The traders at Long-Term knew the models were imperfect, of course. “We know this doesn’t work by rote,” said Robert Stavis, the former member of the Arbitrage Group at Salomon. “But this is the best model we have. You look at the old-timers who went with their gut. You had this model, you had these numbers, and in the end you thought they were a lot more powerful than a guy’s gut.”
