When it comes to hedge-fund blow-ups, our goal is first to avoid them altogether and then secondarily limit their impact on a portfolio if this situation unexpectedly occurs. It is not a matter of embracing normal volatility because it is not normal volatility; instead, blow-ups are one-off, unrecoverable situations that can essentially only be mitigated via portfolio construction. But we can learn valuable lessons from them, and so we forge ahead with this topic.

Here we go…

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