When Genius Failed

When Genius Failed

The Rise and Fall of Long-Term Capital Management

Book - 2000
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With a new Afterword addressing today's financial crisis


In this business classic--now with a new Afterword in which the author draws parallels to the recent financial crisis--Roger Lowenstein captures the gripping roller-coaster ride of Long-Term Capital Management. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein explains not just how the fund made and lost its money but also how the personalities of Long-Term's partners, the arrogance of their mathematical certainties, and the culture of Wall Street itself contributed to both their rise and their fall.

When it was founded in 1993, Long-Term was hailed as the most impressive hedge fund in history. But after four years in which the firm dazzled Wall Street as a $100 billion moneymaking juggernaut, it suddenly suffered catastrophic losses that jeopardized not only the biggest banks on Wall Street but the stability of the financial system itself. The dramatic story of Long-Term's fall is now a chilling harbinger of the crisis that would strike all of Wall Street, from Lehman Brothers to AIG, a decade later. In his new Afterword, Lowenstein shows that LTCM's implosion should be seen not as a one-off drama but as a template for market meltdowns in an age of instability--and as a wake-up call that Wall Street and government alike tragically ignored.
Publisher: New York : Random House, c2000
Edition: 1st ed
ISBN: 9780375503177
Call Number: 332.6 L952w
Characteristics: xxi, 264 p. : ill. ; 25 cm
Additional Contributors: Long-term Capital Management (Firm)


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Mar 20, 2018

I would have to take issue with the title of this book; it is based on the supposition that a Nobel Prize in Economics [which has never existed, as neither the Nobel family nor the Nobel Foundation ever accorded such, it is awarded by the Swedish Central Bank, et cetera!!!] suggests some sort of brilliance - - recalling to mind a recent book I read which attributed Paul Krugman's opinion on something as having the influence of a genius, the very same Paul Krugman who has no comprehension of speculation's effects, nor that prices are determined in the futures market, nor - - given his very public // debate \\ with a Real Economist, Australian, Steve Keen - - clearly proved that Krugman doesn't even have a fundamental understanding of the banking system!!!
I recall having a discussion several years back with an economics professor at any Ivy League school [won't give his name as it was a private conversation and overall he's a decent type] who thought highly of Krugman so I mentioned that when Krugman had attributed the bizarre rise in oil/energy prices around 2008 -- 2009 to // simple supply and demand \\ even though the Baltic Index was collapsing {indicative of a massive oversupply at the time} I had attempted to communicate to Krugman that it was wash sales and super-speculation in the oil futures/energy futures markets which were driving up the prices, and Krugman wouldn't hear of it or couldn't comprehend my point, said economics prof. from an Ivy League school didn't know what I meant by speculation, and I had to explain it in its entirety!
Genius at this book's hedge fund subject - - that's a negative . . .
[When Gary Gensler was head of the Commodity Futures Trading Commission, he commissioned a study on the make-up of futures trades, which had always been proclaimed to be mainly hedges, and ascertained that 90 percent or more of a given day's trades were strictly speculative in nature - - not hedges!]

Agent13 Jun 10, 2012

Pssst, want to beat the market? There are scores of Wall St. brokers touting a sure fire method for making money on trades. Well, for a bunch of number crunchers, (literally; very intelligent people) it worked for awhile. Read this book to find out what happened to them. An entertaining book for (only?) business readers.


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