|
PureBytes Links
Trading Reference Links
|
-- Bruce wrote:
> In hindsight, the LTCM trades were actually pretty
> good. Bonds have been falling in price virtually
> since the very day the attack on LTCM was called
> off.
The trades weren't good. The trades were losers, to be treated like any other losing trade.
What you're saying is LTCM was right on direction... ultimately. That is meaningless. And it certainly does not make a trade good.
> I don't know much about complex option hedging,
> but it seems to me it's pretty hard to factor into
> your risk models the possibility that the entire big > stakes investment world will turn against you for the
> sole purpose of your complete destruction...
Why is it harder than factoring in any other unforeseen cause of a loss? No one cares why one has a loss - one just has a loss... the cause is irrelevant and is never factored into a risk model anyway.
The investment world did not turn against them for the purpose of destroying them. Destroying them was simply the means. The end was profit.
Is LTCM exempt from the rules of the game? Do they get to put on a hugely overleveraged position and profit by it at everyone else's expense without challenge?
OM
|