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To: LLCF who wrote (84877)3/23/2001 5:17:26 PM
From: pater tenebrarum  Respond to of 436258
 
well, one thing that is absent in the evaluation of highly leveraged spread positions a la LTCM is the possibility of liquidity disappearing while the bets go into the exact opposite direction they were expected to take.
and the sheer SIZE of outstanding derivatives positions means that even a small hiccup can wipe out the capital of some players. the counterparty risk obviously can't be gauged properly...another lesson of LTCM.