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sitting in the middle of Wolfgang’s, a high-end steak restaurant on Park Avenue and Thirty-Third Street, and the entrée—steak for three, medium rare, extra char—has just arrived. His dinner companions are the hedge fund’s two biggest investors: Michael Ross, who heads the capital investment group at Maeve Grant, the sixth-largest investment bank in the world, and Isaac Goldenberg, the octogenarian casino magnate, who views investing with Jonathan as just another form of gambling. Neither of them is going to want to hear that the guy who monitors the fund’s position is in a full-blown panic.
    â€œCan I call you right back?” Jonathan says to Haresh.
    â€œI’m sorry,” Jonathan says to his dinner companions, getting up. “It’s my wife. I’ll only be a minute.”
    Ross raises a fist and flicks his wrist while making the pussy-whipped sound. Goldenberg chuckles at that and helps himself to more steak.
    It’s raining outside. Not a driving storm, but more than a drizzle, so Jonathan takes shelter under Wolfgang’s awning. The combination of the wind and the fact that the overhang is not very wide results in Jonathan getting pretty wet, so he’s hoping that this will be a short conversation, and that the steak will still be warm when he returns.
    â€œOkay, Haresh. I can talk now. What’s the problem?”
    His second-in-command says the gibberish words again. Kurtosis and heteroscedasticity .
    â€œGoddammit, Haresh. I get that there’s a volatility issue. What I don’t get is why you’re calling me about it. There’s always volatility somewhere in the position.”
    Jonathan can hear Haresh sigh. “You know what a tail is, right?” he says.
    Jonathan hates it when Haresh talks to him like he’s a second grader, although he likely deserves it for talking to Haresh like he’s an idiot, which he most certainly is not.
    â€œYeah,” Jonathan says sharply. “What normal people call the variation of risk, you guys in the bull pen refer to as tails.”
    â€œRight,” Haresh says, apparently with no recognition that Jonathan is being short. “It’s because that’s how the position shows up on a chart as deviating from the mean. We expect a small amount of deviation, but it should be negligible. Maybe .03 percent. But when the distribution is farther away from the standard deviation, it shows up on the chart as the tail getting fatter.”
    â€œHaresh, I’ve got a hundred billion bucks sitting inside eating steak, and I’m standing here in the rain, so I’d really appreciate it if you get to the point already. And in English , please.”
    â€œOur tail is fat as fuck.”
    Haresh had these Chicken Little moments from time to time. Jonathan had come to believe that his second fancied himself as the lookout man on the Titanic , the last set of eyes that could avoid catastrophe on the horizon.
    Jonathan, however, prides himself on being a man who exhibits grace under pressure. The one who keeps his head while those around him are losing theirs.
    â€œSo . . . the gap is widening,” Jonathan says with an air of calm. “Big fucking deal. It’ll close eventually. I mean, the sun is still rising in the east, right? We increase our position and then we’ll maximize our profit when the alignment hits?”
    Silence on the other end, which means that Haresh disagrees. Finally, Haresh says, “We’re overleveraged, Jonathan. It’s already nearly three to one.”
    This slows Jonathan down. The fund can only generate its outsize returns if it borrows heavily, leveraging the cash on hand so that it can put far more capital in the market than the money actually entrusted to the fund by its investors. The problem was that borrowing more than three bucks for every one dollar invested exceeded the model’s protocol, rendering the fund overly