Book Review: An American Hedge Fund
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In an earlier post I mentioned that I received a request to do a book review on the soon to be published book - An American Hedge Fund by Timothy Sykes. Tim has been featured on CNBC, starred in “Wall Street Warriors“, and has been written about in several national magazines and newspapers.
I received my pre-release copy a few days ago and I read it over the next 2 days.
The Intriguing Industry
Per wikipedia “hedge funds generally exercise extreme secrecy and little is known with certainty about the activities of specific hedge funds or the industry as a whole.” Hedge funds have always intrigued me. Why? Hedge funds have more flexibility than mutual funds in their investment vehicles/mechanisms they use to invest. Also the manager of a hedge fund typically gets 2/20. That is they earn 2% of assets plus 20% of any gains. That’s big money.
The hedge fund is a very misunderstood area in the financial world and for good reason. The secrecy is in part caused by the burdensome government regulations to protect investors. Timothy sheds light into this otherwise mysterious world. There are few books on the topic and this is the first book I am aware of that gives a full account of a Hedge Fund from the inside - from inception to maturity. Timothy goes in great detail of how he got into trading, how he traded, how he started and operated his fund, and the slew of shady characters he met along the way.
Play by Play - The Trades
The play by play of his at time gut-wrenching trades and his huge wins and losses draws the reader into his trading world. Tim shows his youth and passion in his trading as well as the partying that goes with fast money. He shows a very honest account of the industry, its pitfalls, and difficulties. He also demonstrates the big money that can be made in the trading industry. Shedding light on an otherwise murky, mysterious industry Timothy has done a bang-up job. This is the first book I know of that covers micro-cap stock trading in such detail trade-by-trade.
The book is slated to be out on October 1 and I recommend you get it.
The ISBN# is 978-0-9795497-0-0
- Why I buy In The Money (ITM) options - 07/01/08
- Short the Regional Banks - 06/20/08
- Trader Update: The Breakout Trifecta - 06/11/08
- 3 Potential Breakout Stocks: Potash, Apple, Visa - 06/03/08
- Potash - Trading the Good Stuff - 04/07/08
Can we preorder anywhere?
BEWARE: Do Not Let Tim NEAR your MONEY!!
Cilantro/Sykes Hedge Fund Audited Performance SUCKS BIG TIME (3/2003-6/2007):
Compounded Annual Return: 1.52% (underperformed money market rates, with much higher risk; better to buy CD’s than lose with Tim)
Cilantro/Sykes Fund Sharpe Ratio (Annualized): -0.06
(may as well bet on coin flips; or do as Tim Sykes and sell out and go on TV/self-publish etc)
BEWARE: SYKES SUCKS(in many ways)!!
“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.
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
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.
Tim Sykes:BadTrader/WorseWriter
His “book” NOT worth $19! NOT a Classic!
Sykes/Cilantro Fund Lost -36% since Jan2006!
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.
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.
Wow! Some very strong comments!
I didn’t have to buy the book. It was a good read, but it did come across as an individual that got lucky, then the law of averages caught up with him, then he tried to milk his luck.
I give him credit for milking it. He’s doing a good job so far. If he was more colorful he could perhaps takeover that hack Cramer’s job on CNBC when his vein in his forehead finally bursts.
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 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 -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.
MORE SYKES LIES(Amazon Quote):”Yes, my hedge fund is off its highs, …..I am glad to say that the bleeding has recently stopped.”
WRONG!: Sykes/Cilantro continues to lose investors money throughout summer 2007; DOWN again during Aug2007 and Jul2007; Down over -37% since Jan2006.
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….
Sykes said: “..It’ll be a lot easier for me to teach 1,000 people to make $10,000 …”
Uh oh….Here is a warning about Sykes/BullShit Express:
1) He closed the failed Cilantro Fund because it had an audited track record which documented his failures, then
2) Now, with the Fund closed he can BullShit his “trades” to newbies and suckers….(kind of like another marketslurper).
For example, Sykes will name a bunch of possible trades and then take credit for anything that works.
3) Sykes will not have any audited track record; so all aboard the BullShit Sykes express!
I did not enjoy reading Sykes horrible book. It is overhyped and embarrassingly bad! There have been so many other blowouts, and unlike Sykes many are actually interesting like Hunt brothers, LTCM, Livermore etc.
What’s so special about Sykes BLOWOUT? NOTHING!!He must not have read FOOLED BY RANDOMNESS, or knows what BLACK SWAN Means..
Vic’s implosion, LTCM implosion were a treat to watch. Sykes is just a kid nobody cares about. Even Jesse Livermore Lost it all 3 times or maybe more..
There is nothing special about Sykes story and his Hedge Fund failure! Moreover, Sykes book is not a story of someone WHO LOST IT ALL and had GUTS TO carry on and make it all back again.
ONCE Sykes lost his money, he just changed professions.haha…
What a FIGHTER!?….haha… Book is not worth $20 !!
Next Sykes move, Cheesy DVD to “teach” how to trade penny stocks (even though Sykes made less than 1% trading since 2003)….
Beware People, whole lot of snake oil gonna be brewing at Sykes Shack……
The title of timothy sykes’ self-published book, _an american hedge fund: how i made $2 million as a stock operator and created a hedge fund_ offers great promise. any trader who has versed up on the classical trading books would instantly recognize the subtitle as a combination of two of the greatest trading books ever, nicolas darvas _how i made two million in the stock market_ and edwin lefevre’s (auto)biography of jesse livermore, _reminiscences of a stock operator_. unfortunately, the only similarity between these classics and sykes’ book is in the titles.
the aforementioned classics brought much to the table; lefevre’s books offered trading lessons never previously brought into print and darvas’ book gave a simple, trend-following system on how to beat the market which helped many future traders. _american hedge fund_, unfortunately, serves up an appetizer and dessert and calls it a full course meal.
the central theme for sykes’ book seems to be one of ego. most of his mistakes are admitted by the author because of his great ego, and many of his public actions appear to be caused by an insatiable appetite to become the next jim cramer. and while cramer had a 10+ year career as a serious hedge fund manager with significant funds under his control, sykes’ fund ran (the author has stated the fund has now been closed) for a few years with a mere pittance of capital compared to others.
the author details the well-recited tale of turning his bar mitzvah money into a significant grub stake during the end of the nasdaq bubble, by capitalizing, along with others, on the momentum boom. to the author’s credit, he learned that things had changed in 2000, and didn’t give back much of the hard-earned gains from the runup. instead, he started focusing on shorting stocks, which led to his still-favorite successful trading method of being short “unsustainable” runups in smaller cap stocks.
but for those looking to start up a hedge fund, sykes doesn’t get into too much detail on the real meat and bones behind creating a hedge fund. instead he spends most of his time complaining about SEC rules, touting his effort to get his name out to the public, and complaining about becoming highly leveraged in an illiquid pink sheet stock. this rookie mistake was compounded by continuing to deposit more money into the company. reading up on some of the published (and internet-accessible) material on the subject would have saved sykes hundreds of thousands of dollars, and us the dreariness of reading about it.
sykes keeps comparing his trading record to larger hedge funds, and then wondering why he doesn’t have access to larger investors. anyone who would study sykes’ record, even without access to the specific trades, would come up with one of two conclusions: either too much risk was taken on, or because the trading method is not scalable!
this story would have been much more interesting if sykes had delved more seriously into the hedge fund industry, but i suspect that he could only see it through the eyes of his tiny in-name-only hedge fund, which would not offer a clear view of the shenanigans of the industry.
who would enjoy this book? people who watch cnbc as a hobby or a social friend. voyeurs who like to imagine the successes of others being their own. and, sure, people who have never read a trading book before - or don’t know what things were like in the late 1990s - can gain some information here. it is well-written, even when it strays from the main focus of a trading book. but with the proliferation of so many better trading books and with this one having such a misleading title, why spend the money to get this one?
i have no doubt that sykes, when he sticks to his basic setups, is a successful trader. that’s not something many people can say. his story should have been one of many, a la _market wizards_ or _millionaire traders_, and not worthy of his own book. and until he removes his ego from of the equation and focuses on going beneath the superficial level, it will be difficult for people to take his actions seriously.
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.