On Friday, Bloomberg quoted a former LTCM partner as saying the $1.9 trillion hedge fund industry faces “much worse” conditions than in 1998, when Long-Term Capital Management LP collapsed.
“It’s definitely a trickier environment. The market is much worse that it was in 1998. Then it was just LTCM, but this impacts everybody.”
To date, we have not seen an LTCM-like blow up. Are these guys good, lucky or is there risk lurking in the weeds? Is the commodity-play unwind just the thing to bring the dead bodies to the surface? The violence of the commodity and currency moves has the faint whiff of panic.