In late summer 1998, the atmosphere among bond traders was one of intense fear, particularly concerning high-risk credits. This sense of anxiety was not accounted for in the mathematical models created by economists and professors, who had aimed for a perfectly predictable market. Their focus on quantitative analysis overlooked the complexities of real trading, which is driven by instinct and emotional responses.

The disconnect between theoretical models and actual market behavior highlighted a significant oversight: the human element in trading. Traders operate not just on statistics but also on instincts related to self-protection and competition. This reality reflects a fundamental flaw in reliance on purely quantitative models, as they fail to capture the intricacies of human psychology in financial markets.