Quote from dtrader98:
The quintessential example of money management necessity (outside of maybe niederhoffer).
Long Term Capital Management was the pinnacle of quant hedge funds. Boasting noble laureates and a brilliant team of quantitative analysts on their roster, they would make highly leveraged and speculative bets based upon their superior number crunching (among other strategies, seeking low risk arbitrage based betting strategies) abilities. They became so large and leveraged that it became difficult to find liquidity in positions they needed to exit. For whatever reason, they had a large correlation of trades that turned against them, practically simultaneously; and without going into a long winded discussion of the details: they blew up.
So here you have the perfect anecdote (albeit rare) of the superior trader getting smoked by not adhering to money management (one could argue that they did, but that's debatable; at a certain point the leaders began taking overly arrogant risks).
http://en.wikipedia.org/wiki/Long-Term_Capital_Management
-------------------------------
trading method = ying
money mgmt = yang
One cannot prosper without the other.
Therein lies your (legal) holy grail.
"In a negative expectation game, there is no money-management scheme that will make you a winner,"
-Ralph Vince