I am not saying computer modeling can give a reliable answer to this problem, but comparison to LTCM is not fair. The reason why that fund failed so badly was that they applied their models to situations where it was not meant to be applied. As they got bigger, they ran out of arbitrage opportunities, this led to an increased use of leveraging, which ultimately made their fall so spectacular. Leveraging introduces asymmetric risk in your exposure. The original arbitrage models w/o leveraging was not the reason for failure.<p>I do agree with "... and computer models of financial events are far from infallible, regardless of the amount of money and mental resources used to create them.", but what else do we have? The gut feeling of people who may have a conflict of interest?