Victor Niederhoffer

Victor Niederhoffer
Born	Victor Niederhoffer (1943-12-10)December 10, 1943 Brooklyn, New York, U.S.
Died	August 4, 2026(2026-08-04) (aged 82) New York, U.S.
Alma mater	Harvard University (B.A. 1964) University of Chicago (Ph.D. 1969)
Occupations	Investor, trader, writer
Notable work	The Education of a Speculator
Height	6 ft 2 in (188 cm)
Children	seven
Relatives	Roy Niederhoffer; hedge fund manager (brother)
Awards	U.S. Squash Hall of Fame College Squash Hall of Fame U.S. Squash Champion; 5x in singles, 2x in doubles U.S. Paddleball Champion; 2x in singles, 2x in doubles Pierre de Coubertin Fair Play Trophy Harvard Varsity Club Hall of Fame Jewish Sports Heritage Hall of Fame
Website	DailySpeculations.com

Victor B. Niederhoffer (December 10, 1943 – August 4, 2026) was an American hedge fund manager, multi-time U.S. National Squash Champion and national paddleball champion, bestselling author, and statistician. Born and raised in Brooklyn, New York, after attending public schools there he graduated with a B.A.in Statistics and Economics from Harvard University, and a Ph.D. in Finance from the University of Chicago Booth School of Business.

His company Niederhoffer Investments returned 35% a year from inception in 1980 through 1996, as he made hundreds of millions of dollars for his clients. Business Week named him the United States No. 1 commodities and futures manager, and MAR ranked him the No. 1 hedge fund manager in the world. However, losses during the October 27, 1997, mini-crash forced the company to close its doors.

He came back with two new funds, and in a five-year period beginning in 2001, Niederhoffer's funds returned 50% a year (compounded). The industry group MarHedge awarded the funds the prize for best performance by a commodity trading advisor (CTA) in the two years 2004 and 2005. However, the funds were caught up in the 2007 subprime mortgage financial crisis, and closed in September 2007.

Niederhoffer won the U.S. National Squash Championship five times in singles, and three times in doubles, despite taking a five-year hiatus mid-career to protest anti-semitism in the sport. He also won the U.S. Paddleball Championship twice in singles, and twice in doubles. He was inducted into the U.S. Squash Hall of Fame, the College Squash Hall of Fame, and the Harvard Varsity Club Hall of Fame, and received the Pierre de Coubertin Fair Play Trophy.

Early life

Niederhoffer was born in Brighton Beach in Brooklyn, New York. He grew up there in a lower-middle-class family in a small apartment, and was Jewish.

At the end of the 1800s, his paternal great-grandparents had moved from Austria to the Lower East Side in Manhattan. His paternal grandfather Martin (Martie), an accountant and a court interpreter in Yiddish and Spanish, married Birdie (née Kuminsky) in 1916. His maternal grandparents were Sam and Gertrude Eisenberg. His father, Dr. Arthur "Artie" Niederhoffer (1917–1981), graduated from Brooklyn College in 1937 by playing football to put himself through college, and then worked his way through Brooklyn Law School, and finally graduated with a Ph.D. in sociology from New York University in 963. Not able to find a job as a lawyer when he graduated law school, he served in the New York City Police Department for 21 years, retiring as a lieutenant. He then taught as a professor of sociology at John Jay College of Criminal Justice for 14 years. He also taught at Hofstra University, Brooklyn College, New York University, Queens College, and the New York City Police Academy, and authored several books, primarily on the police and criminology, including Behind the Shield, The Ambivalent Force, The Gang, and The Police Family: From Station House to Ranch House (co-authored with his wife). He was awarded the President's Medal of John Jay College for his achievements in criminal justice. His mother, Elaine (née Eisenberg) Niederhoffer (1925–2006), was an English teacher, author, and editor who graduated with a master's in sociology from Brooklyn College, and had descended from a long line of rabbis.

His brother Roy Niederhoffer is himself a hedge fund manager. He worked for Victor and his hedge fund from 1987 to 1992, trading fixed-income securities.

Education

Niederhoffer attended P.S. 225 in Brooklyn. His sixth-grade teacher wrote to him: "Although a little trying at times, you were the spark the class needed this year. You have a keen mind; learn to curb your inclinations to demonstrate superiority." He subsequently went to Abraham Lincoln High School in Brooklyn, where he was an A student, a math prodigy, captain of the tennis team, a pianist in the orchestra, a clarinetist in the band, sports editor of the school newspaper, and class president.

He then studied Statistics and Economics at Harvard University, which he attended on scholarship, earning a B.A magna cum laude in 1964. His senior thesis, "Non-Randomness in Stock Prices; A New Model of Price Movements," disagreed with the "random walk hypothesis" in finance, which maintained that the stock market followed a random, haphazard path; he argued that it followed patterns. His thesis advisor was Robert Dorfman.

He followed that by attending the University of Chicago Booth School of Business on scholarship, graduating with a Ph.D. in Finance in 1969. His Ph.D. dissertation in December 1969 was entitled "World Events and Stock Prices: A Study of New York Times Headlines and Subsequent Movements in the Standard and Poor's Composite Index." In it, he concluded that during the 1960–68 study period, there was a consistent pattern of stock price movement on the Standard & Poor's Composite Index subsequent to "bad" world events: the day after such an event, the index fell, but on days two through five, the market rose, suggesting a tendency for investors to initially overreact to bad news and then recover.

Academia

He was a finance professor at the University of California, Berkeley from 1967 to 1972. As a college professor, Niederhoffer wrote academic articles about market inefficiencies, and a number of papers on anomalies in stock market behavior. His paper Market Making and Reversal on the Stock Exchange (1966) made Niederhoffer the father of statistical arbitrage and of market microstructure studies. He used innovative methods to search for opportunities in stock markets, such as his paper "The Analysis of World Events and Stock Prices" (1971), which used the font size of news print headlines to determine the relative importance of news events and measure how they affected the stock market.

His self-assessment of his performance in the classroom, however, was that he was not a very good teacher.. He left academia in 1972 to concentrate fully on his business activities.

Early career

In 1965, while still at college, he co-founded Niederhoffer, Cross and Zeckhauser, Inc., with Frank Cross, a boutique investment bank which sold small, privately held family-owned companies to public companies and became one of the leading specialists in the U.S. in mergers and acquisitions, representing sellers. The firm was later called Niederhoffer Henkel, and was run by Lee Henkel, the former general counsel to the IRS, and still later merged into CBIZ. Niederhoffer as CEO and board chairman pioneered a mass marketing approach in investment banking, contacted 200,000 independent companies, and did a large volume of small deals at the firm. He also bought many privately held firms with Dan Grossman, his partner during this period.

In 1980, influenced by his academic studies on market inefficiencies, he founded a trading firm, NCZ Commodities, Inc. (later known as Niederhoffer Investments, Inc.), and began began to trade in commodities, including gold, silver, fixed income, and foreign exchange. He opened an office at at 48th Street and Third Avenue in Midtown Manhattan while he lived at East 83d Street and Madison Avenue on the Upper East Side; he would run home late at night to keep in shape.

Niederhoffer predicted daily stock market price changes, based on an analysis of 18 years of stock market statistics. Among others, Monroe Trout, Toby Crabel, and Victor's brother Roy Niederhoffer all traded at the firm.

Niederhoffer's success attracted the attention of George Soros. Niederhoffer became a partner of Soros and managed all of his fixed income and foreign exchange from 1981 to 1993. For a decade, the two of them spoke 50 times a day. Soros wrote in The Alchemy of Finance that Niederhoffer was the only one of his managers who retired voluntarily from trading for him while still ahead. Soros held Niederhoffer in such high esteem that he sent his son to work for him to learn how to trade.

Niederhoffer Investments hedge fund; high returns

Niederhoffer Investments returned 35% a year from inception in 1980 through 1996. From the early 1960s through he mid-1990s he made hundreds of millions of dollars for his clients. In 1994, Business Week named him the United States No. 1 commodities and futures manager. In 1996, MAR ranked him the No. 1 hedge fund manager in the world. Barron's called him one of the most prominent hedge fund managers in the United States.

1997 losses

In 1997, Niederhoffer Investments was not finding many opportunities for investments and, having returned much of its funds to customers such as George Soros, began investing the remaining 100 million dollars in areas in which Niederhoffer later admitted that he did not have much expertise. Niederhoffer decided to sell put options on Thai bank stocks to collect premium – the price of the option – (being effectively long these stocks), which had fallen heavily in the Asian financial crisis, his bet being that the Thai government would not allow these companies to go out of business. On October 27, 1997, losses resulting from this investment, combined with a 554-point (7.2%) single-day decline in the Dow Jones Industrial Average (the eighth-largest point decline to date in index history), forced Niederhoffer Investments to close its doors. In a lawsuit that Niederhoffer later filed on behalf of his customers in the U.S. District Court for the Northern District of Illinois against the Chicago Mercantile Exchange futures market, where he traded options, he alleged that floor traders colluded by marking options against him at much higher than market prices to drive the market down that day to force him out of his positions. The exchange settled the litigation with him, and Niederhoffer distributed the entire amount of the settlement to his clients without deducting any money to pay for the significant legal fees he had incurred. Traders at the time said his broker Refco may have been responsible for as much as $35 million of Niederhoffer's losses.

He lost his $130 million fund, as well as the majority of his own savings. The losses led him to sell his collection of antique silver (known as the second-best collection of American silver, after that of the Metropolitan Museum), some of his trophies and rare books, and to take out a mortgage on his 20,000-square-foot neo-Tudor home in Weston, Connecticut which he had built in 1982. Depressed, lost, and not knowing what to do with himself, he retreated into re-reading novels. He toyed with electronics, inventing an electronic remote-controlled device that raised up and lowered his toilet seat. He joked: "It would have saved a lot of marriages."

Matador Fund; new hedge fund

After closing down Niederhoffer Investments in 1997, Niederhoffer began trading for his own account again in 1998. This original fund was called Wimbledon Fund, the name reflecting his love of tennis. He began managing money for offshore institutional investor clients in February 2002, with $2 million in the off shore Matador Fund. Niederhoffer employed proprietary computer programs that purported to predict short-term moves using multivariate time series analysis. He traded in short-term movements in the S&P 500, buying and selling futures and options contracts on the index up to two dozen times a day, and holding onto each position for one to five days. He purchased the contracts on margin, or with borrowed money. As the hedge fund started bringing in top returns, he opened a second hedge fund, this one open to U.S. investors, named Manchester Partners.

In a five-year period beginning in 2001, Niederhoffer's fund returned 50% a year (compounded). His worst year in this period was 2004, returning 40%. In 2005, by which time he had grown the fund from $2 million to $346 million, he returned 56.2% . On April 6, 2006, the industry group MarHedge awarded Matador Fund Ltd. and Manchester Trading, two funds managed by Niederhoffer, the prize for best performance by a commodity trading advisor (CTA) in the two years 2004 and 2005.

However, Niederhoffer's funds were caught up in the 2007 subprime mortgage financial crisis, and the Matador Fund was closed in September 2007 after a decline in value of more than 75% percent.

Squash and other racket sports

Niederhoffer spent his early years playing wall sports such as handball, paddleball, paddle tennis, and tennis at the beach and sports complex Brighton Beach Baths, three blocks from his home. His college roommate Jim Wynne said: "Vic was always aware that he grew up in a poor section of Brooklyn, the other side of the tracks, and that he was Jewish. He always had something to prove. He would chew on glass to win."

Tennis

As a teenager Niederhoffer played tennis, and won a series of tennis championships in the New York City metropolitan area. He won the 1956 Metropolitan Tennis Doubles Championship for boys under 13 years of age, the 1958 Long Island Tennis U-15 Singles Championship, the 1958 Metropolitan Tennis U-15 Doubles Championship, the 1957 and 1959 PSAL Singles Tennis Championships, the 1959 Brooklyn Junior Singles Tennis Championship, the 1961 Brooklyn Chamber of Commerce Tennis Junior Singles Championship.

Squash

Niederhoffer was subsequently a multi-time U.S. National Squash Champion, and is a member of the U.S. Squash Hall of Fame and the College Squash Hall of Fame. Niederhoffer had never played squash when he entered Harvard University in 1960, though he had played other racquet sports. His coach at Harvard, Jack Barnaby, said "Early in his freshman year, before I ever met Vic, I learned that he was going around school saying that he intended to be the national squash champion. At that point Vic had never set foot on a squash court."

One year later, despite being unseeded, the 18-year-old Niederhoffer won the U.S. National Junior Championship early in his sophomore year. His coach, describing him as one of the most competitive characters he had ever seen, said: "you feel like you are watching a person of Ty Cobb's cut in action again." In 1964 he won the National Intercollegiate Individual squash championship. He played No. 1 for Harvard during his college career, and each year Harvard won the Ivy League title. In 1965, he then won every major amateur tournament.

Niederhoffer won the U.S. Nationals five times, in 1966, 1972, 1973, 1974, and 1975 (a record exceeded only by Stanley Pearson, who won his sixth in 1923), and was the first player to win the championship four years in a row. Asked prior to the 1975 nationals who his greatest threat was going to be, the four-time national champion responded: "Niederhoffer. I've got to be careful not to be arrogant." When he won the championship that year, it was without dropping even one game, a feat he had also performed in his comeback-nationals in 1972. He also won three national doubles titles, in 1968, 1973, and 1974.

While he was a national champion, when he was living in Chicago, Niederhoffer was denied membership in each of the five private clubs of the largely WASP squash establishment. One of the clubs was the site for the upcoming national tournament. One club told him directly that: "it would be extremely difficult for a Jew to become a member". Deeply offended, and believing that the slight was a product of antisemitism, he left the sport for the next five years, with the exception of the 1968 national doubles tournament which he won. He said: "I recognize a private club's right to refuse me membership, but the fact that the national tournament was being held in this kind of closed environment is typical of the short-sighted, elitist attitudes of the ruling body." He later said: "There is a natural tendency among the aristocratic ruling powers of squash to keep it a closed fraternity where women and children aren't welcome, where Jews and unwealthy men aren't welcome. What I've always stood for is the opposite of this, the opening up of the game."

Finally, in 1972, saying that he had made his point about prejudice at squash clubs, he returned to playing squash, and won the national championship. He won in an unprecedented series of four national squash singles championships in a row.

In 1975, Niederhoffer defeated one of the greatest players in the history of the game, Sharif Khan, in Mexico City in the final of the North American Open,viewed as the Wimbledon of hardball squash (the only time that Khan failed to win the title in the 13-year period between 1969 and 1981). In the 1974-75 season, he won every major singles tournament, winning 60 matches and not losing any. He beat Khan again the following year in the new Uptown Racquet Club in Manhattan.

In 1976, Niederhoffer received the Pierre de Coubertin Fair Play Trophy at the UNESCO headquarters in Paris, France. In 1988, he was inducted into the Harvard Varsity Club Hall of Fame, and in 2018 into the Jewish Sports Heritage Hall of Fame.

As to his approach to shot-making, he said that "[I] employ the concept that all shots should have high rewards in relation to risks.” The New York Times called him "the finest shotmaker in the game." Niederhoffer attributed his success to persistence, organization, and businesslike habits, while saying that there were hundreds of squash players who were stronger, faster, and more flexible than he was.

Paddleball

In 1965 and 1966, Niederhoffer won the singles championship in the annual U.S. Paddleball Championship. In 1964 and 1965, he won the national paddleball doubles title.

Racquetball

Not having ever played racquetball before as of February 1975, two months later Niederhoffer competed n the 1975 U.S. Racquetball National Championships. He was a quarter-finalist. He retired from competitive racquetball the following year, citing his age (32) and the fact that there were few players and courts on a good deal of the East Coast.

Writing

In 1997, Niederhoffer published a New York Times bestselling memoir, The Education of a Speculator; The New York Times described it as "An instructional autobiography by the colorful commodities trader.". George Soros praised it for his "original mind and eclectic approach.” In the book, Niderhoffer wrote:

In statistical terms, I figure I have traded about 2 million contracts, with an average profit of $70 per contract (after slippage of perhaps $20). This average is approximately 700 standard deviations away from randomness.

He also had some advice for those who came to his book looking for investing secrets:

It is inconceivable that anyone will divulge a truly effective get-rich scheme for the price of a book. There is ample opportunity to use wealth in this world, and neither I nor my friends, nor anyone else I have ever met, has so much of it that they are interested in putting themselves at a disadvantage by sharing their secrets.

From 2000 to 2003, Niederhoffer co-wrote a weekly column on the stock markets with financial writer Laurel Kenner for CNBC MoneyCentral. He and Kenner co-wrote Practical Speculation (John Wiley & Sons, February 2003).

Other activities

Niederhoffer was an economic libertarian, who believed strongly in personal freedom and the creative power of business, the free enterprise system, and capitalism. He founded the NYC Junto, a libertarian group that he hosted on the first Thursday of every month from 1985 to 2017, and at which he encouraged each attendee to speak. He was an enthusiast of Ayn Rand, and named two of his daughters Galt and Rand. The NYC Junto focused on libertarianism, Objectivism, and investing and was inspired by the Junto hosted by Benjamin Franklin in Philadelphia from 1727 to 1757. He had six daughters and one son.

Niederhoffer was a collector of letters 15,000 books, and 2,500 paintings, and wrote: "Books and letters have always been an important part of my family life. My father was a policeman in the book publishing area of east New York. In those days, they didn’t sell their overstock - they dumped them in the East River. They hired policemen to do the unloading. My father was paid 50 cents an hour to dump them in the river; instead, he saved them. Our house of about 750 feet, plus wife and two children, had his book collection. The whole house and basement were lined with books.”

Niederhoffer had a unique personality. He had a "socks, no shoes" policy in his office, to reduce noise. He did not own a television or watch tv, and did not like to read books less than 100 years old. At the same time, he maintained that the only periodical he read was The National Enquirer. He was known for wearing clothing in bright pastel-only yellow, orange, pink, blue, and other colors. He would attend stuffy formal squash establishment dinners in a tuxedo, but wearing a pair of mismatched-by-color, brand, and design tennis sneakers, such as one blue and one green, which is how he would also usually wear his sneakers on the squash court.

Death

Niederhoffer died of natural causes on August 4, 2026, at the age of 82. He was survived by his wife, Susan (née Cole; they married in 1991and separated in 2003), his former wife, Gail (née Herman; they separated in 1981), his six daughters, Galt (named after the polymath Francis Galton), Katie, Rand, Victoria, Artemis, and Kira, his son Aubrey, 15 grandchildren, his sister, Diane Niederhoffer Klein, and his brother, Roy Niederhoffer.

Bibliography

• Niederhoffer, Victor (1998). The Education of a Speculator. New York: John Wiley & Sons. ISBN 0-471-24948-3.
• Niederhoffer, Victor; Laurel Kenner (2005). Practical Speculation. New York: John Wiley & Sons. ISBN 0-471-67774-4.

Niederhoffer contributed a foreword to a 2006 edition of "Fifty Years in Wall Street" (1887) by Henry Clews.

References

• Patel, Navroz (March 2004). "The Iconoclast of Brooklyn". Profile. Risk magazine. Archived from the original on October 6, 2006. Retrieved September 18, 2006.
• Sweeney, John (April 2001). "Interview: Victor B. Niederhoffer — Music of the Markets". Stocks & Commodities magazine. Retrieved September 5, 2006.
• Taleb, Nassim Nicolas (2001). Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. New York: Random House. ISBN 0-8129-7521-9.

External links

• "Daily Speculations" – Victor Niederhoffer and Laurel Kenner website
• "Writings"
• The Education of a Speculator book reviews
• Bloomberg article mentioning lawsuit
• Inside a hedge-fund meltdown article, MSN.
• Blowing Up, a Malcolm Gladwell 2002 article about the investment strategy of Niederhoffer, and the opposite strategy used by Nassim Taleb.
• Wall Street Journal article on the NYC Junto
• "Victor Niederhoffer documentary - English subtitles (made in Japan) - 1997 " (video)