Book Review: “An American Hedge Fund” – The Story of Timothy Sykes Who Turned $12,000 in Bar Mitzvah Money Into $1.65 Million and Started a Hedge Fund Before Finishing College

July 31, 2007 at 5:44 pm  ·  Category: Books

A few weeks ago I got an e-mail from Timothy Sykes offering me the opportunity to review an advance copy of his forthcoming An American Hedge Fund – due out October 1, 2007. 

At first I was skeptical.  I’ve had offers to review books before and, after looking into them, most have held very little interest for me. 

But as I started reading about Timothy Sykes and his story I became more and more excited. 

Tim turned $12,000 in Bar Mitzvah money into an audited, pre tax $1.65 million – before graduating from college! 

He set up a hedge fund, Cilantro Fund Partners, while finishing up a degree in Philosophy at Tulane that was the top ranked short bias hedge fund by Barclays in 2005. 

In 2006, Timothy was named as one of Trader Monthly’s “Top 30 Under 30”.  He’s appeared on Fox News Channel and CNBC numerous times.

He’s even starred in a TV show: Wall Street Warriors.

After turning up all this within an hour I was ready to agree to review An American Hedge Fund

The one question I still had, however, was if his writing would be up to the story he had to tell.

It is. 

In fact, it immediately reminded me of one of my favorite investment books of all time: Jim Cramer’s Confessions of A Street Addict.

*****

An American Hedge Fund is the first book I’d give to somebody if I were trying to interest them in the stock market. 

I’ve been talking with some local community colleges about teaching an intro to investments course.  If I do, An American Hedge Fund will be the first book we read.

The book is good for so many reasons. 

Obviously the story sounds like a Hollywood fantasy.  It’s inherently interesting to find out how it all went down.

Beyond that, the book is educational.  Timothy introduces readers to various concepts of technical analysis and to short selling as well. 

Finally, the book is a breezy read.  Sykes has a straightforward style that makes his book a pleasure to read.

*****

As a high school senior in the Fall of 1998 Sykes plunged into a stock market environment that in retrospect seems destined to have made him a very rich and famous young man:

I was about to discover I was in the perfect place with the perfect naivete at the perfect time in stock market history.  The Dow and the NASDAQ were coming off large drops in the summertime and the stage was set for a rebound and maybe more.  Internet and technology plays were the hottest sectors and drove the market rebound in the winter on its way to a year long record shattering stratospheric breakout.  The stage was set for me to shine (An American Hedge Fund, pgs. 34-5).

In the pages that follow, Sykes tells the story of how he surely and steadily grew his account by trading stocks like WelcomeToSearch Engine Inc., Nettaxi, Isleuth.com and Illinois Superconductor.

By the end of 1999, after his first semester at Tufts (he would later transfer to Tulane), Sykes had grown his account to $120,000.  He describes his strategy at the time:

The particular companies I played didn’t even matter because I played all sorts of companies; all that mattered were their stock charts.  I bought the stocks of companies with solid chart bases when their trading volume spiked along with their stock prices (p. 71).

A month into 2000 and he had more than doubled his account to $250,000 – a college freshman with a quarter million dollar net worth. 

You can imagine what this did for his popularity:

My popularity on campus was at an all-time high because many students had heard my story and had begun spending their days in my dorm room watching me trade.  I’d put on little shows for my disciples…. Frequently, there were nearly a dozen college students staring at me in awe while they watched me make $10,000-$30,000 in one sitting.  We all shared a good laugh when we discussed how little money they earned from their low paying summer jobs (p. 75).

After a $123,000 gain on a trade in Illinois Superconductor Sykes rounded up the entire dorm and took them out for a fancy dinner in downtown Boston.  The bill wasn’t too bad at $800 since, “after all, other than one flask that somebody had snuck in, there was no alcohol involved, since we were all freshman” (p. 91).

By April, his account had grown to $840,000.  This was (March 2000), of course, the end of the Nasdaq’s fantastic run and the beginning of a brutal bear market.

Determined to make $1 million for the year, Sykes tried out a bunch of other failed strategies.  Ultimately, however, he failed to reach his goal of making $1 million in 2000.

At the beginning of 2001, however, he was to find what would eventually come to be his calling: short selling:

The New Year brought a quick bounce in the markets as the decline over the past few months was grueling but gradual.  It was during this time that I became a bona fide short seller by focusing short selling on the market’s most popular technology companies (p. 109).

*****

An American Hedge Fund is a story so unbelievable it must be true.  Only in America!

I especially recommend this book for younger people who have an interest in the market or want to get started learning about stocks – and for parents who want to interest their kids in the stock market.

UPDATE (Sun 9/16, 3:00pm PST): An American Hedge Fund is now available for purchase at Amazon.com.

An excerpt from this review is featured on the Editorial Reviews page.

*****

UPDATE (Sun 9/16, 3:30pm PST):

A Response To Tim Sykes Critics

No post I’ve written has received as many comments as this one praising Tim Sykes’s An American Hedge Fund.

At first, I was surprised by their vehemence and unanimous negativity.  It even made me question whether I’d given the book such a good review because I got a free copy.  Reading some positive comments from highly respected Wall Street figures today reaffirmed for me what I wrote.

And I think I see what it comes down to.  All the commenters have pointed towards Sykes over the top personality and marketing and the underperformance of his hedge fund.  Some find him abrasive and others simply think he’s not that good of a trader.

But, frankly, that doesn’t touch my review.  His hedge fund might have underperformed of late, he might be a bit brash and the book might not teach you anything about the market if you are experienced.  I wasn’t arguing that Sykes is a great trader and that you should give him money to invest. 

I was saying that, regardless of his performance, Sykes has written an entertaining, readable and educational book that I personally think makes an excellent introduction to the stock market for young people.  Aaron Brown, Executive Director at Morgan Stanley and author of The Poker Face of Wall Street, called it Catcher In The Rye for traders” and I think that’s an apt description.

UPDATE (Mon 9/17/07, 12:50pm PST):

Tim Sykes Responds To His Critics

Greg, Thanks for the honest review of my book. I do have many critics, but not one of them knows the details of my gains and losses. Based on 2 minute-video clips and brief CNBC appearances, they critique my trading prowess. until now, nobody has known the whole story and I think that’s what’s wrong with the finance industry. There’s no way to tell who is right and who is full of it. This is why readers will be surprised at how honest my book is–I hide none of my faults (of which I have many), because in order to learn, we mist understand our gains AND our losses. There are lessons in everything we do and I think people who read my book will truly understand this.
Timothy Sykes  ·  Sep 17, 2007 at 12:19 pm  ·  Permalink [edit]
Posted by Greg Feirman  ·  Trackback URL  ·  Link
 
15 Responses to “Book Review: “An American Hedge Fund” – The Story of Timothy Sykes Who Turned $12,000 in Bar Mitzvah Money Into $1.65 Million and Started a Hedge Fund Before Finishing College”
  • BEWARE: Do not trust Tim Sykes with managing your money!! He has lost his investors a lot of money throughout 2006 and 2007!!

    July 2007 UPDATE Tim Sykes/Cilantro Fund Audited Performance:

    July2007: -1.65%
    YTD2007: -10.26%

    TimSykes Hedge Fund Audited Performance(3/2003-6/2007):

    Compounded Annual Return: 1.52% (underperformed money market rates, with much higher risk)

    Timmay Fund Sharpe Ratio (Annualized): -0.06
    (may as well bet on coin flips; or give up and go on TV/self-publish etc)

    Kaplan Accounting  ·  Aug 19, 2007 at 2:10 pm  ·  Permalink
  • “Lucky Idiot/Sykes has his Luck Run-Out”

    I’ve read the advance copy of Sykes “book”. DO NOT BUY THAT SNAKE OIL CRAP unless you like seeing a hyper idiot self-destruct……

    Nothing of value in this book for any serious professional….

    His “Fund” is down over -36% since Jan2006.

    Bob Cohen  ·  Sep 3, 2007 at 9:25 am  ·  Permalink
  • ATTENTION: Sykes/Cilantro Fund Refund

    All current and former investors should contact Tim Sykes who has agreed to refund his investors losses.

    Sykes said: “I’ll definitely try to pay back my investors, the largest of whom is me!” (9/4/07)

    http://www.elitetrader.com/vb/showthread.php?s=&postid=1591876#post1591876

    Baron  ·  Sep 4, 2007 at 9:34 am  ·  Permalink
  • I read Sykes book and was psyched when I started, but was quite disappointed by the time I got done. Nothing really new or earth shattering in it. I got it for free so it wasnt so bad…..but wouldnt pay 20 bucks for it. Much better “reads” out there.

    Steve Cohen  ·  Sep 11, 2007 at 11:39 am  ·  Permalink
  • Tim Sykes:BadTrader/WorseWriter
    His “book” NOT worth $19! NOT a Classic!

    Sykes/Cilantro Fund Lost -36% since Jan2006!

    Abe Stein  ·  Sep 13, 2007 at 6:46 am  ·  Permalink
  • SYKES said:”Once you read my book, you’ll see stock picks don’t matter, what matters is your ability to profit from patterns that repeat, time and time again.”

    OUR REPLY: Tim, Do you expect us to believe that you have found profitable patterns in financial data without any knowledge of quantitative analysis or equity analysis? Here we are (all of us at hedge fund other than Cilantro Fund Partners) spending zillions of dollars on financial data, quants, equity analysts, sell-side research and supercomputers, trying to find a pattern (any pattern) that can give us a slight edge on the market, while you have managed to discover such patterns all by yourself and without any education or resources. And, joy of joys, you will soon be giving away your secrets to the public in the form of a $20 book.

    I think what really happened is that you’ve given up on trying to analyze individual companies, because that’s just too much work and too boring (who wants to think about businesses when we can be making money instead?) But you still need to sell some kind of snake oil to your audience and your hedge fund investors. And that snake oil is … chart reading. Couldn’t you have been at least a little original, Tim? Of course not, you’re too dumb for that sort of thing.

    I would say that at least one person will lose his life’s savings because of your book, and will probably kill himself. But let’s face it, there are hundreds of thousands of phony books about investing, written by con men like yourself. I guess nothing can stop a sucker from parting with his money, but you are making it just that much easier for him.

    Mike Anderson  ·  Sep 13, 2007 at 8:47 am  ·  Permalink
  • I just read Tims book; summary in a nutshell:

    1) Timmy made money trading the NASDAQ bubble (along with everyone else).

    2) Timmy has not made money trading in the last 5 years.

    3) Timmy is trying to make money off his ’99-’01 track record, while lying about his trading failures over the last 5 years.

    I just saved you the $20 book fee.

    John Agrawal  ·  Sep 13, 2007 at 1:13 pm  ·  Permalink
  • Just finished reading this mediocre book. Its an empty and uninspiring story about Tim Sykes, a self-absorbed irresponsible stock trader. This book is NOT a “classic” and story is NOT “Rocky-like”(as author Sykes claims).

    Sykes put the term “stock operator” in title in order to confuse all future book searches for Jesse Livermore’s excellent story (Reminiscences of a Stock Operator, by Edwin Lefèvre (1923)). This cheesy trick might help book sales, but needless to say, Sykes has nothing in common with the great trader Livermore.

    Sykes comes across like a hyper/immature/video player-type Trader, which worked for him for a few years; then the law of averages caught up with him. His “return to the mean” continues during the past two years; and his very poor investment strategies are DOWN -36% since Jan 2006. His continous bad performance throughout 2007 shows that he does not learn from his mistakes; and readers can only cringe while watching Sykes slow motion demise.

    Mike Fagen  ·  Sep 15, 2007 at 5:48 pm  ·  Permalink
  • Greg, Thanks for the honest review of my book. I do have many critics, but not one of them knows the details of my gains and losses. Based on 2 minute-video clips and brief CNBC appearances, they critique my trading prowess. until now, nobody has known the whole story and I think that’s what’s wrong with the finance industry. There’s no way to tell who is right and who is full of it. This is why readers will be surprised at how honest my book is–I hide none of my faults (of which I have many), because in order to learn, we mist understand our gains AND our losses. There are lessons in everything we do and I think people who read my book will truly understand this.

    Timothy Sykes  ·  Sep 17, 2007 at 12:19 pm  ·  Permalink
  • I purchased Sykes book and read it over the weekend. It is a poorly written life story of a failed trader who has fallen on hard times. This book is basically like a blog of an average person who got lucky trading stocks (which it really should be – blog and nothing more).

    Beware of all the phony glowing reviews for Sykes Book. Its the good ole boy network in high gear where authors/investment advisers use the buddy system to give fake good reviews to each other.

    Book NOT worth $20!
    Better bet is to buy book – Millionaire Traders by Kathy Lien. At least you will learn something. OR Curtis Faith’s book.
    (I like Tim, and hope he eventually finds a career through which he can succeed).

    Walt Becker  ·  Sep 17, 2007 at 2:00 pm  ·  Permalink
  • Loser Sykes Luck Runs Out and Self Publishes Book To Make Some Money Off Of Newbies and Suckers…..

    Maybe Timothy Sykes will find some type of work which will allow him to succeed; but trading and self-publishing books will not allow him to actually contribute to society, and Sykes admits that he continues to lose OPM.

    After reading Sykes book, story can be summarised:

    1) Timmy made money trading the NASDAQ bubble(along with everyone else), and he did not demonstrate good money management. Basically, “lucky monkey” effect….

    2) Timmy has not made money trading in the last 5 years because his luck ran out, and the bad risk management.

    3) Timmy is trying to make money off his ’99-’02 track record, while lying about his trading failures over the last 5 years.

    4) Timmy has averaged less than 1% annual return with his Sykes/Cilantro “hedge fund” since 2003. So, investors would have been better with interest bearing checking account.

    5) Timmy lies that “..my Fund bleeding has stopped…”, but actually he lost his investors very large amounts of money throughout 2006-07, including continuous losses every month of Summer 2007. Sykes Fund “Bleeding” has not stopped, but rather continues as Sykes has lost over a third of his investors money since Jan 2006.

    Book is not worth $20; and it is not worth reading even if you get it for free….

    Steve B.  ·  Sep 22, 2007 at 6:30 pm  ·  Permalink
  • Tim Sykes,
    It is not your LOSING MONEY but it your LOSING HEART that makes me wonder if you ARE A MAN AT ALL…

    Almost every good/great trader had big losses and came back. BUT YOU SIR simply RAN away and are TRYING to FIND another profession..
    that’s SIGN OF A LOSER..

    If your story had shown even a slight iota of grit in you it might have been worth read.

    But You are just another loser..Many people make a fortune in markets.
    and as they say Markets GIVE and take back with same ferocity…

    I just hope you have a better luck as a writer (which btw doesn’t look like happening as of now)

    A.J.  ·  Sep 27, 2007 at 11:48 am  ·  Permalink
  • Update to the Sykes saga. He has been reported to the SEC for posting on message boards attacks against a company he made a short recommendation against on thestreet.com

    How he swindled that side into giving him a podium is anybody’s guess. I imagine he fancies himself ala Jim Cramer, but where he tries to match Cramer in terms of bluster and self-aggrandizement he lacks Cramer’s obvious deep well of knowledge and ability to educate about the markets which is something Sykes cannot do. I hope Cramer knows Sykes used his site and then bashed the same pick on Yahoo and Raging Bull message boards immediately after to reinforce the chances of success for his short recommendation.

    This kid is the sleaziest thing to hit the financial media in a long time and that is saying something.

    Just say NO to Tim Sykes.

    And if you haven’t already seen his now classic laughing stock of Wall Street series of emails published on TraderDaily.com go look them up. They are excruciatingly embarrassing.

    Norman Lunden  ·  Oct 25, 2007 at 6:54 am  ·  Permalink
  • I READ SYKES WORTHLESS BOOK AND IT HAS NO SUBSTANCE AT ALL. THERE ARE PLENTY OF OTHER BOOKS THAT COVER THE SAME SUBJECT MATTER FROM PEOPLE WHO HAVE A RIGHT TO EVEN AUTHOR A BOOK ON THE SUBJECT.

    THIS WORTHLESS BOOK IS JUST AN ATTEMPT AT COMING UP WITH A CATCHY TITLE TO GENERATE HITS ON A SEARCH ENGINE. SAME OLD TIRED INFORMATION PRESENTED.

    SYKES IS A FAILED HEDGE FUND MANAGER, NOW BECOMING A SNAKE OIL BOOK SALESMAN. BOOK NOT WORTH $20.

    Jon Goldberg  ·  Nov 11, 2007 at 3:20 pm  ·  Permalink
  • Timothy Sykes is a hypocrite.

    After I discovered severe corruption at Eurostat, the statistical office of the European Union, I wrote a fully documented message detailing the allegations, which I posted on Timothy Syke’s website.

    In a very short time, my message was deleted. When I contacted Sykes, his excuses ran the gamut from “the file size was too large” to “the message doesn’t fit the theme of our website” to “you don’t write good enough”.

    Timothy Sykes is not a prophet who exposes “manipulative forces at work in companies, the media, ANALysts, etc.” as he proclaims. Timothy Sykes is a liar who probably works *for* the manipulative forces as a facade of opposition.

    If you would like to receive a copy of my message about corruption at Eurostat that includes graphics, please contact me.

    Jeffrey W. Bowyer
    jbowyer@seznam.cz

    Jeff Bowyer  ·  Nov 13, 2008 at 2:40 am  ·  Permalink

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