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Author: BuyLower Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 9208  
Subject: Re: buylower (W) vs. Clones (B) Date: 1/21/2003 9:59 AM
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1) d4 d5
2) Nf3 Nf6
3) e3 Nc6
4) Bd3 Bg4
5) Nbd2 e5
6) c3 e4
7) Bc2 exf3
8) gxf3 Bh3
9) f4 Ng4
10) Nf3 Bg2
11) Rg1 Bxf3
12) Qxf3 Nf6
13) Bd3 Qd7
14) Qe2


I saw on your bio you read When Genius Failed about gamblers.


I suppose you could call When Genius Failed a book about gamblers, but that doesn't really give a clear picture. It is the story of LTCM (Long Term Capital Management), the hedge fund run by an ex-Wall St. trader who recruited quants. Two of whom were Nobel prize winners in Economics. What they did was basically arbitrage. The reason they made so much money was that they were so highly leveraged, much of it financed by the big banks. They used highly developed models to make money off of spreads. The only problem was they assumed human beings are always rational. They also were also somewhat forced to start arbitrage on other types of trades such as equities. When the spreads that they predicted would eventually tighten didn't, basically due to FUD, the highly leveraged positions crushed them. The banks had to step in, bail them out and took over the positions, which were eventually right. Just goes to show how margin calls can wipe out a highly leveraged position. I highly recommend it.

The book you mentioned sounds interesting, I'll have to take a gander at it.
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