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Stock market returns are lumpy. Get used to it!

Capitalmind Podcast

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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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