As traders struggled to repay debts, economist Neal Soss highlighted the challenge of selling assets during a crisis. He pointed out that in tough times, investors often sell available assets instead of what they should, leading to unintended consequences. By leveraging a single security, they relinquished control over their entire portfolio, creating a situation where unrelated securities became interconnected through the same investors.

This interconnectedness meant that when a large number of financial players focused on similar investments, the idea of diversification as a safety net was undermined. In the context of Long-Term Capital Management, this reality prompted a reevaluation of the traditional belief that diversifying one's portfolio ensures protection against market volatility.