Describe Books In Favor Of When Genius Failed: The Rise and Fall of Long-Term Capital Management
| Original Title: | When Genius Failed: The Rise and Fall of Long-Term Capital Management |
| ISBN: | 0375758259 (ISBN13: 9780375758256) |
| Edition Language: | English |
Roger Lowenstein
Paperback | Pages: 264 pages Rating: 4.19 | 22157 Users | 622 Reviews
Point Out Of Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
| Title | : | When Genius Failed: The Rise and Fall of Long-Term Capital Management |
| Author | : | Roger Lowenstein |
| Book Format | : | Paperback |
| Book Edition | : | First Edition |
| Pages | : | Pages: 264 pages |
| Published | : | October 9th 2001 by Random House Trade Paperbacks (first published January 1st 2000) |
| Categories | : | Economics. Finance. Business. Nonfiction. History |
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With a new Afterword addressing today’s financial crisisA 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.
Rating Out Of Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
Ratings: 4.19 From 22157 Users | 622 ReviewsRate Out Of Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
There's a graph at the very beginning of this book that's got to be one of the funniest displays of financial information I've seen in a while. It's very simple - a line showing the notional value of a dollar invested in Long-Term Capital Management over the firm's all-too-brief lifespan. The line climbs slowly from its beginning in March 1994, picks up speed through the intervening years, peaks at a bit over $4 in April 1998, and then drops off a cliff Wile E. Coyote-style to about 25 centsAs a student of the efficient market idea I has always wondered what these guys were up to in more detail even after seeing the Nova program about the meltdown of Long Term Capital Management in 1998. This is an excellent book that explains as well as can be in a general work of literature less than 300 pages. There are several lessons here, that apparently will not be learned.Mathematical models are based on very good math with very many assumptions required to make the computations workable.
(3.5) Eerily similar to a crisis almost exactly 10 years laterAn interesting, well-told if brief account of the rise and fall of Long-Term Capital Management (you remember that one, don't you?). When things get heated it was along the lines of Sorkin's Too Big to Fail, but otherwise a decent treatment of the significant events in the life and death of LTCM.Don't have too much more to share other than how prescient the following quotation (the book was written in 2000) was (or, perhaps how Wall
"They had forgotten the human factor." Sometimes 'vulgar Marxist' accounts of economics can be eerily similar to efficient markets theory because they assume a sort of natural outcome of exploitation and trading. This allows them to make simple predictions about the future. Yet people in markets continuously do things that aren't even in their narrow self-interest. And they do these things because of their personalities and prejudices. They are arrogant or bold or timid. You can't understand
This books gets three stars because it is a serviceable summary of its topic but is in now way outstanding. If you like finance, specifically statistical modeling and hedging strategies, you will find this tale of Nobel Prize hubris gone wrong because "muh models" didn't predict multiple standard deviation events intriguing. If you like reading about bad actors using arms of the federal government to engineer golden parachutes for them, you'll REALLY like this book.What is tough about this book
Roger Lowenstein gives a detailed account of the unprecedented success and abrupt collapse of Long Term Capital Management. LTMC was founded by John Meriwether, ex bond trader at Salomon Brothers in 1994, and the fund mostly relied on convergence trading. The returns were astonishing in its early days, but the exorbitantly high leverage coupled with the financial meltdown in Asia and Russia forced the Fed to mediate a bailout of the fund in 1998.
It works until it doesn't. Hard to believe that after LTCM's fall John Meriwether went on to found a new firm, JWM Partners, which, not surprisingly, blew up in the 2008-2009 downturn. What is surprising? In 2010, he founded a third firm, JM Advisors Management; so much for high-water marks.
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