Monday, October 01, 2007

Have you read the new book, An American Hedge Fund?

Question: What do you think of Tim Sykes' newly released book, An American Hedge Fund?

Below is a review I wrote up earlier in the year. Read the book for insight into the hedge fund business, from the point of view of an outsider looking in. It's a captivating story about wealth-building and a young day-trader's tenacity and entrepreneurial spirit.

A Modern Odyssey: Young Day-Trader Turns Hedge Fund Entrepreneur

Timothy SykesAn American Hedge Fund is the candid autobiography of a young, spectacularly successful day-trader, chronicling his rapid ascent from $12 thousand in Bar Mitzvah gifts in 1998 to $2.75 million in hedge fund assets at the end of 2005—and his equally dramatic, ego-deflating slide over the next 15 months, halfway down the financial mountain he single-handedly built.

Mainly, as told from the perspective of a “little guy” newcomer struggling to gain a toehold in the exclusive New York-centric hedge fund scene, this captivating book is a personal finance story, offering a vicarious educational experience for aspiring traders and budding entrepreneurs. From our front-row seat, eyes glued to Tim’s triplet of high-tech trading screens, we follow him on the way up as he nimbly advances from trading publicity plays to overnight gap-ups to short-selling microcaps, and on the way down when he diversifies away from his trading niche through a venture capital investment that unfortunately turns sour. During the Internet craze of the late 1990s, dot-com crash in 2000, post-9/11 market volatility and subsequent bull market, we see play-by-play examples of intraday trades that work for a while but, sooner or later, stop being profitable. In spite of (or perhaps because of) his strikingly high trading volume (annual turnover rate of 200 times fund size!), Tim shows remarkable adaptability, uncannily discovering new market opportunities whenever old ones fade away.

Parallels exist between self-appointed hero, Tim Sykes, and well-known “giants” of finance. As Tim’s story unfolds, we find him engaged in: trading baseball cards and reselling lost tennis balls, reminiscent of Warren Buffett’s many childhood business ventures; playing high school tennis with a fervor akin to Victor Niederhoffer’s in pro squash, and experiencing a similar reversal of fortune (though thankfully not as shattering as Niederhoffer’s); switching from the long side to the short side of trades, with the agility of George Soros; and suffering through investor withdrawals precipitated by unexpected fund losses, though fortuitously without the crippling leverage that ultimately led to the demise of colossal hedge fund, Long-Term Capital.

Similarities with the world’s wealthy and famous aside, however, the true richness of An American Hedge Fund lies in Tim’s honest, inspirational and, at times, entertaining portrayal of his personal aspirations, struggles, triumphs, defeats, admission of mistakes and, ultimately, wholehearted tenacity—something the underdog in all of us can easily relate to. Despite misfortune—elbow pain stymies his pro tennis dreams, spotty high school grades preclude him from admission into Ivy League colleges, size requirements prevent deep-pocketed institutions from investing in his small hedge fund, and straying into venture capital brings heavy losses—Tim always finds a way to pick himself up and move on.

Having battled the microcap market with the fortitude and intensity Odysseus displayed fighting the Trojans, Tim, still a youthful 20-something, now enters the next leg of his life quest, this time in the public spotlight as financial media celebrity and up-and-coming author. Are these latest developments a temporary distraction, or the beginning of a longer-term wandering like Odysseus’s circuitous, decade-long journey home from battle across the Aegean Sea? Whatever Tim’s future may bring, following his formative years of nearly incessant buying and selling of stocks, I find it hard to fathom how he could be content for long without trading.


Anonymous Ben Storey said...

Re: Sykes amateurish hedge fund book:

Is it more sad or amusing when someone's young ego spurs them to write a book when they possess neither literary skill nor talent? Sykes has commented elsewhere that his goal to become "a great teacher, not a great investor" but in this sad excuse for a tutorial he proves to be neither as his amateurish errors practically drive him from the market, credibility (what little he had) completely shredded. Perhaps, however, it's not truly his fault: let's face it, when it comes to imparting wisdom from Wall Street it is simply not possible that a raw twenty-something simply has much to say.

Not that Sykes doesn't try however. In perusing the "comments" portion of Amazon book reviews, he's certainly not reluctant to chime in and offer a defense at nearly every turn. Find me ONE other author at Amazon that feels so compelled to argue his own incompetence.

Tim Sykes should end his determined quest to become a media personality as his grating manner and decidedly non-telegenic looks suit him far better to shine shoes.

8:53 AM, December 01, 2007  
Anonymous Jon F. said...

I read Tim Sykes mediocre hedge fund book since I knew him at Tulane, and like him as a person. However, the book is an empty and uninspiring story about how Sykes became a self-absorbed irresponsible stock trader. This book is NOT a “classic” and story is NOT “Rocky-like”(as author Sykes claims). This book is basically like a blog of an average person who got lucky trading stocks and then his luck ran out (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.

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 game 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 -37% since Jan 2006. His continuous bad performance throughout 2007 shows that he does not learn from his mistakes; and readers can only cringe while watching Sykes slow motion demise into a worthless snake oil salesman.

10:35 AM, December 01, 2007  
Anonymous J.T. said...

Ok, I just recently learned of this guy, Tim Sykes, and have visited the web site he set up, read his book , and watched a few of his idiotic appearances on various news outlets such as CNBC. This is HILARIOUS.

Tim, if you are reading this, listen up:

Much of what I'll say is redundant but you know NOTHING about what you claim to know about. You are a rank amateur who has learned enough surface information about an industry so as to come across as being knowledgeable enough about it to teach to others. The only people that take you seriously are complete newcomers to this game that know next to nothing, because to a complete amateur you sound like you know what you are talking about. You have learned enough about trading to pretend and claim to have traded and that's about it.

Trading your parents money via an online retail account is not a fund, but is laughable. Your story is just that, a story. "I turned my 12k bar mitzvah money into 2 million". It reads like bad spam I get in my inbox but the journalists eat it up like cake. Your web site is hilarious because you are an enormous idiot and I will continue to visit it for free laughs. I wonder if you know how stupid you are or if you have truly convinced yourself that you have learned something valuable enough to write about?

7:41 AM, December 02, 2007  
Anonymous Inventory Management Software said...

I really appreciate your post and it was superb .Thanks for sharing information.

10:50 PM, December 29, 2010  

Hedge funds create nothing they just move money around.

10:26 PM, January 13, 2013  
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