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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (29956)	10/2/1998 1:06:00 PM
From: James F. Hopkins	Read Replies (1) \| Respond to of 94695

David; Looking at the reports coming out my opinion is all we can really do is guess. My guess is they lost a lot of their own money right along with the fund, making long bets when they thought Asia and Russia had bottomed, but to soon, then became convinced we were to follow shorted this market to high heaven hoping to make up for the other losses. One of the problems with that much leverage is each layer has it's cost ( in interest rates ) the more of it you use the less time you have to be right, at some point simple volatility can cause you to have to make margin calls , and they had borrowed from just about every body they could. I bet they had some good positions but just couldn't hold them long enough. For the time being I will give them the benefit of the doubt of having got caught up in "gamblers fever" , I'm almost sure now that I saw this coming down when the last big bets were placed but I had no idea of who it was. Being I use to be a sort of errand boy for some professional gamblers, I saw this type of thing bite some very smart people. I tend to think they most likely turned their own pockets inside out looking for spare change in a desperate attempt to re-gain their early losses. The huge leverage has all the earmarks of people addicted, and as smart as they might be addicted gamblers always get blind sided, there is another faction of professionals who makes it their life style to cure them via pain. When I was an errand boy more than once I saw the pros divide up the take after a mullet was cleaned out. Jim PS I bought into a hedge fund one time but didn't stay in it very long, all in all the hedgers don't seem to do that good over time. If they leverage they have a second nut to crack. They get a little pie in the sky from time to time, but the style once leveraged makes them prime targets for the pros. If some one as far removed as me could see the huge bets LTCM was making ( not that I knew who they were ) but you can bet the pros did. I'll have to hunt back for the post were I whistled. It's just a best guess, but I think they got caught up in "gamblers fever" and likely wound up lossing their personal money as well, that's just based on what I've seen in the human nature of addicted gamblers. Jim