Inefficient Markets
“Could you be ona desert island and makemoney trading?”That is the questionto answer.1
The hedge fund Long Term Capital Management (LTCM) went bust in 1998, and that event is more relevant today than ever. It laid the foundation for government induced bubble/bailout schemes still employed daily.
LTCM promised to use complex mathematical models to make investors wealthy beyond their wildest dreams. It attracted elite Wall Street investors and initially reaped fantastic profits with secret money-making strategies. Ultimately, its theories collided with reality.
To understand the LTCM debacle, it starts with two academic legends: Merton Miller and Eugene F. Fama who developed the Efficient-Markets Hypothesis. The premise of their ...
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