I’d say LTCM were not wrong compared with the rest they just bet on 300 years of data and reality gave them a unique situation which blew them up, having never happened in 300 years.
Lots of people made lots of money for a couple of years.

Woke ( millenial ) engineers built the new Millenium bridge over the Thames in London.
Even though all my CEng mates said you test everything in public at 1hz as thats walking speed, they didnt.
Hard to believe but they didnt do any modelling at 1hz
School boy error.
But not only did they cock it up but many of the old bridges crossing the Thames have signs saying you cannot march over them without breaking step as the 1hz issue has been known for a very long time.

In the summer of 1997, Taleb predicted that hedge funds like Long Term Capital Management were headed for trouble, because they did not understand this notion of fat tails. Just a year later, L.T.C.M. sold an extraordinary number of options, because its computer models told it that the markets ought to be calming down.

From here:


Even more scary is Blackrock. Not a bank but a private investment outfit that controls 7 trillion dollars. They can and do control governments. They control a great deal of the US government’s pension fund. They also developed a program called Aladdin which institutional investors use to control assets worth more the the GDP of the USA. Compared to Blackrock LTCM was sandbox play. Blackrock can blackmail or crash the world economy.

Blackrick is an investment manager like Warren Buffet, they dont have the tools to blow up the world.
LTCM was like an investment bank so creates credit derivitive products, thats what blows up the world.

Blackrock is a little more frightening than BRK

Sounds like its doing a LTCM but packaged to allow pension funds and their rules to actually invest in risky instruments?
They just invent a product and sell it to get a margin…
Thats why they employ bright minds for big money, get your bonus and leave before your product blows up the world.

Saying that Deutsch Bank is who will be blowing up the world next, its probably insolvent but the EU and the rest of the world cant let it go down, but it should.

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