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I don't think they could keep it up for that long without slipping up at least once. Enron started around the same time and got tripped up in 2001. If it were
by huffmsa 7y ago
I don't think they could keep it up for that long without slipping up at least once. Enron started around the same time and got tripped up in 2001.
If it were a one man investment shop, then maybe it leans more towards fraud. But if they obviously employ dozens of quants, and have obvious hardware outlays, it seems less likely.
It makes a lot of sense to me that they just win a bit more than they lose, play a lot of hands, and treat everything with pretty even money, so they're never overexposed in any one place.
- huffmsa 7y agoI think I have the math right here, but let's say you start with > Capital = $100 1 time a day 5 days a week 50 weeks a year, you're going to take your capital and place that many $1 bets with it. Let's say you net +1% on your deployed capital ever day. After 250 rounds, you have $1215 in the bank. Again, correct the math if I'm wrong. But scale that down to 0.57%, which is the win rate I saw, and they're making ~$600/yr, which is the stated average return. Seems legit
- papln 7y ago> Let's say you net +1% on your deployed capital ever day. That's the "..." step in "1 steal underpants, 2 ..., 3 Profit!"
- huffmsa 7y agoWell yeah. But that's what they've figured out. It's unlikely, but not impossible.
- texasbigdata 7y agoThe book has more detail. They raised capital in the beginning.
- papln 7y agoEnron only collapsed because they intentionally destabilized major public-facing national security infrastructure (retail energy markets), and they were incredibly brazen and sloppy about it. If they didn't make as large bets on collateral damage, and they acted with professionalism, they would have been fine.
- huffmsa 7y agoSee what you said? They made too many large, overleveraged bets. Blew them up