• Choose a category
• All
• Classic-Fiction

16 Ibid.

17 Floyd Norris, “The 1994 Honor Roll (of Sorts),” New York Times, 25 December 1994.

18 Benjamin Graham, The Intelligent Investor (New York: Harper & Row, 1973), 96.

Chapter 4: The Insatiable Curiosity to Know Nothing Worth Knowing (Oscar Wilde Was Right)

1 Anita Raghavan and Mitchell Pacelle, “Buffett Has Renewed His Talks to Acquire Long-Term Capital,” Wall Street Journal, 27 October 1998.

2 Roger Lowenstein, When Genius Failed (New York: HarperCollins, 2002), 128-129, 224-225.

3 Claudia H. Deutsch, “Edson Mitchell Dies at 47, Executive of Deutsche Bank,” New York Times, 26 December 2001. Edson Mitchell died in 2001 at the age of 47, after the twin-engine Beechcraft flying him to Rangeley, Maine to join his ex-wife and his children for the holidays, crashed into a mountain. He had left Merrill Lynch in 1995 to run global markets at Deutsche Bank.

4 Anita Raghavan, “Long-Term Capital’s Partners Got Big Loans to Invest in Fund,” Wall Street Journal, 6 October 1998.

5 “A Top Trader Quits Salomon,” New York Times, 22 December 1994. Hufschmid was head of Foreign Exchange at Salomon in 1993; his foreign exchange trading group reportedly made more than $200 million.

6 Edward Wyatt, “Profits of Hedge Fund Insiders Appear to Be Off but Still Big,” NewYork Times, 26 September 1998.

7 Sandra Hernandez, “Two-Year Notes Have Biggest Weekly Decline in 2008 on Fed Cut,” Bloomberg News, 21 March 2008.

8 Gregory Zuckerman, “Shakeout Roils Hedge-Fund World,” Wall Street Journal, 17 June 2008. Estimates varied from as low as 6,000 to 8,500 globally, depending on who was counting. That number does not include managed offshore entities that looked a lot like hedge funds but are called by a variety of structured finance labels, structured investment vehicles (SIVs), and special purpose acquisition vehicles (SPACs). Many of them invest in leveraged bets on tranches of collateralized debt obligations.

9 Gregory Zuckerman, “Shakeout Roils Hedge-Fund World,” Wall Street Journal, 17 June 2008.

10 Josh Hamilton, “Warren Buffett’s Berkshire Salary Remains $100,000,” Bloomberg News, 17 March 2008.

11 Jenny Strasburg, “Tudor Investors Pull More than $1 Billion from Raptor,” Bloomberg News, 14 December 2007.

12 Carrick Mollenkamp and Ian McDonald, “SEC Plumbs Money Firm’s Files,” Wall Street Journal, 24 March 2006.

13 Kenneth M. Krys and Christopher Stride, et. al. v. Christopher Sugrue, Mark Kavanagh, et al. Supreme Court of the State of New York, County of New York, Index No. 08600653, filed May 5, 2008.

14 Greg Newton,“Serve Him Right: SPhinX Liquidators Sue Angolan Resident,” Naked Shorts, 3 April 2008.

15 See note 13 in Chapter 3.

16 W. W. Meissner, S.J., M.D. Ignatius of Loyola: The Psychology of a Saint (New Haven:Yale University Press, 1992), 26.

17 Gary Belsky, and Thomas Gilovich, Why Smart People Make Big Money Mistakes and How to Correct Them (New York : Fireside, 1999), 118.

18 Lowenstein, When Genius Failed, 123.

19 Berkshire Hathaway 2007 Annual Report. 17.

20 Nassim Taleb, Fooled by Randomness (New York : Random House, 2001) xxvi. Emphasis in original.

21 Janet Tavakoli,“Dead Man’s Curve,” Client Note, 21 September 2006. A longer version of this client note was published in HedgeWorld.com, 22 September 2006 (printed with permission of TSF, which retains the copyright). The following is an excerpt for those interested in more detail:

If we use the model for a normal (Gaussian) distribution, a five-standard deviation credit event should only happen once in every 7,000 years. But in the market place, we see this happen once or twice in a decade. Amaranth was short fall natural gas futures contracts and long winter natural gas futures contracts in sequential years from 2006 through 2009, among other trades. But just as too much money flowing into these trades can collapse spreads in the treasury market, too much leveraged money flowing into the much thinner commodities market undid Amaranth’s trades. Spreads tightened by five to ten standard deviations