What Happened To LTCM: 10 Years Later

Amazing talk. Must watch if you’re interested in financial speculation, financial crises, want to better understand the current financial crisis, or just want to know how you can make billions for years and then lose it all in a few weeks.

“Eric Rosenfeld, the one-time Harvard professor who became a trader at Long-Term Capital Management in the 1990s, explains how a portfolio balanced in a way so that it appears “riskless” because it has so many diversified positions can be made very risky when too many people holding similar positions decide to exit at the same time. In short, trades that don’t seem to be correlated at a fundamental economic level or according to history can nonetheless become correlatedthrough trading activity.”

Watch the video at BusinessInsider

[photo from bull n bear]