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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Katherine Derbyshire who wrote (49115)	7/12/2001 2:29:51 PM
From: Ian@SI	Read Replies (3) \| Respond to of 70976

Katherine, Slightly unfair to the LTCM folk. Their model worked very well for the first couple years or so. As they scooped up nickles left lying on a whole lot of tables globally. And the model might have continued to work for a very long time if the institutions that were handling LTCM's trades hadn't decided this was too lucrative to pass up. So they, in turn, began copying LTCM's practices. It was at that point that any semblance of control vanished; and a global financial system collapse was barely averted. Essentially, some of the finest financial minds in the world, through their blind greed, came very close to creating a massive disaster. Those of us who have lost a few shekels in the high tech sector can feel like absolute wizards, by comparison. ;^) FWIW, Ian

To: Katherine Derbyshire who wrote (49115)	7/12/2001 3:00:58 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

Having your model based on numbers, is a necessary-but-not-sufficient requirement for success. "Gut feel" equals extrapolating the current sentiment into the future. Given the fact that flows of money into stock mutual funds (a proxy for the consensus "gut feel") always bottoms at market bottoms, and always peaks at market tops, it is hard to do worse than "gut feel", as a model for predicting the future. But the LTCM method came close.