For your Labor Day evening viewing pleasure.
Back with some ideas and analysis later tonight…
The Trillion Dollar Bet (2000) – A documentary about the demise of Long Term Capital Management.
Joined Apr 1, 2010
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Thanks for this one buddy.. 1997 my first spanking ever lol .. these were the good days…
We talked about this in options & futures class at business school. Even the smartest finance minds in the world are fallible and nothing is ever certain in finance no matter how much you model, strategize, etc. was the moral of the story I took away from it. A great cautionary tale.
A great example of the intersection of a mathematical model derived on several assumptions (like pretty much all models) and the people who abused it (ironically also those who developed said model), likely as a result of hubris.
A model with no predictive power is useless. These guys were blinded by money into forgetting that they can only predict as long as all of their assumptions held true. A smart operator of a mathematical model is constantly sanity-checking the results to make sure they correspond with reality. A smart operator will always keep his/her eyes open for violations of the assumptions from which the original formula was derived.
People…