhoffera personality. Rand, American writer and philosopher of Russia’s descent (her real name – Zinovyevna Alice Rosenbaum), known as the creator of the philosophy of objectivism and an ardent supporter of the rational ego and the theory of “non-interference in the economy” (laissez-faire capitalism). Her ideas are very popular in America, at one time had a great influence on the former Fed chairman Alan Greenspan (Alan Greenspan). The library Niderhoffera have several of her letters.

As a passionate collector, Victor Niderhoffer filled house 2,500 works of art XIX-XX centuries, including paintings, sculpture and carving. Among them – images of people and places that played a key role in his life: his father Arthur Niderhoffera (Arthur Niederhoffer), trading floor of the exchange, as well as Brighton Beach, the period of the 1950’s. One of the rooms of the mansion contains only the glass shelves with shells, which reflects the deep interest owner in the process of evolution. Another of his passion are antique toys.

Followed by Ayn Rand, Victor Niderhoffer believes that the moral purpose of man consists in the pursuit of happiness and achievement, and that free enterprise is the key to prosperity, personal freedom and peace. In 1985, he initiated the creation of NYC Junto – meetings devoted to libertarianism, objectivism and investment activities. Since then, he shall preside at all meetings taking place on the first Thursday of each month. The idea of an intellectual salon Junto Niderhofferu prompted the meeting, which took place under the same name in Philadelphia from 1727 to 1757 years. and which was headed by Benjamin Franklin (Benjamin Franklin).

Victor Niderhoffer proud favorable influence exerted by them on many of those with whom he had a chance to communicate. More than a dozen officers who were trained in his art auction, made his fortune making up hundreds of millions or even billions of dollars. Among them Monroe Trout (Monroe Trout), Stu Rose (Stu Rose), John Hamer (John Hummer), and Roy Niderhoffer (Roy Niederhoffer). All of them have made major strides in asset management and mergers and acquisitions, M & A.

Now, on the seventh decade of his life, Victor Niderhoffer intends to prove to the world that is not a loser. For even the huge loss of money was not so painful for him as a stamp of failure. In recognition of the trader, he said, “no matter how funny it sounds, in all sincerity believe that his share had the biggest successes in the history of the band speculative attacks.

History of Victor Niderhoffera began in 1943 in Brooklyn, a Jewish family. His father, Arthur, in 1939, he graduated from Brooklyn Law School and went to work in the police, because there was a higher salary and social guarantees better than lawyers. Victor’s mother, Elaine (Elaine Niederhoffer), taught at the school. The boy grew up in a small apartment, decorated in bright decorative style Art Deco, “is located one block from the beach, railway station and public school number 225.

Then-Brooklyn, was, according to the recollections Niderhoffera, “the capital of the disadvantaged of the world” – the city sloggers, rebels and misfits, a single mention of which “is enough to see the raised eyebrow or hear giggling and joking.” But Victor is convinced that the Brighton Beach gave him many useful lessons, through which he could become a successful trader. He wrote that “the game, deal, music, sex and fauna taught him to optimize the low-lying and routine part of life,” and that “the necessary foundation for purchases for the fall and sales on the rise – professional Stock Operator.”

Streets of Brighton Beach, ridden gamblers and dandies, Harvard had his boyhood years. Victor Niderhoffer spent the weekend watching as the guys with colorful nicknames like “Malicious Irvine” or “The Animal” play handball, and how their game wagering. According to his uncle, Howard Eisenberg (Howard Eisenberg), Victor has been characteristic of children covered by the desire to look like champions, and for him it was extremely important to fight and win. ”

Arthur early taught his son to play tennis. For five consecutive years, Victor became the champion of New York’s junior, earning him than the glory, the right to a scholarship at Harvard University. Doing there in 1960, Niderhoffer interested in squash, in which he had never had to play. Nevertheless, has not yet set foot on the court, he said that would be the champion. Victor continued working out the one hit every day for months until he mastered it completely, and then passed to the next. Eisenberg told me later that his nephew is often put on the court many sport shoes, resulting in a reputation as an eccentric and eccentric.

A year later, Victor Niderhoffer really won the championship of the country’s junior, and by the time of graduation in 1964 he received the title of students at American universities. Subsequently Niderhoffer won five times at the U.S. championships in a single game (a record surpassed only by Stanley Pearson (Stanley Pearson), received the sixth title in 1923) and won three national tournaments in the pair. In 1975 he defeated the legendary Khan Sharif (Sharif Khan) in the final of U.S. Open squash. This was the only time during the period from 1969 to 1981, when Khan was unable to retain leadership in their hands.

Victor Niderhoffer recognized as one of the best players in the history of squash and is included in the Hall of Fame this game. In this case, and journalists, and players pointed out that he had very little resemblance to the other players in squash level and never was “a graceful athlete.” With his tall and powerful figure, he looked awkward and strangely inflexible. According to his coach, the legendary Jack Barnaby (Jack Barnaby), Victor did not have great natural talent, but he was an extraordinary zeal and fighting spirit, and it worked better than anyone else among his students. Partner Niderhoffera at U.S. championships in 1968 Vic Elmaleh (Vic Elmaleh) was convinced that Victor won, primarily because of its consistency and confidence.

Multiple champion himself said that “the difference between winning and losing, usually hangs on a thin thread, and anyone who is prepared to give the game all that it requires a little more, has the potential for greatness.” Pondering the reasons for his success, he recalled the words of Francis Galton that all the outstanding people combined have four properties: tenacity, organization, health and abilities. According Niderhoffera, thousands of players are stronger, faster, flexible, than he had the best shot, but in no one of them, these qualities are not combined with a tenacity and organization.

Coming out of the walls of Harvard University with a Bachelor of Economics, Viktor Niderhoffer went to the west, the University of Chicago, where in 1969 he defended his doctoral dissertation. From 1967 to 1972. He taught finance at the University of California. In 1960-70-ies. Niderhoffer published several articles about the inefficiency of the market, has attracted considerable interest and much controversy among experts. How playing squash, and developing scientific ideas, he chose an unconventional approach. His dissertation is “non-random nature of fluctuations in stock prices: a new model of price movements” ( “Non-Randomness in Stock Prices: A New Model of Price Movements”) challenged the generally accepted at that time the theory of random walk, according to which stock prices are moving haphazardly and unpredictably. Victor Niderhoffer hypothesized that stock prices vary according to certain schemes. For example, he discovered that, if the shares fell on Friday, then, as a rule, they declined and the following Monday. According to Volpe, Ronald (Ronald Volpe), Professor of Finance Yangstaunskogo University, Ohio, in those days it was regarded as scientific heresy.

However, purely academic work does not attract Niderhoffera. Before coming to Berkeley, in 1965, he teamed with a former employee of Merrill Lynch & Co. A cross by Frank (Frank Cross) and other times of Harvard, Dr. Richard economy Tsekhauzerom (Richard Zeckhauser), founded a brokerage firm with a starting capital of only $ 400 under the name Niederhoffer, Cross & Zeckhauser, abbreviated NCZ. (Today, this company is called Niederhoffer Henkel and is managed by Lee Henkel (Lee Henkel), the former chief legal counsel services of internal taxes.) Partners purchased through advertisements or letters to small private companies and then find suitable buyers for them from among public companies. Victor Niderhoffer also bought a lot of private firms, together with Daniel Grossman (Daniel Grossman), his partner for 40 years. According to Grossman, Niderhoffer went into business, shrouded in a veil of mystery – an agreement between the management of investment banks and companies were in private clubs – and began to promote it with marketing strategies.

As in court, Victor Niderhoffer behaved very eccentrically, to impress clients and to disrupt the competition. According to the memoirs of Henry Yushkevich (Henry Juszkiewicz), who worked in the NCZ in 1980., In meetings with clients, he looked like “extraordinary and brilliant,” and he “had only to throw a few opinions that the agreement was signed.”

In 1979 Niderhoffer decided to engage in trading on the derivatives exchange market, starting with gold and silver, and then moving to fixed income and foreign currency. He has hired students to enter the historical data on markets in computers 12 Radio Shack TRS-80, which are connected with each other. As a practitioner, Victor Niderhoffer wanted to be traded based on data and not on the same intuition, and used a hastily erected computing device to detect predictable correlations between markets.

In 1980 he was based trading firm NCZ Commodities, Inc., Also known as Niederhoffer Investments, Inc. However, Tsekhauzer soon found that the operation Niderhoffera become too risky, and left the joint company in 1983, fully devoting himself to scientific careers. Now he is a professor of Business School of John F. Kennedy at Harvard University. Another partner, Cross, died in 1980. Victor Niderhoffer also continued to go from one success to another. Firm Niederhoffer Investments has become one of the leading financial consultants in the field of futures, options and shares. In the early 1980’s. success of the trader was seen by George Soros (George Soros), who entrusted him to manage individual accounts. More than ten years, Victor Niderhoffer receive high profits by controlling the Soros funds up to $ 100 million invested in fixed income instruments and foreign exchange market, but then realized that he was beginning to lose their benefits, and he closed his account. In “The Alchemy of Finance” Soros said that Victor was the only one of its managers who voluntarily resigned, when things are going well. The great financier so highly valued Niderhoffera that sent his son to work under his leadership and learn how to conduct trades.

By mid-1990’s. Victor Niderhoffer considered one of the leading traders in futures in the U.S.. Annual Return received Niederhoffer Investments since its inception in 1996, was 35%. By results of 1996 New York agency MAR Hedge awarded her the palm in its ranking of companies, hedge fund managers. In 1994, the magazine Business Week named Niderhoffera best fund managers in the matter of stock market of America. And he recalled that “one happy month, his picture was published in several prestigious publications, namely, Business Week, National Enquirer, Financial Trader and Wall Street Journal.

In 1997, Victor Niderhoffer published bestseller “Universities Stock Operator” ( “The Education of a Speculator”), in which the autobiographical features of the original way combined with investment ideas.

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