Oh no, not again!

Every August, Niederhoffer throws a big party in New York City, to which he invites dozens of regular contributors to his Web site as well as some of his friends. This year, there were about seventy-five guests. . . .As the crisis in the market spread, Niederhoffer had briefly considered cancelling the party, but he decided that to do so would have alerted people to his troubles. . . .The atmosphere was friendly and relaxed. None of the guests mentioned Niederhoffer’s financial predicament.
. . .At 6 P.M., the party reconvened at Delmonico’s, which Niederhoffer had reserved for the evening. After cocktails in the dark-panelled bar, his guests entered the ornate dining room, where a Broadway tap dancer and a family of Hawaiian singers performed. I was seated next to Laurel Kenner and Aubrey, but didn’t see much of Niederhoffer, who was wearing a lilac jacket and spent most of the evening table-hopping. After dessert was served, he stood up to speak.
“This is a historic gathering,” he said, swaying slowly back and forth. “We are here in the middle of one of the greatest turmoils in Wall Street history. I am sure that many of you are keen to know how we are doing. Well, I can tell you that it has been very difficult. The battle has been joined, and it is still to be determined who the victor is. I always say that when you are in the middle of one of these situations it is better to say nothing. If you say you are doing badly, it gives ammunition to your enemies. If you say you are doing well, you are tempting fate. . . . We will see what happens and who wins the final point.”
Later in August, after the Federal Reserve cut the discount rate–the rate at which it lends to banks–the markets calmed down; but Niederhoffer’s woes continued. In September, he was forced to close two of his funds, including his flagship, Matador, which had declined in value by more than seventy-five per cent. After cashing out many of his investments, Niederhoffer repaid his lenders and returned what money was leftover to his clients. He laid off several employees and consulted with his lawyers. Meanwhile, rumors circulated on the Internet that, for the second time in a decade, his funds had “blown up.”
Had he been able to wait a little longer before liquidating his trades, his funds might have recouped most of the losses. After the Federal Reserve cut interest rates again, on September 18th, the stock market rallied further and volatility decreased. Still, Niederhoffer sounded philosophical. “The market was not as liquid as I anticipated,” he said. “The movements in volatility were greater than I had anticipated. We were prepared for many different contingencies, but this kind of one we were not prepared for.” Niederhoffer was still trading for his own account, and for some remaining clients. “My basic ideas about the creative power of the market, buying in panics, buying on weakness–I don’t think what has happened has anything to do with that stuff,” he said. “I am going to keep going, for better or worse.” — New Yorker

Thanks to Pete for the heads up!