Jun

28

I had a chance to read an advance copy of An American Hedge Fund, by Timothy Sykes, about his experience as a very young trader and his hedge fund start up. It is the story of a college student who made money on over the counter buy back stocks very quickly, leveraging on short-term market inefficiencies in a very speculative and volatile market. The book made me think about the following aspects of trading:

  1. A trader's ability to adapt to changing market conditions is the key to successful trading.
  2. While many praise foresight, they mistake incredible luck for incredible intelligence.
  3. A speculator succeeds when he/she is able to identify and take advantage of market inefficiencies.
  4. Trading books usually ignore the evolution of marketplaces.
  5. Traders pick up on any consistently successful strategy until it lasts before the cycle changes again.
  6. Short term trades that turn into long term situations often become the source of financial and mental agony.
  7. Sometimes you need to accept defeat and move onto new opportunities.

Sam Humbert adds:

I also read a proof of Mr. Sykes's self-published (why self- rather than Wiley-published is another thread) book on the plane back from Chicago last week, and here's my back-of-the envelope: I liked the book better than I'd expected. It's a fast and breezy read, and had a pleasantly candid and enthusiastic tone. Mr. Sykes comes across as an eager, hard-working, observant market participant with good hondling sensibilities.

Several of his trading ideas, though generally not original/unique to him, are well-presented and explained. The one negative is the long digression about a private-equity situation that didn't pan out, which distracts from the main narrative flow. But I guess those are the facts he had to work with. For a market veteran, it's best read with an empty mind, without preconceptions such as 'what the heck does a 20-year-old know?' and can be enjoyed as such. 

Eric Falkenstein remarks:

Sounds fascinating. I would accept some overestimation of skill vs. luck, but generally many big money situations involve people's being in the right place at the right time — and the recipients aren't morons. But I couldn't see where to buy this book.

Tom Alexander writes:

I also had the opportunity to read an advanced copy of Mr. Sykes's book. I think there are several lessons here. Mr. Sykes sent me a flattering note requesting I review a copy of his book. I accepted; flattery works really, really well on my old ego. While I have not had the opportunity to read it yet, my wife found it very readable and illuminating from her lay perspective.

Mr. Sykes is self-publishing his book, allowing him to keep a much higher percentage of the profits. The downside is he has to do his own marketing. He seems to have very effectively figured this out by using viral marketing and the wonders of the Internet to spread the word through blogs.

It is nice to see entrepreneurship alive and well. 


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14 Comments so far

  1. NYCboy on June 28, 2007 12:05 pm

    the book is not worth the paper was written on. he’s just a lucky guy who made money in the biggest bull market of this generation. dime a dozen

    http://www.dealbreaker.com/tim_sykes/

  2. Dax Desai on July 18, 2007 8:40 pm

    I just received my advanced copy. I think this book is going to do great if he does the topic justice. People are mystified by hedge funds and I hope this book will provide the public with valuable insights into the industry.

  3. Baron on September 4, 2007 12:25 pm

    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

  4. Steve Cohen on September 11, 2007 2:33 pm

    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.

  5. Mike Covel on September 13, 2007 11:35 am

    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.

  6. Mike Fagen on September 15, 2007 8:39 pm

    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.

  7. Veteran on September 21, 2007 10:12 am

    The book offers nothing new, neither from trading perspective or any other kind.
    The writer is too young to offer “message” as he claims, and not too good of a trader to inspire.
    In short, don’t waste your money. There are better reads out there.

    http://www.nypost.com/seven/09212007/gossip/pagesix/partys_over_for_hedge_king.htm

  8. Steve B. on September 22, 2007 9:08 pm

    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 in a nutshell:

    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.

    I just saved you the $20 book fee. Book is not worth reading even if you get it for free….

  9. A.J. on September 27, 2007 2:32 pm

    Tim,
    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)

  10. Jake Stein on September 28, 2007 8:59 am

    Sykes Closing Failed Cilantro Fund: DOWN over -37%:

    http://ftalphaville.ft.com/blog/2007/09/25/7586/tim-sykes-has-a-fund-only-a-mother-could-love/

  11. Steve C. on November 11, 2007 5:11 pm

    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.

  12. Ed S. on November 25, 2007 9:48 am

    Ok, I just recently learned of this guy and have visited the web site he set up 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?

  13. Ben Storey on December 1, 2007 12:51 pm

    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.

  14. RJ on December 10, 2007 12:06 am

    Just got done with Tim’s book, realy, really great read. Wouldn’t be too much of a stretch to call it the modern day Reminiscences of a Stock Operator. Trust me, I know, it sounds crazy, but the story is really that cool.

    PS Read Tim’s blog and discovered all these “negative reviews” are the work of one person!

    http://timothysykes.com/index.php/myblog/we-have-located-my-one-hater-191.html

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