Rogue Trader, Chicago Style (Great Story)
- Thread starter Maverick74
- Start date
(not that I disagree with you) They didn't do any trading. They didn't run LTCM. LTCM didn't lose its shirt on delta-hedging options. They did good ol' pair trades and long/short fixed income trades in stupid sizes and then blew up. LTCM management and traders were ex solomon guys who used to run the same strategies.
It's funny how most people even in finance still don't really know what happened in LTCM.
It's funny how most people even in finance still don't really know what happened in LTCM.
Quote from Pekelo:
No they didn't. They overleveraged and their model stopped working, but that is not rogue trading. That is called seeing a black swan for the first time...
If it's not too bold to remind you that Scholes later started managing his own fund and...lost more money. Ever seen the movie trillion dollar bet? It's not a bad documentary, I've personally watched it like 10 times (though they say nothing about Scholes's last "great fund"). Plus, both Scholes and Merton actually recommended writing straddles...without hedging - makes you wonder...are Leason, Scholes and Merton THAT stupid...c there's a difference between just being stupid and writing options without hedging, it's unbeliavable.
References:
http://www.reuters.com/article/idUSN1033644420080410
http://en.wikipedia.org/wiki/Robert_C._Merton
I can actually add like 20 links to confirm that Scholes and Merton did actually took part in the trading itself...not just their formula with their "normal distribution" assumption among other things.
Not saying that the formula is bad - actually i think it's very robust and you can conpensate one variable with another to get better "fair price", but they still can't trade.
So Merton's a bad trader. Being a bad trader isn't quite the same as being a rogue trader like you called him, no? Or do they not teach that distinction at liverpool?
Boy the job market must be horrible - a smart fella like you don't get a callback meanwhile merton used to be able to raise money. Only if you were born into a better, more prosperous time.
Boy the job market must be horrible - a smart fella like you don't get a callback meanwhile merton used to be able to raise money. Only if you were born into a better, more prosperous time.
Still, can't let it go? Pathetic...anyway - i won't argue with you, it's kinda scary
. And finally...Paris Hilton gets more money than me, is she a better trader??? Yeah...pathetic is really the word that describes you. Anyway...gotta go out now to watch a movie - good luck in your endevour to prove how smart you are (hint: join wilmott.com - many smart guys MIGHT compliment you).Quote from kinggyppo:
"In 1986 a con man named Dan Dewey walked into the pit disguised in a false beard and glasses and racked up big positions in the contract. The idea was that if his trades were winners, he would attribute them to his confederate, a trader named Tom Sanders. If the trades were losers, well, no one would ever know who that man in the beard was who made the trades. Dewey, Sanders, and two others would have pocketed $308,000 if they hadn't been caught."
classic if you see a guy wearing a groucho mask, don't sell him more than a 10 lot.
http://www.chicagoreader.com/chicago/busted/Content?oid=891725
Thanks for that.
