Daily Speculations

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The Chairman
Victor Niederhoffer


12/23/04
Victor Niederhoffer: Higgledy-Piggledy at Year-End

Frederick Hill in talking about the boom in Wall Street construction after the great fire of 1835 wrote in 'The Story of a Street": "Almost before the ruins had cooled the work of tearing down and building up was resumed. It is as difficult to wend one's way through Wall Street as it ever was. Physically as well as financially there is peril in perambulating that street. Stocks may rise but stones are falling prodigiously in all directions." The perils are still great but one has noticed that there is a tendency for the fees taken by funds to be maximized at the end of the year relative to "long-term values." Anecdotally, there is a tendency to extremes near the end of year and reversals at the beginning, so that the amount of frictional payment to cover the costs of keeping the wheels of commerce is well greased. And in that direction, one notes the dollar near a low at the end of the year, and wonders if it will take the same zigzag higgledy-piggledy course as Internet stocks from year-end 1999 to the first week in 2000, as so many other markets in similar positions have taken. But this must be tested.

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