Nassim Taleb on Victor Niederhoffer

Victor Niederhoffer was a wildly successful hedge fund manager who was invited to partner up with George Soros in 1982.

Later, he decided to stop working with George Soros because he wanted to move on and do his own thing.

Soros was so impressed with the guy, that he sent his son to work for him.

To Niederhoffer, it was his talent, hard work and smarts that made him a multi-millionaire.

But to Nassim Taleb, this could just be a rationalization after the fact.

Victor Niederhoffer’s success, Taleb supposes, could be largely due to luck.

Of course, most of Wall Street thought that Taleb was crazy.

But then in 1997, Niederhoffer’s investment fund blew up and he was forced to shut it down.

He later opened a new fund and it went on to do well… but then blew up again in 2007.

Was Niederhoffer really a superior speculator? Or did Taleb have a point about luck being a big factor?

Check out this article about Niederhoffer’s interactions with Taleb, as written by Malcolm Gladwell. It’s a long (but enjoyable) read, so you might want to bookmark the page to read over the weekend.

Your thoughts?

Feel free to share your thoughts below.

By |2018-12-17T20:01:20+00:00November 15th, 2018|Philosophy|4 Comments

4 Comments

  1. Imran March 24, 2016 at 2:49 am - Reply

    Backgammon is the best board game at demonstrating the vagaries of financial markets. It’s just you versus the Market (the other player) and The Dice (the randomness of Price).

    If you’re a regular backgammon player and are good at it (especially against a seemingly cheating computer player), then I really believe that you will get the instinct that Taleb could be right.

    “talent, hard work and smarts” will help, but luck determines the final outcome.

    For sure, talent et al will make you lucky “more often” than not i.e. make more money and/or lose less (as opposed to make less money and/or lose more), but be under no illusion that you are in full control.

    • Chris Lee March 24, 2016 at 4:41 am - Reply

      Interesting.. I’ve never played backgammon before so I don’t know what it’s about. I’ll definitely check it out.

  2. Imran March 24, 2016 at 2:51 am - Reply

    In any case, Niederhoffer’s book “The Education of a Speculator” is an enjoyable read as well.

    I admire him as a gutsy speculator but I felt the same way about him as Taleb does: I certainly do not want to be the kind of speculator he was.

  3. Kai Ling Ni March 24, 2016 at 9:44 am - Reply

    After all, no one can escape from the BLACK SWAN if you even once a while

    forget to or do not set a stop loss point in the GREAT MARKET place as a game

    player.

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