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The Quant Understatement of the Day

Here is the quant fund understatement of the day, this time from a WSJ piece on how UBS's just-released results lend insights into the quant/sub-prime storm:

By some estimates, trading by these giant investment pools, such as AQR Capital Management or Renaissance Technologies, may account for more than half of all daily activity on the New York Stock Exchange. That was a consequence of their ability to leverage up their positions by as much as 10 times. They didn't just provide liquidity. Their algorithmic trading programs, which seek to exploit tiny discrepancies in the relationships between securities, also acted as the market's shock absorbers -- dampening volatility much like a market-maker would.

Last week's rout illustrates that, unlike the specialist at his post, these funds are less reliable as market makers. The huge lashings of leverage they employ make them susceptible to margin calls by lenders. To meet these demands for more collateral, many were forced to liquidate positions in a disorderly fashion last week. Rather than providing liquidity, these funds removed it at the moment it was needed most. [Emphasis mine]

Right, well, there's that.
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