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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.
Plenty of lessons for today too.
Probably a five star book except the author gets a very few trading terms wrong, or incorrectly understood.
Buy it. Read more
I really got into this book. If you like Liars Poker this is a good read. This book goes a step further by highlighting the hubris that lead to the demise of these guysPublished 1 month ago by jason m
a little preachy at end but very good overall
. tells a good story and writes about complex ideas in a simple way
While the term genius may adequately describe some of the partners of LTCM one has to wonder how strong their grasp of economics actually was. Read morePublished 1 month ago by Christopher Ammons
as part of my history search, I do remember reading about this in the Wall Street Journal. but of course I only read the hi lites and now I see the story.Published 1 month ago by Lil Bear
Back when I got into finance (2003) this was required reading. I think it still should be required reading. Read morePublished 2 months ago by KM
To close a passage describing financial intermediaries’ risk management techniques, When Genius Failed author Roger Lowenstein makes an innocent reference to Mark Twain: “History,... Read morePublished 2 months ago by Stephan Campbell
The LTCM blow-up is a really interesting story. Lowenstein tells it well. Hopefully, the world will not get suckered into a replay of this story. Read morePublished 2 months ago by B. Volkert