Thanks a 10^6. Aside from the constant pain, it is a nice experience - I get to sleep late and do close to nothing the whole day. Plus, if I was not where I am, it is not likley I would be posting anything here . Thanks again. Aha, now we talking. The problem was not the strategy, it's the fact that they promised very high returns and had to deliver. In fact, any junk bond strategy (or any strategy for that matter) would be about as risky given the desire for abnormal returns. Leverage is the main problem in ANY disaster. I am waiting for a few other to happend so I can pick up some pennies rolling around. Not really, they could not. But there was a number of funds that replicated their strategy on much smaller scale. For example, bond trading desk at Clinton Group was doing it - they are still here with annualized returns of about 37% over the last 4 years. What was the trick? Well, they were less capitalized and, more importantly, nobody was manipulating them. Don't forget that Lehman, for example, forced them to liquidate their positions swhich Lehman themselfs bought. LTCM's death was a feeding for all people in the market - we all danced on their remains. I certainly did. " Who knows what would have happened if they didn't take action. " As for destruction of financial system - well, 29' came as close as it gets and it still recovered. In some poetic sense markets need some natural disasters to kill off the weak "Not surprising that the volume of otc transactions is slowing down. " Where did you get that information? IR/Credit are booming, the only slowing-down part is energy derivatives. Also, do not forget structured products - they are growing too. "Sure your sheet metal worker will not be able to handle IR derivatives. In life, there's a distribution of abilities out there. Some are in that right tail and get paid a lot of money to handle complex financial products. Good for them. I just don't think they are such a big deal. " Well, it is not about big deal - it's simply about money. If we ignore the cash, John, the metal worker, does more interesting things - things that last longer then one day. I certainly respect just as much any trader I have ever met. "I'll tell you, the only people I esteem are those who can trade the markets. People who can put their cohones on the line and take a long or short position. People like Tudor Jones, John W Henry, Vic Sperandeo and the list goes on. Are they perfect? No. Did they have big drawdowns along the way? probably. Did they ever blow up? No. Were they CONSISTENT over the last 20 years? Yes. <snip>The only consistent thing about big banks is that they always end up taking the little guy out." I have respect for these people in a similar fashion I have respect for car racers and pro athlets. But are they doing anything interesting? No. The fact that they are consistent does not surprise me - there are plenty of people who are, in any institution. Howie Rubin, for one. Plenty of people did very well over the years and nobody knows them unless they write a book or blow up. As for "little guy" - such is life. Trading derivatives you get used to the fact that it is a zero-sum market, some gain, some loose. I think any trader with some cap under management, including your's truly, had semi blown-up plenty of people. Having traded both exchange-traded stuff and OTC, I have to admit that OTC is far more interesting. Not as exiting as exchange, but far more interesting. "Good trading to you," Argh, just let me get through this crap - I will be back screwing people up Good luck to you too. PS. As for books, I can send you a pre-print of something realy interesting. It's a kind of duct-tape for quant finance booklet, very nifty.
Sle, Thanks for your thoughts. Don't know if I agree with all of them, but it was great to wrestle a bit. I'd definitely like to take a look at your quant manual. Sounds good. I'll pm you. Take care and I'll catch up with you soon, Maverick.