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Old 06-24-2008, 04:48 PM   #51
Phone Booth
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Re: Susquehanna Partner Wins 10K Stud Bracelet. Donates 100% to Charity

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Originally Posted by Thremp View Post
I'm not sure exactly what you're trying to get at. If the banks injected 3.625billion to receive 90% of the fund's equity, the existing equity holders must have had 400 million remaining in equity. Even after a modest return since then of, say, 10%, that's still 440 million, from something like 4.7 billion. That's losing a lot of money.
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Old 06-24-2008, 05:17 PM   #52
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Re: Susquehanna Partner Wins 10K Stud Bracelet. Donates 100% to Charity

wow

congrats, and what charity?

pretty baller
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Old 06-24-2008, 08:02 PM   #53
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Re: Susquehanna Partner Wins 10K Stud Bracelet. Donates 100% to Charity

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One thing though: I thought those with very high IQs were more likely to have low EQs?
EQ isn't really a well-accepted framework. What they may be measuring as EQ is almost certainly a combination of 1) mental/emotional stability (within various normative spectra, the extreme ends of which represent personality disorders and mental/emotional illnesses, 2) intelligence, 3) cultural capital and possibly some other related factors. I think the perception that those with high-IQs have low EQs is mainly due to the fact that those with an extreme tendency towards specialization (think Asperger's Syndrome, computer/math nerds, idiot-savants, etc) are considered to have higher IQs when they really don't, tend to be less emotionally healthy (due to isolation and lack of proper social development) and and often distance themselves away from the mainstream culture. These factors lead them to make poorer decisions when their own or others' emotions are involved than is indicated by their overall intelligence.

Obviously this is, like most things I've mentioned in this thread, conjectural, but probably closer to the truth than most of what one would read on this topic.
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Old 06-24-2008, 08:47 PM   #54
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Re: Susquehanna Partner Wins 10K Stud Bracelet. Donates 100% to Charity

we're bad at predicting who will be a productive genius because in order to be a productive genius you must: a) possess a rare level of intelligence; b) have sufficient interest in some field to acquire the knowedge and skills necessary to contribute to it; c) have just the right balance of 'attachment' to your ideas while continuing to expand on them and search for alternatives, i.e. you cannot become obsessed with low probability hypotheses because they are emotionally satisfying; d) get lucky and stumble across a novel and productive hypothesis (and if not c, you have to do it before you stumble across an emotionally satisfying but ultimately falsifiable/conceptually misleading hypothesis). theoretical 'satisficing' is very common, even amongst those with extremely high levels of g (as it is with all groups).

that's a lot of conditions and several of the most important ones have little to do with the heritable form of intelligence.

general intelligence and executive function have a positive correlation, and executive functions are what you use when theorizing about the motives of other people, i.e. what does he think i think he thinks. that said, subjective impressions of intelligence usually assess the sophistication of someone's theory of mind and not their computational horsepower. those with the most impressive computational talents are almost always obsessed with abstractions and symbols, and those most likely to be obsessed with abstractions and symbols are least likely to find other people interesting enough to develop a sophisticated theory of mind. ergo, people associate 'really high IQ' (which they invariably associate with computation and not 'intelligence', for whatever reason) with 'low EQ' or an inability to relate to other people or low practical/'comprehensive' intelligence.

Last edited by VanVeen; 06-24-2008 at 09:10 PM.
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Old 06-25-2008, 12:07 PM   #55
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Re: Susquehanna Partner Wins 10K Stud Bracelet. Donates 100% to Charity

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Originally Posted by Phone Booth View Post
I'm not sure exactly what you're trying to get at. If the banks injected 3.625billion to receive 90% of the fund's equity, the existing equity holders must have had 400 million remaining in equity. Even after a modest return since then of, say, 10%, that's still 440 million, from something like 4.7 billion. That's losing a lot of money.
Their ideas were ultimately correct, they just had ****ty risk management. And people commonly say "ZOMG they lost everything", when its not correct.
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Old 06-25-2008, 01:10 PM   #56
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Re: Susquehanna Partner Wins 10K Stud Bracelet. Donates 100% to Charity

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Their ideas were ultimately correct, they just had ****ty risk management.
If you really believe this, you don't understand fixed income arbitrage. Just about every decent idea is correct if your cost of funding is sufficiently low. It's not sufficient that you find a cashflow arb, but you need to ensure that the cost of funding for your position is lower than the expected return for the entire duration of the trade. Their costs were low because the funding was contingent. If you force them to get term funding, in order to match their liabilities to their assets from the beginning, I don't know that they had any profitable ideas at all. They were betting on all kinds of things (equity vol, risk arb) that they didn't understand that I'm not particularly certain that they understood the fixed income instruments they were trading all that well either.

And I don't know where you get the idea that "their ideas were ultimately correct." The article you quote certainly doesn't show this and I see no real evidence (though it's somewhat probably, given the nature of assets they held) that had they hold on to their position at the initial low cost of funding, they would've made money. They were up from the point where they were bailed out, but that's after losing over 4 billion. But this is like saying if you buy a basket of credit assets, you tend to outperform treasury bills in the long run. That's not hard.

The other factor you're not including is the fact that they were involved in all kinds of bets where you can't meaningfully talk about "fundamentals" outside of the market. Selling equity vol and providing vega does in fact change realized volatility, which means you can't meaningfully use equity vol data since their liquidation to predict how well their position would have done.

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And people commonly say "ZOMG they lost everything", when its not correct.
My understanding is that the general partners were practically wiped out - the equity as stated is not the position just of the general partners, but of the entire fund, including limited partners (investors).
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