When Genius Failed

The Rise and Fall of Long-Term Capital Management

Paperback, 288 pages

English language

Published Oct. 9, 2001 by Random House Trade Paperbacks.

ISBN:
9780375758256

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3 stars (1 review)

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 …

1 edition

captures peak hedge fund mania?

3 stars

Lessons to be learned about hubris and mathematically-backed ideological confidence, Wall Street's internal FOMO and ruthlessness, and just general foolishness. Diversification is misleading when all the same investors are in all the same markets. Title is unsupported in this narrative, there's little genius on display here, and suffers somewhat for being written so soon after the event. The details are clear after 50 pages, followed by a lot of blow-by-blow.