In the wake of LTCM’s failure, it was easy to forget these multiple precautions. Meriwether and his partners came to be seen as the victims of a reckless faith in their models—which fueled the belief that some modest addition of caution could prevent similar disasters. But the truth was both more subtle and harder to live with. LTCM’s risk management was more nuanced and sophisticated than critics imagined, and the lessons drawn from its failure included several prescriptions that LTCM itself had implemented.
