waveman comments on Markets are Anti-Inductive - Less Wrong

30 Post author: Eliezer_Yudkowsky 26 February 2009 12:55AM

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Comment author: waveman 15 March 2011 10:04:36AM 1 point [-]

IMO, a fair amount of the profit in the highest flying risk arbitrage schemes is based on leveraging with the bankruptcy put.

Yes! Selling insurance, but with no capital to back it up.

If these people were smart they would take money off the table as they go. But the trouble is that they starting drinking their own kool-aid. Eg Long Term Capital Management.