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    When Genius Failed: The Rise and Fall of Long-Term Capital Management (Paperback) By (author) Roger Lowenstein

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    DescriptionWith a new Afterword addressing today's financial crisis A" BUSINESS WEEK "BEST BOOK OF THE YEAR 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.


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  • Full bibliographic data for When Genius Failed

    Title
    When Genius Failed
    Subtitle
    The Rise and Fall of Long-Term Capital Management
    Authors and contributors
    By (author) Roger Lowenstein
    Physical properties
    Format: Paperback
    Number of pages: 304
    Width: 132 mm
    Height: 202 mm
    Thickness: 18 mm
    Weight: 181 g
    Language
    English
    ISBN
    ISBN 13: 9780375758256
    ISBN 10: 0375758259
    Classifications

    B&T Merchandise Category: GEN
    B&T Book Type: NF
    BIC E4L: ECO
    Nielsen BookScan Product Class 3: S4.5
    BIC subject category V2: KCS, KFFM
    B&T Modifier: Subject Development: 10
    B&T General Subject: 180
    Ingram Subject Code: BE
    Libri: I-BE
    Warengruppen-Systematik des deutschen Buchhandels: 27830
    BISAC V2.8: BUS069000, BUS027000
    DC21: 332.6
    DC22: 332.6
    BISAC V2.8: BUS036000, BUS004000, BUS077000, BUS029000, BUS069030
    LC subject heading: ,
    Edition statement
    Reprint
    Publisher
    Random House USA Inc
    Imprint name
    Random House Inc
    Publication date
    09 October 2001
    Publication City/Country
    New York
    Author Information
    Roger Lowenstein, author of the bestselling Buffett: The Making of an American Capitalist, reported for The Wall Street Journal for more than a decade, and wrote the Journal's stock market column "Heard on the Street" from 1989 to 1991 and the "Intrinsic Value" column from 1995 to 1997. He now writes a column in Smart Money magazine, and has written for The New York Times and The New Republic, among other publications. He has three children and lives in Westfield, New Jersey.
    Review quote
    "A riveting account that reaches beyond the market landscape to say something universal about risk and triumph, about hubris and failure."--"The New York Times" "[Roger] Lowenstein has written a squalid and fascinating tale of world-class greed and, above all, hubris."--"Business Week" "Compelling . . . The fund was long cloaked in secrecy, making the story of its rise . . . and its ultimate destruction that much more fascinating."--"The Washington Post" "Story-telling journalism at its best."--"The Economist"
    Flap copy
    John Meriwether, a famously successful Wall Street trader, spent the 1980s as a partner at Salomon Brothers, establishing the best--and the brainiest--bond arbitrage group in the world. A mysterious and shy midwesterner, he knitted together a group of Ph.D.-certified arbitrageurs who rewarded him with filial devotion and fabulous profits. Then, in 1991, in the wake of a scandal involving one of his traders, Meriwether abruptly resigned. For two years, his fiercely loyal team--convinced that the chief had been unfairly victimized--plotted their boss's return. Then, in 1993, Meriwether made a historic offer. He gathered together his former disciples and a handful of supereconomists from academia and proposed that they become partners in a new hedge fund different from any Wall Street had ever seen. And so Long-Term Capital Management was born. In a decade that had seen the longest and most rewarding bull market in history, hedge funds were the ne plus ultra of investments: discreet, private clubs limited to those rich enough to pony up millions. They promised that the investors' money would be placed in a variety of trades simultaneously--a "hedging" strategy designed to minimize the possibility of loss. At Long-Term, Meriwether & Co. truly believed that their finely tuned computer models had tamed the genie of risk, and would allow them to bet on the future with near mathematical certainty. And thanks to their cast--which included a pair of future Nobel Prize winners--investors believed them. From the moment Long-Term opened their offices in posh Greenwich, Connecticut, miles from the pandemonium of Wall Street, it was clear that this would be a hedge fund apart from all others.Though they viewed the big Wall Street investment banks with disdain, so great was Long-Term's aura that these very banks lined up to provide the firm with financing, and on the very sweetest of terms. So self-certain were Long-Term's traders that they borrowed with little concern about the leverage. At first, Long-Term's models stayed on script, and this new gold standard in hedge funds boasted such incredible returns that private investors and even central banks clamored to invest more money. It seemed the geniuses in Greenwich couldn't lose. Four years later, when a default in Russia set off a global storm that Long-Term's models hadn't anticipated, its supposedly safe portfolios imploded. In five weeks, the professors went from mega-rich geniuses to discredited failures. With the firm about to go under, its staggering $100 billion balance sheet threatened to drag down markets around the world. At the eleventh hour, fearing that the financial system of the world was in peril, the Federal Reserve Bank hastily summoned Wall Street's leading banks to underwrite a bailout. Roger Lowenstein, the bestselling author of Buffett, captures Long-Term's roller-coaster ride in gripping detail. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein crafts a story that reads like a first-rate thriller from beginning to end. He explains not just how the fund made and lost its money, but what it was about the personalities of Long-Term's partners, the arrogance of their mathematical certainties, and the late-nineties culture of Wall Street that made it all possible. When Genius Failed is the cautionary financial tale of our time, the gripping saga ofwhat happened when an elite group of investors believed they could actually deconstruct risk and use virtually limitless leverage to create limitless wealth. In Roger Lowenstein's hands, it is a brilliant tale peppered with fast money, vivid characters, and high drama.