Victor Sperandeo

Victor Sperandeo
Victor "Trader Vic" Sperandeo
Born	March 16, 1945 (1945-03-16) Queens, New York, USA1
Occupation	Trader, Index Developer, Financial Commentator
Website
http://www.aftllc.com http://www.victorsperandeo.com

Victor Sperandeo is a trader, index developer, and financial commentator based in Dallas, Texas. He has over 40 years of experience trading both independently and for the likes of George Soros and Leon Cooperman. Sperandeo was featured in the best-selling The New Market Wizards and Super Traders, has been profiled in Barron’s, The Wall Street Journal and Stocks & Commodities, and appears regularly on CNBC, CNN, Fox, and other networks. Sperandeo has authored two books detailing his philosophy: Trader Vic – Methods of a Wall Street Master and Trader Vic II – Principles of Professional Speculation.² John Wiley & Sons released Sperandeo’s third book on trading in 2008. It is entitled Trader Vic on Commodities: The Unknown, Misunderstood And Too Good To Be True.³

Sperandeo developed the Diversified Trends Index (DTI), a commodity and financial futures index, which was subsequently licensed to Standard & Poor’s as the S&P Diversified Trends Indicator by Alpha Financial Technologies, LLC, of which Sperandeo is the President and CEO. It is now known simply as the Diversified Trends Indicator or DTI and is now licensed to several new licensees directly by AFT. In addition, Sperandeo developed the Commodity Trends Indicator (CTI) and the Financial Trends Indicator (FTI) and various other futures-based indexes and trading strategies.

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Trader Vic on Commodities: What’s Unknown, Misunderstood, and Too Good To Be True

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Trader Vic – Methods of a Wall Street Master

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Trader Vic II : Principles of Professional Speculation

1968–2000

Sperandeo began his trading career as an options trader in January 1968 when he joined Filer Schmidt & Co., a stock options dealer, where he traded over-the-counter securities options. In March 1970, Sperandeo moved to U.S. Options, also a stock options dealer, where he continued as a securities option trader for bank and trust company clients. He became a portfolio manager for Marsh, Block & Lieber, a broker-dealer and trading firm, in September 1970 but soon left in order to launch Ragnar Option Corporation, an OTC securities options dealer, in April 1971. In addition to making a market for over-the-counter securities options, Ragnar also wrote options tailor-made to customer specifications, and, for a short time, Ragnar became the largest OTC securities options dealer in the world. Ragnar acquired several exchange memberships on the Chicago Board Options Exchange soon after its founding in 1973. Sperandeo served as Ragnar’s President from its inception until February 1977, when its operations were merged into Weeden & Co., an institutional broker and trading firm. Sperandeo continued to trade options at Weeden, where he also became a block trader in so-called ‘glamour’ stocks, holding the position of Vice President until March 1978, when Weeden ceased operations. Sperandeo then began to manage a proprietary trading account and several private client accounts for Interstate Securities, trading in securities and securities options until December 1986. Concurrently, in February 1979, Sperandeo founded Hugo Securities Co. Inc., a trading firm, where Sperandeo taught and seeded other traders, building a business as market maker and specialist in securities options and trading futures. In the process, Hugo Securities acquired a number of exchange seats on the Chicago Mercantile Exchange, the American Stock Exchange, the Pacific Stock Exchange, the Philadelphia Stock Exchange and the New York Futures Exchange.

Concurrent with his tenure at Hugo Securities, during the bearish period from December 1981 until July 1982, Sperandeo traded a short portfolio for George Soros’ Quantum Fund. In addition, Sperandeo also served as principal and associated person for commodity pool operators and commodity trading advisors. Sperandeo himself was a registered commodity pool operator from February 1984 until March 1987. Furthermore, Sperandeo operated Victory Partners from June 1983 until September 1986, which was a hedge fund trading mainly options on security indexes. Subsequently, in October 1988, Sperandeo founded Rand Management Corporation, an investment adviser that was registered with the Securities and Exchange Commission.

Sperandeo sold the securities-related business operations of Hugo Securities Co. Inc. in May 1989. However, Sperandeo continued to trade futures. He was a registered commodity trading advisor from May 1989 until August 1993. In addition, from August 1993 until October 1994, Sperandeo conducted research that eventually would lead to the creation of the Diversified Trends Indicator. Furthermore, from October 1989 to January 2004, Sperandeo was a registered principal and associated person of Hugo Securities Co. Inc., now a commodity pool operator and commodity trading advisor. During this time period, Sperandeo was also registered as an associated person of Rodman & Renshaw Inc., a futures commission merchant, from October 1994 to December 1995, serving as a consultant and futures expert. Sperandeo was also Managing Member, registered principal and an associated person of Trader Vic Investments LLC, a commodity pool operator and commodity trading advisor, from May 1996 until November 2001.

2000 to Present

Sperandeo has served as president and CEO of Alpha Financial Technologies, LLC (AFT) and Enhanced Alpha Management L.P. (EAM) since their formation in 2000 and 2001, respectively. AFT is a financial engineering firm focused on the research and development of “white box” futures-based indices created by Victor Sperandeo such as:

• the Diversified Trends Indicator or DTI, a long/short rules-based, investable managed futures index incorporating a diversified group of 24 components, 50% each of exchange-traded commodity and financial futures contracts.
• Commodity Trends Indicator or CTI, a long/short rules-based, investable commodity futures index incorporating a diversified group of 16 tangible commodity futures contracts (no financials)
• Financial Trends Indicator or FTI, a long/short rules-based, investable financial futures index incorporating a diversified group of 8 global financial and currency futures
• Foreign Exchange Trends Index (FXTI) provides investors a banchmark for a tactical allocation between physical commodity futures and interest rate futures.
• GETS TW Index reflects a retrospective application to past market histories of the following "static" group of five equity indexes, each representing key regions of the world; the Hang Seng, NDX, Topix, Straits Times and DAX.

The DTI, CTI and FTI were licensed to Standard & Poor’s from November 14, 2002 through November 14, 2009 and known as the S&P Diversified Trends Indicator, S&P Commodity Trends Indicator and S&P Financial Trends Indicator during such time period. Effective as of November 15, 2009, AFT’s core indexes are now licensed to new licensees directly by AFT.

AFT has received two patents in the U.S., two in the Bahamas and one in Australia on financial products using long/short indicators or indexes in conjunction with leverage, which seek to add alpha while simultaneously reducing risk.

Currently, there is approximately $3 billion invested in products linked to AFT’s indexes. Licensees include Rydex|SGI, Direxion Funds, Goldman Sachs, Merrill Lynch, Macquarie, Nomura, Carnegie, Nordea, SEB, Credit Suisse, Bank of Ireland, Claymore, Nikko, Barclays Capital, and HSBC.

EAM is an investment management firm focused on alternative investments, primarily commodity and global macro strategies. Also, Enhanced Alpha Management, L.P., a subsidiary of EAM, develops “black box” indices such as the Trader Vic Index, which was licensed to the Royal Bank of Scotland (“RBS”) in the second quarter of 2009.

EAM will soon be launching a multi-strategy hedge fund that combines several of his proprietary indices together. The fund will be available to investors in early 2012 and the strategy can also be customized for specific mandates (Liability Driven Investments). For example, a pension fund has an actuarial rate of return of 7.3% and wants to hit that number with as little volatility as possible. EAM will create a custom blend of their funds to return between 7% and 7.5% with a low standard deviation of returns.

Reputation

Sperandeo was a 2008 Inductee into the Trader Hall of Fame by Trader Magazine, and named “The Ultimate Wall Street Pro” by Barron's.

He has made numerous appearances on financial programs on CNBC, CNN, and other networks, offering his insights and expertise — particularly on commodities — to the viewing public. Sperandeo has been profiled twice in Barron’s — “Man of all Markets”, on May 2, 1983, and “Trader Vic the Ultimate Wall Street Pro”, on September 21, 1987. His philosophies and methodologies have also been featured at length in the books Super Traders, and New Market Wizards. He has also been included on Ziad Adelnour's list of top 100 Wall Streeters.

Bibliography

• Trader Vic – Methods of a Wall Street Master, John Wiley & Sons, 1993, ISBN 0-471-30497-2.
• Trader Vic II : Principles of Professional Speculation, John Wiley & Sons, 1994, ISBN 0-471-53577-X.
• Trader Vic on Commodities: What’s Unknown, Misunderstood, and Too Good To Be True, John Wiley & Sons, 2008, ISBN 0-470-10212-8.
• Sperandeo has also authored articles and editorials for dozens of publications including Barron’s, The Wall Street Journal, Institutional Investor and many other professional magazines.

External links

• Victor Sperandeo web site
• Alpha Financial Technologies web site
• DTI (Diversified Trends Indicator)
• CTI (Commodity Trends Indicator)
• FTI (Financial Trends Indicator)
• Enhanced Alpha Management, L.P. web site
• Victor Sperandeo interviewed by GoldMoney Foundation

Further reading

• Schwager, Jack D. (1995). The New Market Wizards. 16 pages: Wiley; New Ed edition. ISBN 0-471-13236-5. 
• Rubenfeld, Alan (1992). Super Traders. McGraw-Hill. ISBN 1-557-38284-0. 

References

¹Michael Martin (October 2008). – Hall of Fame: “To The Victor”. - Trader Monthly.

²Trader Vic – Methods of a Wall Street Master, John Wiley & Sons, 1993, ISBN 0-471-30497-2. Trader Vic II : Principles of Professional Speculation, John Wiley & Sons, 1994, ISBN 0-471-53577-X

³Trader Vic on Commodities: What’s Unknown, Misunderstood, and Too Good To Be True, John Wiley & Sons, 2008, ISBN 0-470-10212-8.