No, not Meriwether's hedge fund, although it's still in trouble too. I'm talking about Scholes' hedge fund. When will these guys learn that having a Nobel Prize does NOT exempt you from the basic economic fact that greater returns are ONLY possible with greater risk. Highly leveraged bets are great when the market is up, but they will trash you on the way down.
Platinum Grove Asset Management, the hedge-fund firm co-founded by Nobel laureate Myron Scholes, temporarily stopped investor withdrawals from its biggest fund after it lost 29% in the first half of October. The decline left Platinum Grove Contingent Master fund with a 38% loss this year through October 15. Funds employing a similar approach of exploiting differences in the value of related securities fell 14% last month and 30% this year, according to data compiled by Chicago-based Hedge Fund Research. Scholes, winner of the 1997 Nobel Prize in economics, was a founding partner in Long-Term Capital Management. He started Platinum Grove in 1999 with Chi-fu Huang, Ayman Hindy, Tong-sheng Sun, and Lawrence Ng, who had all worked at LTCM.
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