Practical Speculation

by Laurel Kenner and Victor Niederhoffer

Book Overview

The follow-up to Victor Niederhoffer's critically and commercially acclaimed book The Education of a Speculator has finally arrived. Practical Speculation continues the story of a true market legend who ran a hugely successful futures trading firm that had annual returns of over thirty percent until unforeseen losses forced him to close operations. Like a phoenix rising from the ashes, Niederhoffer returned to the world of trading stocks, futures,...

• Format: Hardcover
• Language: English
• ISBN: 0471443069
• ISBN13: 9780471443063
• Release Date: February 2003
• Publisher: John Wiley & Sons
• Length: 400 Pages
• Weight: 1.51 lbs.
• Dimensions: 1.3" x 6.1" x 9.5"

Customer Reviews

$120000000 tuition fee paid on your behalf by Niederhoffer

This is literally the cost of the wisdom in this book.Mr.Niederhoffer is back after his fund with $120 million under management,rated the best for 12 consecutive years,lost big and was forced to close in 97.He`s back explaining what went wrong and how to avoid the mistakes he himself committed before learning (the expensive way)what not to do.It`s hard for a small fish like myself who lost his small stake (relatively speaking) few times in his years of ignorance to recommend this book since,I consider it a hidden treasure no one has the right to benefit from in this cut throat business without paying at least the tuition fee I and my fellow traders paid switching from one losing system to the next.This said,Do you accept the gift?This book is the closest thing to a free lunch on wall street.The best investment ideas are found in the most unlikely places.Isn`t Practical speculation,a book written by a hedge fund manager who lost everything and mortgaged his house, an unlikely place to find great investment ideas? Well,think again.Victor Niederhoffer is imho the world`s best trader.Now,here`s the man`s REAL TIME track record that you can verify for yourself:In March 2003,Niederhoffer was THE ONLY bullish trader I know of.He published his opinion in a very insightful column on MSN -why the market should go up 19%? - while the Prechters,Abelsons and the other trend followers of the world were talking about a 10 year bear mkt and a crash that only Mr.Prechter can help us conquer.Mr.Niederhoffer`s prediction was not contingent on any break of a trendline or a moving average crossover or a resistance level breakout like most technicians tell you to save face in case their prediction goes astray as it usually does.No sir,his prediction was a straightforward 19% no strings attached.At the date of this review,16th of july,the market is up more than 15% from the date the article was published.Now my friend,this is a real time prediction not a retrospective one (I told you so type).In his short term swing trading using the VIC (a variation from the volatility index)and the stock/bond ration,he caught 960 dow points out of 1050 on 12 trades.Experienced traders know that predicting reversals in the long term let alone the short term is the hardest task for a trader and that the probabilty of achieving such endeavour by chance variation alone is nil.In fact,most of the successful hedge fund managers were at one point or another either his students or his employees.If you already missed the 15%+ return in 3 months or the 900+ dow points, cut your losses short like good traders do and BUY THIS BOOK.There are two things that experienced traders and squash players of this world do not want: a)being on the other side of Niederhoffer`s trades like the abelsons of 2003.b)having to return a Niederhoffer`s backhand like the khans of the 70s.While I was never locked in a squash court with Niedrhoffer,I found myself unknowingly on the other side of one of his IBM trades l

Valuable Advice from Two Experienced Pros

I am an economist from the New York area. Long-term investment in the stock market has been quite profitable for most, but attempts to augment those returns by active speculation is not as easy and has cost many far more than they had hoped to gain. As Prof. Milton Friedman has observed, what we assume to be true that is false is far more dangerous than not knowing and knowing that one does not know. Part of the problem is that they are many myths and unproven widely held assumptions that can lead the speculator astray. Even a good number of professionals fall prey to such misconceptions. Victor Niederhoffer and Laurel Kenner's excellent collaboration exposures many of these fallacies and then goes on to show how an aspiring speculator should go about testing and thinking about how to make money. While they provide some useful ideas, cautioning to be aware of ever changing cycles, what they really provide is a way of going about the process and do so in a way that an investor with just the basic understandings of the market can probably follow easily. Victor has no need to write this book. Although he is quite frank in discussing his own investment debacle in 1997, he has been able to recover from that event. His many years of investing have given him experience and understanding of markets that few can match. While providing useful advice, he is not giving away any magic formulas or secrets. I have personally known him for a good number of years and believe him to be a most honorable and generous man. He has gained much from the relatively free economic system of this country and in the spirit of Benjamin Franklin is willing to share some insights with others so that they too can be enriched by this land of liberty and its ordinary people that he so loves. The reader of this book will most likely learn many valuable lessons and be able to avoid many mistakes that might otherwise be very costly. In my opinion, it is a most worthwhile book for any amateur or professional who is serious about speculating. Some who have reviewed this book point out that some of the points they make are well known. One writes a book for many people, not just one. For many readers, most of what is written therein will be new and useful. For those more experienced much of what they read will not be new, but that is hardly a reason for them to ignore any book that contains familiar material if there are some new gems of wisdom that will be most worthwhile even for them. That is highly likely to be the case with this book because I found many such gems of wisdom and experience. There is also some criticism of some sections dealing with such topics as Alan Greenspan, for example. I even find myself in agreement with some. But just as there are no perfect people there are no perfect books. We do not reject people because they are not perfect or we would have no one to associate with. Likewise we should judge a book by its overall contribution to our knowledge. On this scor

Best book for the responsible investor

Perhaps the best book ever written for someone trying to establish their own views and beliefs on the markets. If you note the list of people reviewing this book, it is like a who's who of ground breaking work on the markets. Jon Markman, Yale Hircsh, Dr. Steenbab all are on the cutting edge of practical market writing. If you write this off as the authors simply being a "Wall Street insider" you are mistaken. Further, if you let the high accolades of Victor Niederhoffer's brilliance, intimidate you from buying the book., you couldn't be more wrong. If you are just beginning your studies of the market, or if you are a "tried and true wall street insider", there are many lessons to learn.I am far removed from Wall Street, and Indiana boy just beginning my "investment career", without a business degree from a esteemed college. Yet found this book inspiring and full of wonderful suggestions on how to approach the markets. My best sentence summary of this book: "It leads you to personal responsibility for your investments". You learn of Victor's own dramatic poignant personal acceptance of such responsibility. From his meteoric rise to top of the hedge fund world to his fall, in 1997, only to reinvent himself to make a return. Few have had a more spectacular fall from grace. He admits mistakes and clearly exposes an easy target for his critics. However, I found this most endearing. He gladly accepts the criticism of others more enlightened, to teach his mentors a few lessons. He explains how to avoid being blinded by success, if you are fortunate enough to achieve it. And how to accept the evitable falls as being part of the duty of a capitalist progressive, trying to achieve wealth through acceptance of risk It clearly shows why others would prefer that you abdicate responsibility. Exposes a journalist with a hidden political agenda, to "balance" capitalistic thrust of the markets. Exposes writers with sole interest of getting most eyes to pay for their latest view. Some blatantly ride the latest fad. Others play on emotions of fear and greed. All with promises of a treasure map to the markets, for the price of their advice.But perhaps most enriching are the numerous and brilliant ideas on how to get an edge. Not promises of wealth, but an edge. Further, he shows how these "edges" are bound to disappear as markets learn and reacts to them. Victor and Laurel call this the "ever changing cycles" of the market. Laurel and Vic, however, must be commended for making their method, the "scientific method", easy to understand and interesting to read. They leave it, however, for you and your professors to take the responsibility to learn the nuances of perfecting the statistical method. But give you the overview on how to successfully apply it. The focus is on how to creatively apply this method to the markets. Their narrative is so interesting their presentation of their discovery process, was inspiring to me to develop several of

Another Masterpiece.

Practical Speculation is one of the two best books on trading/investing on the market, the other book is The Education of a Speculator.The Education of a Speculator, was largely an autobiography, in which Niederhoffer shared some of his life experiences and lessons, that helped him become one of the greatest traders in history. Most successful traders will tell you that it is the best book on the subject of investing ever written.The new book Practical Speculation, teaches you how Victor does his research, walks you through a few examples, and explains why the the research churned out by brokerage firms, and Stock Market Commentators is flawed, and will only loose money for you. Victor alerts you to the pitfalls that most average investors fall in to, and shows how the scientific method can be used to illuminate the path.This book is well written, entertaining, and filled with great ideas, that you wont find elsewhere. Victor's two books are probabaly the only two books any investor need read. I have read most of the popular books on investing and trading, and Victors books are so far ahead of the rest it is unbelieveable. I have only just finished reading this book, but I know I will go back to it many times, as it is difficult to absorb all the great ideas in one reading.