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#92 Ed Thorp and Claude Shannon
Founders
The Ever-Present Risk of Leverage in Financial Crises
Individuals often underestimate the risks associated with leveraging their investments, as seen in the case of a partner from LTCM who took out a $24 million personal loan to increase his stake in the fund. The partner's net worth plummeted from over $100 million to negative $20 million when the fund faced financial distress. This scenario highlights the timeless lesson that human nature, especially the tendency to leverage for perceived genius, remains a consistent factor in financial crises throughout history.
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