Daily Speculations

The Web Site of Victor Niederhoffer & Laurel Kenner

Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.



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James Lackey: Beheaded

I turned off the news feed a few weeks back, just in time. I walked past the news stand and saw the Korean kid begging for his life. That reminds me of me.

A couple of years ago I was begging Victor for my trading life. He saved me. It was nothing short of a miracle. I was at the right place at the right time.

I was always cool enough to realize, no one gives a damn what I think. Everyone wants to know Vic's secrets. I always say, I can't give away what is not mine.

One amazing thing about Vic is all of the guys he mentors are from all over the world, literally. That is one group of smart dudes. There is always someone asking him for something, for some help here or there. I know this is not enough for a statistical sample, but 5 for 5 in recent past have told me the same thing. They don't send Vic daily e-mails what & why they day-traded for themselves.

I find that amazing. I think they are all nuts for not practicing or playing every day with the coach. I can't think of a better way to learn. When I have a bad day he says, "dont be too hard on yourself." When I screw up he says, "Very bad." When I trade okay he says "good." A new twist just added is "fair" I take that is get on the gas next time kid.

I know we all take our security for granted. I was thinking on the way to work, what if some terror numb-nut tried to capture me and chop my head off this morning. Then, riding a mountain bike I looked at all the bums in the park, with their carts and bicycles. Hades man, I was just a few bad trades away from a park bench.

Well two years ago, it was not one word responses and feedback from Vic. It was paragraphs, not only very difficult to decipher the trading lessons, but his language or vocabulary was dictionary.com word of the day, every day. One day he called me a son of a bitch for buying IBM there. I told my wife that, after work. She asked me if that made me mad. I said hell no, I am making progress, I can finally understand what the guy is talking about. In any event I made it through basic training, this time with much greater difficulty than in the Army. It was more like special forces training.

Certainly, some of you gentlemen to not post to lists for fear of the "very bad" feedback. I say, but what better way to learn? A good young, soon to be PhD., asked the list whether he should work for a trading firm now, or go to Europe to earn his Doctorate. He didn't ask me, because he knows I would tell him to drop everything and become a day trader. His mom would kick both of us in the backside.

My latest blizzard of posts is to meet and greet all the new members of the spec lists. How does a race car driver/day trader look at the markets? I post a bunch of mumbo jumbo analogies that are unfit for the spec list, but fine for the open list. I can't give away what I learned. However, I always have new questions. The answers always seem to be random garbage, but I do try.

Dealing with Quants, chartboys, salesman, screen watchers and neophyte-traders is exactly like being a member of any race team. I have raced everything from big wheels/greens-machines, to bmx-bicycles to motorcycles to cars and have dealt with engineers, sponsors, parents, fans-oh-aaaaah not mine, crew members and other racers.

Guys from same background, even if they dislike one an other, usually respect each other. However, some real passion and anger can be between other departments will develop, even though they all depend on each other for security and survival. Usually it is just miscommunication, and a healthy dose of ego.

What was first a pleasurable dream job, a member of a race car team, or a job as a trader turns into hell and just another job. I can think of no-greater miss- communication than via e-mail. A blizzard of posts back and forth leave so much room for misunderstanding.

There are two huge mistakes traders make. First is not admitting you are wrong and taking a reasonable loss. Just as important is not taking enough risk. Not being aggressive enough is as bad or worse than losing, to a day trader.

I know Epstean's Law, post as little as possible or not at all. Hades the easiest thing to do is to keep mouth shut and sit back and learn from spec list. There must be a better way. Take on some risk, take a stab at a good post. I might add, cut losses and don't respond to the bad ones.

This is the opportunity of a lifetime fellas...LACK