Not everyone believed that Long-Term's models were the be-all end-all to investing.
Seth Klarman, general partner at Baupost Group, had turned down a stake in Long-Term. He believed not accounting for "outlier" events and increasing leverage was incredibly reckless. Any serious mistake on Long-Term's part would wipe out a huge amount of its capital.
Mitchell Kapor and LTCM partner Eric Rosenfeld created and sold a statistics program together for hundreds of thousands of dollars. Afterwards, Kapor took a finance course with Merton at MIT, but saw quantitative finance as a faith, rather than science. Seeing the potential for disaster in these models, Kapor opted for the software industry instead.
Paul Samuelson, the first financial economist to win a Nobel Prize, was a mentor to Merton while at MIT. Since the conception of LTCM, Samuelson was concerned about what would happen if extraordinary events affected the market, and moved it out of its ideal predictability.
Eugene Fama, Schole's thesis advisor, found in his research that stocks were bound to have extreme outliers, which couldn't be explained by random distribution. Real-life markets are inherently more risky than models, because they are subject to discontinuous price changes. He became even more concerned when Long-Term eventually moved into equity.
Nonetheless, Long-Term wouldn't stop growing. By 1996, the firm had over 100 employees and $140 billion in assets. That year they brought in total profits of $2.1 billion. In 1997, Merton and Scholes were awarded the Nobel Prize in economic science for their model in determining derivative values.