“In America, they give you a second chance but not a third.”
In its most recent issue, The New Yorker ran a fascinating profile of trader and hedge fund manager Victor Niederhoffer.
During the 1990s, Niederhoffer, incidentally a huge Ayn Rand fan, was one of the hottest traders on the planets, racking up annual returns in excess of 30%. In 1994, Business Week named him the best commodities fund manager in the country.
At the top of his fame, Niederhoffer, who holds a Phd in Economics from The University of Chicago and was a world champion squash player, published a popular investment book/autobiography: The Education of a Speculator.
But he ran into trouble in the Spring of 1997 when his investments in Thailand were torched when the Thai government ended the peg of its currency, the baht, to the dollar.
After this debacle, Niederhoffer was forced to shutdown his funds and fell into depression.
But he came back and had been enjoying a nice second act the last few years. In 2004, he launched the popular blog Daily Speculations and his funds had been performing well.
Unfortunately, he ran into trouble during the credit crunch in August and, when a big investors pulled a large amount of money (subscription required), was forced to shut down his flagship Matador Fund.