Rationality: From AI to Zombies: Letting Go. Eliezer Yudkowsky. Feb 1, 2015. Learn when to admit failure It’s important to have a watershed moment and acknowledge a fundamental problem, instead of dividing it into palatable bite-size mistakes.
LTCM were exploiting market inefficiencies. Other people learned of the tricks. LTCM didn’t lose hope. They borrowed more and more leverage to exploit tinier and tinier margins.
And their math probably said the leverage was okay....