Latest nonsense fromKrugman
- Thread starter zdreg
- Start date
Again, I read the book several years ago. I don't recall if their money was locked in, but I do recall that circumstances conspired quickly against the fund while it was too highly leveraged. It's good to have models to form an understanding. But it's not so good to slavishly follow them because, after all, they're just models. LTCM followed their models slavishly.
Early skepticism[edit]
Despite the fund's prominent leadership and strong growth at LTCM, that there were skeptics from the very beginning. Investor Seth Klarman believed it was reckless to have the combination of high leverage and not accounting for rare or outlying scenarios. Software designer Mitch Kapor, who had sold a statistical program with LTCM partner Eric Rosenfeld, saw quantitative finance as a faith, rather than science. Nobel Prize winning economist Paul Samuelson was concerned about extraordinary events affecting the market.[19] Economist Eugene Fama found in his research that stocks were bound to have extreme outliers. Furthermore, he believed that, because they are subject to discontinuous price changes, real-life markets are inherently more risky than models. He became even more concerned when LTCM began adding stocks to their bond portfolio.[19]
Warren Buffett and Charlie Munger were two of the individual investors that Meriwether approached in 1993 to invest in the fund. Both analyzed the company but turned down the offer, considering the leverage plan to be too risky.[23]
https://en.wikipedia.org/wiki/Long-Term_Capital_Management#Early_skepticism
And so what, exactly, is your point here as it relates to this thread?
And this was conveyed in your prior post? Fascinating.
Once. It was a dark and stormy night.
You seem to not realize the self-contradictory nature of what you have written. Who do you think will be building and repairing highways, bridges, grade schools, public utilities, high speed rail, broadband resources, etc., etc? The Army? And where will the teachers come from that will teach grade schoolers in their new schools with smaller class sizes. The Army? I think not. Think about this. The private sector will do all this things, just as you want. But without a government none of these things would get done, just like they haven't been getting done. Think about this and get back to us.
rather than energy for our next jump, some believe this:
One hundred billion humans that lived on the earth over the past one hundred thousand years.
However, the great advances in knowledge from fire to flight to flash drives has come from an incomprehensibly few people, perhaps as little as 100. This is a devastating constraint upon our advancement of knowledge, for it depends very much on the arrival of one unique individual per billion, and perhaps one every few generations.
These special individuals increase abstract and fundamental knowledge as they propel humanity across a discontinuity. If their occurrence depends on quantity (i.e. one in one billion) and not time, then there could be as many as 7 such individuals present in today's world. This does not seem to be the case as there has been little advancement in fundamental knowledge for close to hundred years. Thus their arrival instead seems more evenly spaced over time.
Forecasting of knowledge progression in such a regime that follows a smooth stochastic evolution with an extremely small probability of a jump, is a futile exercise