Just a moment...

The ideal capital cycle opportunity for us has often been one in which a small number of large players evolve from a situation of excess competition and exert what is euphemistically called “pricing discipline.”

financial risk, which is the risk of loss coming from an adverse movement in financial markets/prices or the failure of a client/counterparty to perform on its contractual obligations.

Each price contains a vast amount of information. The price of a gallon of gasoline, for example, incorporates everything from the weather in a far-off port to the stability of a foreign government. It tracks refinery availability in the Gulf of Mexico and emissions regulations in California, while simultaneously taking into account the increased d

In August alone, the fund lost roughly 45 percent of its capital, an event that the fund’s risk analysis predicted should happen no more than once in the history of Western civilization. It shouldn’t be unduly difficult to draw a conclusion about whether LTCM was extremely unlucky, or whether its managers misunderstood the nature of the risk.