When Genius Failed: The Rise and Fall of Long Term Capital Management

When Genius Failed: The Rise and Fall of Long Term Capital Management

Paperback

By (author) Roger Lowenstein

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  • Publisher: FOURTH ESTATE LTD
  • Format: Paperback | 288 pages
  • Dimensions: 128mm x 188mm x 22mm | 200g
  • Publication date: 1 January 2002
  • Publication City/Country: London
  • ISBN 10: 1841155047
  • ISBN 13: 9781841155043
  • Sales rank: 6,079

Product description

Picking up where Liar's Poker left off (literally, in the bond dealer's desks of Salomon Brothers) the story of Long-Term Capital Management is of a group of elite investors who believed they could beat the market and, like alchemists, create limitless wealth for themselves and their partners. Founded by John Meriweather, a notoriously confident bond dealer, along with two Nobel prize winners and a floor of Wall Street's brightest and best, Long-Term Captial Management was from the beginning hailed as a new gold standard in investing. It was to be the hedge fund to end all other hedge funds: a discreet private investment club limited to those rich enough to pony up millions. It became the banks' own favourite fund and from its inception achieved a run of dizzyingly spectacular returns. New investors barged each other aside to get their investment money into LTCM's hands. But as competitors began to mimic Meriweather's fund, he altered strategy to maintain the fund's performance, leveraging capital with credit on a scale not fully understood and never seen before. When the markets in Indonesia, South America and Russia crashed in 1998 LCTM's investments crashed with them and mountainous debts accumulated. The fund was in melt-down, and threatening to bring down into its trillion-dollar black hole a host of financial instiutions from New York to Switzerland. It's a tale of vivid characters, overwheening ambition, and perilous drama told, in Roger Lowenstein's hands, with brilliant style and panache.

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Author information

Roger Lowenstein has reported for the Wall Street Journal for more than a decade and is a frequent contributor to the New York Times and The New Republic. He is the author of Buffet: the Making of an American Capitalist.

Review quote

'A must-read thriller for anyone who works, or invests in markets. It is a story of how arrogance can drive greed and fear to extremes.' Scotsman 'Richly textured and lucid...A riveting account that reaches beyond the market landscape to say something universal about risk and triumph, about hubris and failure.' New York Times 'Lowenstein has written a squalid and fascinating tale of world-class greed and, above all, hubris.' Business Week 'This book is story-telling journalism at its best' The Economist

Editorial reviews

This is business history for those who like to dwell on disaster. It charts the rise and fall of the investment company Long-Term Capital Management, formed in 1994 by John Merriweather who had been a leading figure in Salomon Brothers. For four years it racked up returns of 40% a year and amassed a staggering US$100 million of assets, virtually all borrowed, which it used to enter into derivative contracts producing over $1 trillion worth of exposure. The size of the operation and the scale of the risk boggle the imagination. But it all started to go wrong. Arrogance and greed led to greater and greater risks being taken, yet below the surface of their apparent respectability and success the alchemists of wealth fought to keep ahead of catastrophic failure. The author is a respected financial journalist with experience on the Wall Street Journal. He writes well and he knows the stage on which this drama was played out. The events, and the people a team that Time magazine dubbed 'the brightest and brokest' as things went from bad to worse are described here in detail. The story takes on the mantle of a thriller as success turns to failure following the collapse of markets in Brazil, Indonesia and Russia, and frantic rescue attempts are made with the entire American federal banking system drawn into the process. For those fascinated by the world of high finance and who hope to draw lessons (or perverse pleasure?) from the apparent genius of market men becoming all too fragile, this is a riveting read. Though the author tells his readers it is an unauthorized account, the sources acknowledged and thanked for their cooperation appear well placed to make it an authoritative, if sobering, tale. (Kirkus UK)