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Strategies & Market Trends : The Stock Market Bubble -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (1775)	9/24/1998 12:15:00 PM
From: Sword	Respond to of 3339

The real fear will be that the positions will be put on in such a way that the market will get away from them before they can meet their margin requirements. The fear is not that this one hedge fund will go under, but that they will go hundreds of billions of dollars in the hole and take their partnering banks down with them. The article said that these troubles were caused by an incorrect computer model (the market dynamics were outside of the boundaries of their model). (Duhhhh! Surprise, surprise! Financial markets exhibit chaotic paradigm behavior. That is why TA methods break down so often. Physical modeling of dynamic systems like financial markets depends on linear relationships. But the market exhibits non-linear discontinuties that can't be handled by computer modeling.) So when the markets do things that are unexpected, tremendous losses can and do occur. These guys are gambling with the health of the financial world! If we experience another '29-'31 debacle, hedge fund leverage will surely go down in the history books as one of the significant contributing factors. Incredible! -Sword