Daily Speculations

The Web Site of Victor Niederhoffer and Laurel Kenner

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The Chairman
Victor Niederhoffer

4/20/2005
Nebraska Chronicles: The Sage's Best Ideas, by Victor Niederhoffer

I have read all the books about the Sage, and I have read all his bearish annual reports (with their implied sanctimonious message that he is so much more moral and prudent than you and I, and that a primitive society of abstinence, for you, and self sacrifice is to be preferred to our society of constantly increasing material well-being and personal liberty).

And I find that there are only two sensible and valuable things he has said (as he never talks in public about the importance of using tax losses and float from an insurance operation to buy stocks for the long term during a rising yield curve environment, and the importance of having very good friends and token ownership in the media, which are the actual sources of his success).

The first thing I find valuable is the message he delivered before the luxury boat trip he arranged for his fat cat influential friends and his surrogate son, Bill, where Ben Graham was the invited guest . He said, "We are all here to hear Ben talk. No one else talk at all."  I always use this when introducing a distinguished invited guest to a dinner party.

The other useful thing is an extension of his Stoical idea that one should look at the market and not at the commentary. Along these lines, it is helpful to look at the "disaster" that is the fixed-income market. The bellwether long-term June bond trades at 114.12, a two-month high, 4 percentage points above where it was one month ago and within 2 points of its all-time high, and some 60-80 points above its level of the cardigan Carter era.

And also good is to look at the CRB index, now at 306, down from 316 a month ago, and about equal to where it was at the end of February.

The dollar is up about 5% on the year against the euro, with comparable damped gains against the others, to the cost of those who pyramided against it on the way up, and the humiliation of fellow quant grads from Harvard who were snatched by the Sage and talked about how the dollar sucks at Davos and other locales where the head Body Snatcher plied his trade.

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