WTT: The Anatomy of a Blow-Up

This What Ted's Thinking, The Anatomy of a Blow Up, brings situational awareness to the underlying causes of hedge fund disasters. Hedge fund blowups happen the same way every time. It isn't leverage, it isn't concentration, and it isn't illiquidity. It's the combination of the three that proves fatal. Most hedge fund strategies are built around three tools that multiply underlying skill: leverage, borrowing money to boost returns concentration, investing meaningful capital in a small number of ideas And illiquidity, owning assets that can't be sold at market prices quickly. Used alone and eff