Pipeline Books

The Education of A Speculator
by Victor Niederhoffer

On October 27, 1997, Victor Niederhoffer and his partners were unable to meet a $50 million margin call. Bankrupt. The event foreseen by a friend reading his forthcoming book, The Education of a Speculator, had come to pass. "It's obvious that it's only a question of time until you go under," Niederhoffer quoted with pride, scorn and false humility.

I was at the mid-point of the book on the 27th, a day that seems destined to merit at most a small footnote to the financial history of 1997. Until then, Niederhoffer came across as an egotistical eccentric who was able to generate unusual insights into market dynamics. By taking risks that frightened even his former employer, George Soros, he occasionally won big. After the 27th, the magnitude of the risks he accepted daily become more evident, and the inevitable result was as obvious as his friend suggested.

The fatalism is everywhere: "Chances are good that I'll be on the wrong side, providing liquidity and money for the big gainers on the other side, and expediting my own demise."(p. 391)

Niederhoffer creates insight through analogy with music, sex, biology, historical events, sports and even the ramblings of an economic itinerant, Mr. Bo. A highly entertaining mixture. Well worth the time.

Financial Content:You will learn much about market psychology, but do not read this book looking for the path to wealth. This has nothing to do with prudent investing. Read this book as the zenith of the 1990s "hedge fund" – managed by those for whom market action is a mind-enhancing drug, and for whom the game is the thing.

Review by: R.A.Swan, Chief Investment Strategist, CT Investment Management Group

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The Education of a Speculator

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