Because they wrote a paper on pricing options and were window dressing for a bunch of ex solomon traders? yeah - definitely rogue traders who took unauthorized positions.
No they didn't. They overleveraged and their model stopped working, but that is not rogue trading. That is called seeing a black swan for the first time...
(not that I disagree with you) They didn't do any trading. They didn't run LTCM. LTCM didn't lose its shirt on delta-hedging options. They did good ol' pair trades and long/short fixed income trades in stupid sizes and then blew up. LTCM management and traders were ex solomon guys who used to run the same strategies. It's funny how most people even in finance still don't really know what happened in LTCM.
If it's not too bold to remind you that Scholes later started managing his own fund and...lost more money. Ever seen the movie trillion dollar bet? It's not a bad documentary, I've personally watched it like 10 times (though they say nothing about Scholes's last "great fund"). Plus, both Scholes and Merton actually recommended writing straddles...without hedging - makes you wonder...are Leason, Scholes and Merton THAT stupid...c there's a difference between just being stupid and writing options without hedging, it's unbeliavable. References: http://www.reuters.com/article/idUSN1033644420080410 http://en.wikipedia.org/wiki/Robert_C._Merton I can actually add like 20 links to confirm that Scholes and Merton did actually took part in the trading itself...not just their formula with their "normal distribution" assumption among other things. Not saying that the formula is bad - actually i think it's very robust and you can conpensate one variable with another to get better "fair price", but they still can't trade.
So Merton's a bad trader. Being a bad trader isn't quite the same as being a rogue trader like you called him, no? Or do they not teach that distinction at liverpool? Boy the job market must be horrible - a smart fella like you don't get a callback meanwhile merton used to be able to raise money. Only if you were born into a better, more prosperous time.
Still, can't let it go? Pathetic...anyway - i won't argue with you, it's kinda scary . And finally...Paris Hilton gets more money than me, is she a better trader??? Yeah...pathetic is really the word that describes you. Anyway...gotta go out now to watch a movie - good luck in your endevour to prove how smart you are (hint: join wilmott.com - many smart guys MIGHT compliment you).
I have no idea how this relates to anything you've said above or I've said above. But then again, you are the man with the deductive capability. And... maybe I am at wilmott and nuclearphyance too Enjoy your movie.