2min chapter

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Stock market returns are lumpy. Get used to it!

Capitalmind Podcast

CHAPTER

The Lumpy Nature of Stock Arbitrage Losses

Think of this as the lumpy nature of stock arbitrage losses. You win most of the time and you happily make a certain return. When you lose, you lose so badly that it wipes off everything that you've made. And I think this is what's happening right now. LTM was fantastic until it was not. Fantastic for a really long time, terrible for a really short time. That, well, and in a way, they still keep their Nobel prizes. It probably is a function of lack of understanding of how much volatility can exist in a market before you realize that the strategy is flawed.

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