More Amaranth Feedback
Brian Cypher writes:
“The reason I wanted to write to you is your posting on Amaranth. When I read that, I thought “Amaranth must have made a huge directional trade or continually scaled into long positions as gas went down. They totally disregarded any portfolio risk analysis measures.” I couldn’t believe that a firm like this, which had attracted “smart” money, could make such a grossly over-weighted trade not only in monetary terms but in ego as well. Even if they would have just limited their total portfolio exposure to 5% (approx. $475 million) to the Natural Gas market, the loss would have been limited to that or at best 50-60% loss of that 5% or $250,000,000 or so. I don’t get it but then I do and it makes my personal goals that much more attainable. This is just one more example of how trends will continue to persist in markets.”
