Hedge funds aren’t regulated, which is why they can invest in riskier financial products. Hedge funds are managed by small groups of mostly wealthy investors, and they invest their money in ways not subject to the same regulations as mutual funds, which manage investments of larger groups of people.
LTCM was a hedge fund that was founded in 1994 by trader John Meriwether. LTCM had an important role to play in both. The 1997 Asian financial crisis and the 1998 Russian default are two events that are probably much more familiar to you, as they brought the financial world to the brink of collapse. Big Idea #1: Long-Term Capital Management was an enormous hedge fund that made its money through arbitrage. In these key points you’ll discover why we’re not rational when making decisions also academics might not be good at giving advice about money because they don’t have enough real world experience. The key points of this passage will provide you with an important reminder that no company or person should think they are better than everyone else because it’s impossible for them to beat the market on their own. Like Icarus, they were very successful but then went too far and crashed due to their own hubris. This fable can be used as a metaphor for Long-Term Capital Management (LTCM), which dominated financial markets in the 1990s. In this famous story, Icarus flies too close to the sun and his wings melt.
Icarus fell into the sea below and drowned. He flew with those wings until he got too close to the sun and the wax holding them together melted. Icarus was given a pair of wings made by his father, Daedalus. 1-Page Summary of When Genius Failed Overview
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