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To: GraceZ who wrote (211721)	12/29/2002 12:57:18 PM
From: smolejv@gmx.net	Read Replies (4) \| Respond to of 436258

Hi Grace: re >>Here is an excellent article in six parts covering that fiasco<< I have a better suggestion: The rise and fall of LTCM - When Genius Failed by Roger Lowenstein amazon.com A really good book, worthy example of American investigative writing. I dont want to dissect your msg too much but "the problem ... was that the transactions were dependent on the market acting in a rational manner" made me smile. Yeah, these markets, they just dont want to behave (for instance in a normal ie Gaussian fashion). You tell them to do Brownian motion and they'll do a river dance instead. They are SOOO irrational, even a Nobel Prize winner or two cant get them to behave. I have about two feet of books on options (turn round, check, yeah, they're still there) and I sweated through all the formulae and - Gadz - I even made money. Big time (me, of all the Lemming Angstroms...). It's just that a) it was not me b) it wasnt the option math either it was just that sweet sweet bull time. And lately just this sweet sweaty bear time. By the time those geniuses knew they got it down pat, the elevator chord was cut already. RegZ dj

To: GraceZ who wrote (211721)	12/29/2002 8:45:03 PM
From: reaper	Read Replies (2) \| Respond to of 436258

it was that the transactions were dependent on the market acting in a rational manner been reading a lot of stuff from Merriweather's publicist recently, i see... LTCM's book was one huge spread convergence trade. a gigantic, leveraged bet on spreads narrowing across a wide range of financial instruments. they were not "hedged" for sh8t! what could be more "macro" (what LTCM claimed they didn't do) than that? the bet worked great all the way to early 1998 as spreads across just about everything shrank and converged, and then went against them in spectacular fashion as spreads blew out. would you care to explain to me what was "irrational" about spreads blowing out (from historically low levels, no less) in the summer of 1998? then i guess things are only MORE "irrational" now, since spreads on the whole are even HIGER today? Cheers