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As the title suggests, despite your best efforts, things often don't turn out as the theory would suggest. Why should this be?

A quick interdisciplinary tour of financial theories highlights the fact that much theory only appears to model what is really happening, and can hardly be relied upon.

What if the only innovation is in accounting? What if, far from confronting risk we are in fact hiding it? What if, instead of circling truth, we are circling the opposite or not very much at all? What if you can constantly change the rules so that all your darts score top points all the time?

What does this say about software theories and methods? Is it just a merry dance?

Published at the time of Enron this paper has a renewed resonance in times of sub-prime and self-certification.

Published in the proceedings of the XP2002 Conference, Alghero, Sardinia

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Comments on the Agile Alliance website have questioned the references to Shell in the demise of LTCM. According to e.g. wikipedia "LTCM lost $286 million in equity pairs trading and more than half of this loss is accounted for by the Royal Dutch Shell trade".

Further from BusinessWeek: "David H. Komansky, chief executive of Merrill Lynch & Co., feared that if LTCM had to liquidate its huge Shell position as well as its other equity positions, it would roil the prices of the two oil-company stocks as well as the overall stock market."