LTCM’s visible profits pulled other funds into the same strategies, crowding the trades.

Evidence

However, the interviews drawn on here suggest that overlaying the increased preference for safer, more liquid assets were the effects of a different, more directly sociological process. Meriwether’s group at Salomon and at LTCM earned remarkable profits, and were known to have earned those profits. This had encouraged others in other investment banks, and increasingly in other hedge funds to follow similar strategies. — Donald MacKenzie, An Engine, Not a Camera, 1022

Categorization

• XREF: connects to: LTCM’s disclosed strategy led rivals to take similar arbitrage positions — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1027; Other traders imitated LTCM’s successful arbitrage models and strategy — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 155; Arbitrage strategies became consensus trades as hedge funds imitated LTCM — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1029

Broader Connections

• Other traders imitated LTCM’s successful arbitrage models and strategy #corroborates (0.95) — Donald MacKenzie, An Engine, Not a Camera, 155
• LTCM’s disclosed strategy led rivals to take similar arbitrage positions #corroborates (0.92) — Donald MacKenzie, An Engine, Not a Camera, 1027
• Arbitrage strategies became consensus trades as hedge funds imitated LTCM #expands (0.90) — Donald MacKenzie, An Engine, Not a Camera, 1029