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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: starhawke who wrote (71110)	11/29/1999 2:49:00 PM
From: Chuzzlewit	Respond to of 132070

The problem with the hedge funds was not so much theory as practice. For example, they lost a lot of money on a failed merger (TLAB-CIEN) because they assumed the merger would go through, and thus they assumed that the risk in their position was small. So they shorted the acquiring company (TLAB) and went long the acquired company (CIEN). When the merger fell apart both positions moved in the wrong direction. So the problem was underestimating the risk, not the theory. But all of this is beside the point. The point I was trying to make is that there is a real cost associated with the issuance of stock options, and investors ought to have the right to know those costs. Without them, income statements should be filed in the fiction section of the library <g>. TTFN, CTC

To: starhawke who wrote (71110)	11/29/1999 6:10:00 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

starhawke, Good note. Theorists often lead folks to think that theories are laws, so the suckered end up betting a lot to earn a little. That is when they die. We don't really need LTCM to prove it to us. You can visit the CBOE or one of the other options exchanges and watch as the floor traders get carried out after betting a "theoretical lock." Unfortunately for them, the Fed did not step in to bail them out because none of them were good friends with Alan Greenjeans. <g>