The original retards of trading: LTCM

[zghorner]

Only difference is that he wasn't a financial/option genius like Scholes. Those people at LTCM did this for a living.

But you bring up a good point. Smart people in one category often think they are smart in several other categories. [cough] Elon Musk [cough] That usually leads to hubris.

smart folks are so used to being "right" in every day life they cant stand it when mr. market tells them they are wrong...so they hold or worse yet, add to the losing position until they are both the smartest & poorest person in the room.

 

[Same Lazy Element]

It's all about incentives. If nothing blows up these phds get millions a year. There is almost no downside for them.

This is probably the most insightful thing anyone said here. For most people, blowing up either means losing their own money (even as a fund, the founders are usually heavily invested) or means completely destroying their career. However, once you reach a certain level of fame (phd or no phd), there is very little downside to taking outsize risks. There are multiple examples of traders blowing up (quants or otherwise) and moving on to another venture.

 

[VEGASDESERT]

Actually, they still are the smartest guys in the room.

If I can collect big fee's from AUM long enough to become a multimillionaire
before I blew up the fund and walked away rich,

I'm ok with that.

Sure beats flipping stocks and having to be smart all the time.

 

[longandshort]

This is probably the most insightful thing anyone said here. For most people, blowing up either means losing their own money (even as a fund, the founders are usually heavily invested) or means completely destroying their career. However, once you reach a certain level of fame (phd or no phd), there is very little downside to taking outsize risks. There are multiple examples of traders blowing up (quants or otherwise) and moving on to another venture.

Jon Corzine...