#4: UNCERTAINTY IN MARKETS "How ridiculous and how strange to be surprised at anything which happens in life."

"Anything can happen in the market.
The largest trading blow-ups are always related to the words “…will never happen”.
The most notable example is Long-Term Capital Management’s (LTCM) collapse. This hedge fund excels in convergence trades, which assume price convergence of two assets over time.The fund had a sound strategy, as long as major market disruptions do not occur. It used huge leverage. It assumed that market disruptions that will affect the convergence relationship will never happen. Well, they did happen.A more recent case involves Marko Dimitrijevic, a hedge fund manager. He thought that the Swiss National Bank will never let the Franc float freely against the Euro.In a nutshell, anything can happen. Welcome to the markets."