kaal:claim:3405660-006

LTCM was diversified across markets but not across strategy, so its positions failed together; market level diversification does not imply strategy level diversification.

Source quote, verbatim

It became obvious that while the fund was diversified in terms of markets, its overall strategy was not diversified.

From

Kaal, Indirect Regulation of Hedge Funds (2019), II. The Need for Hedge Fund Regulation, p. 6
https://ssrn.com/abstract=3405660 · source PDF

Cite as

Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660

Holds when

stress conditions in which risk spreads widen across markets simultaneously

Classification

failuresupport: evidencedfailure: illusory diversificationfamily: systemic-risk-transmissionsystemic-riskrisk-and-incentivesprivate-funds

Verify

The quote above is an exact substring of the source PDF, whose sha256 is cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d. Extraction method: pdf-text-layer.
Attestation record: colloquium/attestations/ecccee0c865da2aa...json
Verify the binding yourself: curl -s https://wulfkaal.github.io/claims/3405660-006.md | sha256sum