Lowenstein, a financial journalist and author of Buffett: The Making of an American Capitalist, examines the personalities, academic experts, and professional relationships at LTCM and uncovers the layers of numbers behind its roller-coaster ride with the precision of a skilled surgeon. The fund's enigmatic founder, John Meriwether, spent almost 20 years at Salomon Brothers, where he formed its renowned Arbitrage Group by hiring academia's top financial economists. Though Meriwether left Salomon under a cloud of the SEC's wrath, he leapt into his next venture with ease and enticed most of his former Salomon hires--and eventually even David Mullins, the former vice chairman of the U.S. Federal Reserve--to join him in starting a hedge fund that would beat all hedge funds.
LTCM began trading in 1994, after completing a road show that, despite the Ph.D.-touting partners' lack of social skills and their disdainful condescension of potential investors who couldn't rise to their intellectual level, netted a whopping $1.25 billion. The fund would seek to earn a tiny spread on thousands of trades, "as if it were vacuuming nickels that others couldn't see," in the words of one of its Nobel laureate partners, Myron Scholes. And nickels it found. In its first two years, LTCM earned $1.6 billion, profits that exceeded 40 percent even after the partners' hefty cuts. By the spring of 1996, it was holding $140 billion in assets. But the end was soon in sight, and Lowenstein's detailed account of each successively worse month of 1998, culminating in a disastrous August and the partners' subsequent panicked moves, is riveting.
The arbitrageur's world is a complicated one, and it might have served Lowenstein well to slow down and explain in greater detail the complex terms of the more exotic species of investment flora that cram the book's pages. However, much of the intrigue of the Long-Term story lies in its dizzying pace (not to mention the dizzying amounts of money won and lost in the fund's short lifespan). Lowenstein's smooth, conversational but equally urgent tone carries it along well. The book is a compelling read for those who've always wondered what lay behind the Fed's controversial involvement with the LTCM hedge-fund debacle. --S. Ketchum --This text refers to an out of print or unavailable edition of this title.
The only surprising element here is how many people in every generation can be fooled by credentials. Read morePublished 1 day ago by Appalachian Son
I am a fan of Lowenstein's books and this did not disappoint. He is on a par with Michael Lewis in making the often complex machinations of the financial world accessible to the... Read morePublished 6 days ago by Nancy Batch
There is a scene late in the book, where all the major bankers are hanging out in the halls of the Fed. Read morePublished 1 month ago by J. Edgar Mihelic
Greed sure does funny things to people. They start raking in big bucks and then it becomes a contest to see who is the smartest on the block. Read morePublished 2 months ago by Terry Oglethorpe
This book talks about the formation and demise of Long Term Capital Management which is primarily a fixed income arbitrage shop. Read more
Roger Lowenstein’s book contains an extraordinary amount of detail. There’s nothing wrong with that. Read morePublished 2 months ago by Richard Bobb