Emotional Arbitrage

Discussion in 'Psychology' started by cgjung, Dec 17, 2010.

  1. cgjung


    I remember reading Lowenstein's When Genius Failed, how Goldman pressed on the opposite side of LTCM's trade once word was out that insolvency was imminent. It's no wonder the FED made 100% return on LTCM assets once spreads returned to normal. Wait until there's emotional upheaval and pounce!

    "The risk free return is only possible where there is volatility, not in asset prices, but in the emotions of the participant."

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