Some of Long-Term’s investors had learned this credo practically in the crib. Terence Sullivan, who kept notes on his meetings with Long-Term, believed it would take a rare, “calamitous” event—maybe a once-in-a-hundred-year flood—for Long-Term to go seriously wrong. There would be times, Sullivan knew, when prices would deviate from the norm and when markets would move against Long-Term, costing it money. But for the markets in all of their trades to consistently depart from the norm would be a statistical freak, like rolling seven consecutive snake eyes or being hit by lightning twice.
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