
Blowing Up: How This One Fund Blew Up Overnight – And What We Can Learn from It - daok
https://palisade-research.com/blowing-up-how-this-one-fund-blew-up-overnight-and-what-we-can-learn-from-it/
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AstralStorm
This is the good old fallacy of not looking at long enough time horizon and
estimating information content in recent variance in addition to not setting
up a robust strategy.

Usually taking off robustness for small short term profit is not worth it.

The usual thing is if the maximum observed variance vastly exceeds any current
trend, you definitely should not gamble in this way as the volatility is high.
Complete but easy calculation would allow him that the assumption he made is
baseless. (Take a peek at variability in 70s, current blip is way below that.)

As for "black swan" events and general risk bounds, he probably did not gamble
with money he couldn't afford to lose. That's not necessarily true for his
clients though.

Bankruptcy with limited liability is a valid exit strategy and any investor
should be aware of that risk strategy.

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NelsonMinar
Blowing Up: a crappy webserver. Here's a mirror:
[http://archive.is/ezjyH](http://archive.is/ezjyH)

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dang
[https://news.ycombinator.com/item?id=18496870](https://news.ycombinator.com/item?id=18496870)

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wglb
Ok, so don't they teach beginning options traders about naked call options??

