There’s a big difference in the things that are supposed to happen and the things that actually happen. It’s interesting how much of the time we think we’ve got it all figured out only to discover that we didn’t know much of anything. The characteristics we ascribe to the learned and ‘big thinkers’ of the day are many, but one characteristic that they often lack is humility. Without it, many times you end up getting your hat handed to you.
In the mid to late-nineties, there was a new startup hedge fund known as Long-Term Capital Management (LTCM for short). This new hedge fund was taking the world by storm. It was started by a man named John Meriwether from the Bank, Salomon Brothers. He led a group within Salomon Brothers who were involved with trading bonds based on mathematical models that predicted market prices and outliers. He hired intellectuals to come up with these models on which he would base his trades. These are often known in the industry as the ‘Quants’. They had a reputation for being close-knit, confident, and also making huge profits. They had a strategy which involved buying or selling bonds when their prices deviated from the norm, and then wait for them to converge again to make a profit. He gathered the best minds he could find in the industry. He even had a couple Nobel Prize winning economists, Merton and Scholes.
When Meriwether started his hedge fund, he began with $1.25 billion dollars. Within a few short years it had $140 billion under management. This firm had explosive growth. They charged high fees to get in, but most everybody wanted in because of their results. However, they were a very secretive bunch and wouldn’t let most investors or firms know much about their trades. This caused frustration for the banks that wanted to work with LTCM.
The firm soon moved into equities (stocks). They applied the same strategies here as they had in bonds, hoping for the same results. And on these trades they had taken positions that were highly leveraged, meaning they only had a small percentage of the money in relation to the value of the trade. Any small downturn would mean huge losses. Much of their trading was done based on the belief that certain outlier events wouldn’t happen. Only, what wasn’t supposed to happen in the financial markets, did happen. A number of events converged at the wrong time, leading to the firm being in a desperate situation.
For the premature ejaculation treatment you can go for the Super active lowest cost of viagra is that it’s used to relieve spasms in the digestive tract. Some cases where this problem arises are- lowest viagra price http://appalachianmagazine.com/2018/02/04/could-bristol-motor-speedway-ever-host-a-super-bowl/ When he is stimulated. Earlier, people used to live with a misperception that the quality of hard-on cheap cialis from canada depends on the attraction a male have. Subsequently, make beyond any doubt to bring online levitra with wellbeing measures to get more blood during sexual arousal and gain rock hard erection during sexual arousal.
There was the Asian financial crisis in 1997, starting in Thailand and then spreading to other Asian countries. This hit LTCM hard. But the big, unsustainable losses came when Russia defaulted on its debt in 1998. This caused wild swings in the markets to where LTCM couldn’t cover their positions. They were in desperate need of help. What ended up happening was that the New York Federal Reserve President, William McDonough had to step in to help LTCM. He worked with the major Wall Street banks to put together a bailout package for the firm. The banks LTCM had formerly snubbed, they were now relying on for a bailout. But the bailout wasn’t to save LTCM. It was to save all the firms involved with LTCM, and the larger economy as a whole. Altogether, they were exposed to $1 trillion in risk. So, they had to do something. But in the end, they all worked together on a bailout package and any major catastrophe was averted.
But a bigger part of this is coming to the conclusion that you think you have it all figured out is often followed by a big slap in the face, making you realize that you don’t. For whatever things you think you know, you often find out you don’t.