Comment on Great Books of Failure

Sun, 19 Apr 2009 03:14:46 GMT

I disagree strongly that "the danger of leverage" is the key message of LTCM. The key message for rationalists has to do with the subtle nature of correlation; the key message for risk managers has to do with the importance of liquidity.

"The danger of leverage" also isn't much of a message. That's like saying the message of the Iraq War is "the danger of foreign policy."

Does "popular belief" hold that LTCM wasn't hedged? Anyone who believes that is very far from learning anything from the LTCM story.

Discuss