Practical Speculation (Hardcover)

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 last year at the expense of my trading account.

Last word of advice,do not let Niederhoffer`s humility fool you.He`s not crawling back slowly up the stairs as he likes to say,he is taking monster steps that neither you or I are capable of taking yet.
Like all the greats,he only talks about his losses and hardly mentions his wins.
If you followed his writings,predictions and recommendations as closely as I did you would quickly realize that the misses don`t amount to more than a very small percentage of the hits.

Laurel Kenner on the other hand is the most shortchanged writer in history.Co-authoring a book with a giant like Niederhoffer is not an easy task.To her credit,her writings prior to joining Niederhoffer at MSN showed a great understanding of the financial mkts and contrarian views on different aspects of speculation (a trait you can`t do without as a trader).

My only minor disappointment was the lack of mention of Livermore.In my years of ignorance I traded using Livermore`s methods and was wiped out few times before realizing that I was feeding the system with my hard earned money by placing mkt orders and only buying on up days and new highs a la Livermore.
Mr.Livermore in my opinion disseminated more ill founded wisdom than Graham since his words became cliches in all brokerage ofices.

On a final note,whether you buy this book or not won`t affect my wealth in anyway SO,IGNORE THIS REVIEW AND THE BOOK AT YOUR OWN EXPENSE

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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.

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