C-Cube Message Board - Msg: 9108213

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Technology Stocks : C-Cube

CUBE 36.42

+1.1%

Dec 11 3:59 PM EST

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To: Stoctrash who wrote (40085)	4/23/1999 2:04:00 PM
From: Black-Scholes	Read Replies (1) of 50808

The Long Term Capital Management incident was a simple liquidity crisis. The validity of the Black-Scholes pricing model was in no way compromised by that incident. The model is based on probabilities and statistics and cannot take into account "low-probability, high-stress" situations like Russia unilaterally defaulting on their debt. But I do agree the Fed should not have "orchestrated" a bailout by investment banks - it's a moral hazard orgy (for the record, the bailout consortium has since made a sizable sum of money on the ORIGINAL LTCM POSITIONS - which goes a long way to proving that it was a liquidity crisis). Bad outcomes are not always the result of poor analysis. As for your CUBE theory - I'm disappointed you're vulnerable to conspiracy theories. I do feel the rational for INTC making a strong bid for CUBE is strong - very strong. I know institutional sentiment is beginning to arrive at that conclusion too. Think it through. Look at CUBE's balance sheet.

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