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Could Renaissance Technologies be the next Long Term Capital Management(mathematically managed hedge funds)?

Is what James Simons of Renaissance doing similar to what Meriwether, Merton and Scholes did at Long Term Capital Management? Or is his mathematical models more complicated. Will it end up like LTCM? If not, why not?

Asked By: Cassandra's dream - 8/25/2009
Best Answer - Chosen by Asker
The model isn't what brought down LTCM, it was that they began applying the model to things it simply was never designed to be used on in an attempt to add returns. Specifically foreign currencies and merger arbitrage activity. They also levered the model 40 to 1, which meant that when the markets turned against them... More
Answered By: financegal27 - 8/25/2009
Additional Answers (1)
It's very unlikely that RenTech will go the way of LTCM, in my opinion. Renaissance is very secretive, but by all indications they are run under completely different methodologies (not to mention philosophies... More
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Answered By: MikeJ - 8/25/2009
 
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