LTCM - How Academics Almost Blew- Up The Financial System

In general I quarrel over academia trying to explain to a practitioner what works in investing and what does not. Most of financial academia is ignorant concerning what really works in stock market investing and what does not.

The strategies they advocate always look very nice on paper. The data they use is abundant, diligently processed and thoroughly back tested over a long period of time. The statistics academia presents to the public are sophisticated and the cause of action appears to be logical, simple and easy.

Unfortunatley, stock market investing is not easy. At best when people from financial academia, especially from the chicago school, start testing their theories in the real world they underperform.
At worst they threaten to blow- up the whole financial system, like LTCM almost did in the late 1990's.

Great BBC documentary on LTCM!