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Book - Product Information
When Genius Failed: The Rise and Fall of Long-Term Capital Management
Roger Lowenstein
Rating: 4.5/5 Stars
Rank: 681
On September 23, 1998, the boardroom of the New York Fed was a tense place.
Around the table sat the heads of every major Wall Street bank, the
chairman of the New York Stock Exchange, and representatives from numerous
European banks, each of whom had been summoned to discuss a highly unusual
prospect: rescuing what had, until then, been the envy of them all, the
extraordinarily successful bond-trading firm of Long-Term Capital
Management.
Roger Lowenstein's When Genius Failed is the gripping
story of the Fed's unprecedented move, the incredible heights reached by
LTCM, and the firm's eventual dramatic demise. 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 the
Hardcover
edition.
About the AuthorRoger 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.
Editorials
Sample 3 of 11
When Genius Failed: The Rise and Fall of Long-Term Capital Management
Roger Lowenstein
![]() | | | Amazon.com | | On September 23, 1998, the boardroom of the New York Fed was a tense place.
Around the table sat the heads of every major Wall Street bank, the
chairman of the New York Stock Exchange, and representatives from... read full editorial |
![]() | | | Barron's | | "Strongly reported and cleanly written... Lowenstein adds fresh detail,
personality, and even drama to the tale."--This text refers to the
Hardcover
edition. |
![]() | | | Review | | Praise for Roger Lowenstein's national bestseller Buffett: The Making of
an American Capitalist"A delightful portrait . . . Mr.
Lowenstein has done a masterly job."-- The New York Times Book
Review"A significant contribution... read full editorial |
Customer Reviews
Sample 3 of 55
When Genius Failed: The Rise and Fall of Long-Term Capital Management
Roger Lowenstein
![]() | | | Still a Must Read for Risk Professionals | | (Singapore) March 22, 2005 - 5.0/5 stars | | As someone who is involved in managing my firm's risk to hedge funds, I
found this book illuminating. It will equip you with a lot of info for the
next time someone comes to you with a deal which is "a sure thing."... read full review |
![]() | | | Leverage, Intrigue and a lesson in Markets | | (ny) July 5, 2005 - 5.0/5 stars | | When Genius Failed
Continuing with my book tree that started
with Warren Buffett's letters to shareholders we take a look at, "When
Genius Failed" by Roger Lowenstein.
I don't know about you,
but if I read a smartly... read full review |
![]() | | | Don't just assume a N(0,1);first,get empirical evidence | | (bellflower, california United States) November 27, 2004 - 4.0/5 stars | | Lowenstein's(L) book is much more than a history of the failure of a
group of high powered mathematical economists making use of a combination
of the Black-Scholes options pricing model,the Capital Asset... read full review |
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