[saosebastiao]

There is nothing inherently wrong with the LTCM algorithm. Using the same algorithm after the crash, it was eventually liquidated at a profit. The problem was how leveraged the investors were. Banks that invested in LTCM were so heavily leveraged in it that the temporary collapse of the fund was threatening the survivability of a few large institutional investors. The same fund likely would have performed very well for an investor that was not as heavily leveraged. The collapse would still be harmful but not fatal.