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Feb 13, 2011

Duffy rated it:

Long Term Capital Management was a hedge fund made up of a group of former hotshot bond traders from Solomon Bros., together with some high powered financial academics (including two Nobel prize winners), and one former central banker. They were the biggest stars in the business, and they had all the arrogance and greed that you could possibly imagine. They also seemed to be as good as they thought themselves. In five years, they turned a billion dollars into 4.5 billion dollars. Then they l More...

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Dec 13, 2008

Kate rated it:

I started reading this book in summer of 2007 and then picked it up again this fall. In 1997 I was blithely running around France checking out art while this country's financial system nearly came to a halt, the Fed had to step in and major banks suffered huge losses as a result of hubris and lack of understanding the true risks they were taking. Lowenstein brilliantly takes us behind this scenes to unravel how real geniuses-- Long-Term's marketing strategy was touting the number of Nobel prize- More...

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Dec 04, 2011

Abhishek rated it:

This book turns out to be like a sequel or call it a spin-off to the Liar's Poker. When Genius Failed documents the story of the infamous hedge fund Long Term Capital Management started by famed trader J. Meriwether, formerly of Salomon Brothers. After having to resign from Salomon Brothers, post the trading scandals that he had to take certain moral responsibility for, J. Meriwether started his famous hedge fund in 1994 with an initial equity of 1.25 billion! The staggering rise of the hedge fu More...

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Mar 16, 2011

Brian rated it:

Eerily similar to a crisis almost exactly 10 years later

An 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 h More...

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Feb 11, 2011

Anthony rated it:

While visiting the library in Sq. Hill in Pittsburgh and I saw this book on the bookshelf and picked it up out of pure curiosity. I walked out with my nose between the pages.
I enjoyed Lowenstein's approach to explaining some of the finer details of what 'quants' on Wall Street do and explaining how risky and flawed some of the deals they get into can be in a non-intimidating and confusing manner.
The book is a nice chronological flow of events that details well the rise and fall of o More...

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Mar 01, 2010

Dan rated it:

This review has been hidden because it contains spoilers. To view it, click here

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Oct 23, 2009

Cramer rated it:

This is one of the most interesting non-fictional stories that I have ever read. It appears as though the entire thing was created for a movie. It explains the story of Jon Meriwether's hedge fund, Long Term Capital Management(LTCM), and how it almost single-handedly (although it includes the carelessness and hubris of the major banks) brought the financial markets to a halt. It appears that LTCM was about 9 years ahead of their time as their bets with international arbitrage started to go bad More...

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May 23, 2009

Tagg rated it:

The book recounts the story of Long-Term Capital Management, a hedge fund that collapsed 1998. The only reason it didn't bring others down with it: Wall Street's major banks intervened at the Fed's behest. But even then, they intervened only because they perceived LTCM--with a trillion dollars in derivatives exposure and leverage that reached 100:1--was too big to fail.

The lessons from that episode are eerily familiar: the dangers of unchecked leverage, undisclosed derivatives, a More...

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May 17, 2011

Chris rated it:

This book is amazing. Even though it covers the blow-up of 90s hedge fund Long Term Capital Management (LTCM), it could easily have been written about the current financial crisis. People believing their investments to be risk-free due to blatantly unrealistic assumptions in the model? Check. Derivatives leading to the fear of markets shutting down because of counterparties being intertwined with each other? Check. The Federal Reserve orchestrating a bailout to prevent markets from shuttin More...

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Jan 29, 2009

Robert rated it:

As 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 More...

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Apr 22, 2011

DoctorM rated it:

A good inside account of the rise and shattering fall of Long-Term Capital Management, one of the most glittering of the hedge funds of the 1990s. Loewenstein looks at the insular, secretive, competitive inner circle of traders and arbitrageurs--- one that, as LTCM always boasted, included two Nobel laureates, both of whom had been instrumental in developing the Efficient Markets Hypothesis and the idea of computer models for arbitrage ---and at the way they were undone by their own hubris and b More...

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Jul 19, 2009

Maciej rated it:

Po przeczytaniu książki można się zastanawiać, czy upadek LTCM w 1998 r. nie nauczył niczego Fed oraz instytucji finansowych w zakresie charakteru rozkładów na rynkach finansowych (rozkłady nie-gaussowskie) i związanego z tym występowania zjawisk rzadkich ("black swans"), zarządzania ryzykiem, stosowania lewaru czy wykorzystywania pozabilansowych instrumentów finansowych (derywatytyw)?

Dla przykładu, można znaleźć podobieństwo między stosowaną przez LTCM strategią gry na zmn More...

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Feb 28, 2010

Stephen rated it:

This was a book about how some very smart guys started off speculating, but ended up gambling and going under. I think it highlights how sometimes getting the best and brightest people in a room can backfire when their fame egos prevent investors from demanding the most basics of checks and balances. They were supposedly too big to fail, and we may have been better off if they had not been bailed out by the industry. History imitates. Good book overall. It seems almost a sequel to Liar's Po More...

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Oct 31, 2009

Jennifer rated it:

Wow I just finished reading this book (it's about 3 am here) and I can just feel the heaviness of the entire debacle and its lessons weigh upon my shoulders, but it's a good feeling. It's always wonderful to learn and to enjoy the entire process.

What a fantastic read! Lowenstein is quite masterful in explaining both the detailed financial concepts necessary to understand what happened and all the little human errors of sorts that lead to the mess now known as LTCM.

Seve More...

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Mar 03, 2010

Sheil rated it:

This book was rated a four... and then came the epilogue. Roger Lowenstein did a great job summarizing what was a monumental collapse by Long Term Capital Management, and the epilogue really drove the point home. It makes me wonder why, having graduated college just last May, we finance majors are taught the efficient market theory over and over again, but we never hear about behavioral finance until we read books like this. How many times do we need to be shown that markets simply are not ra More...

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Aug 06, 2011

Andrew rated it:

A good biography of a company whose investments went terribly wrong. Lowenstein's conclusion seems to suggest that Merton's financial mathematics based on the normal distribution and Brownian motion process failed. We tend to hear similar comments each time a one in a million event (Taleb's black swan) takes place in financial markets. The credit crunch of 2008-2009 and the ensuing crisis is the most recent example. One should perhaps however note that in spite of the modern financial theory's s More...

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Jun 09, 2011

Chris rated it:

The all too familiar story about easy credit, correlations going to one in a bad market, the past doesn't accurately predict the future, markets are only so efficient, and too big to fail. LTCM, a highly leveraged hedge fund, composed from some of the brightest on Wall St., dabbled into territory without the needed expertise. Russia defaulted on its debt initiating a downward spiral that consumed $4.6 billion in losses from LTCM, wiping out its equity in a matter of months. A consortium formed, More...

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May 15, 2011

Jacob rated it:

Although the author's writing isn't as engaging as Michael Lewis (The Big Short, Liar's Poker), it's still clear and easy to read. The causes of this debacle are clearly laid out and explained, as well as summarized at the end. In addition, the author adds some commentary on why this kind of thing is likely to happen again and it's chilling to read this book published in 2000 clearly describe some of the significant factors of the meltdown in 2007-2008.

And yet I think the author gets More...

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Aug 12, 2010

Chris rated it:

In 1998 -- 10 years before the most recent financial crisis -- the collapse of a single hedge fund, Long-Term Capital Management (LTCM), threatened to spark a similar crisis.

This well-written book details the origins and resolution of the crisis, starting with the background of the fund's founder, John Merriwether, its investment philosophy and corporate culture, the economic events that lead to its downfall, and its unlikely rescue by a large group of Wall Street banks.

More...

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Aug 06, 2011

Verena rated it:

Very interesting and engaging account of the LTCM story, definitely worth a read for anyone with an interest (and some knowledge of) capital markets. There are many lessons to be learned from these events: Human behavior can't be modeled with precision; even the smartest guys can make huge investment mistakes, and they are more likely to do so if they are not aware of that fact. The author's warning regarding the dangers that government rescues of financial institutions entail by promoting exces More...

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Jan 26, 2010

Dan rated it:

Reading this account of the LTCM debacle now is infuriating. Infuriating because of the remarkable similarities between that crisis and what happened at Bear Sterns, AIG, Lehman, etc. just ten years later. Worse, the actions that Congress, the Clinton Administration, the Federal Reserve and the big banks took in the immediate aftermath of LTCM went exactly in the wrong direction, all but insuring an even more disastrous re-enactment.

Lowenstein's book is a solid, detailed account, wri More...

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Dec 07, 2009

Allie rated it:

Considering the subject matter, this is a good book. It does read like an overly long newspaper article at times and I did lose track of who was who here and there, but still managed to make the main characters seem like real people. If you are interested in the interworkings of a failed hedge fund then this is the book for you! And I thought the government bailouts were something new to our economy?! haha Good information if you are into the stock/bond market, but I wouldn't want to read this w More...

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Dec 04, 2008

ainsley rated it:

I adored this book not only because it is very well-written, but also because it helped me understand the capital markets much more than I previously did. I read it in tandem with a capital markets course in business school and found I was referencing the book more than my capital markets text book for explanations of how certain financial measurements worked.

If you don't like finance, though, might not be a great book to cuddle up with. But if you're curious about the world of alte More...

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May 09, 2011

Heather rated it:

A frustrating read. While the financial reportage is first-rate, the narrative is as dry as the hedge fund's mathematical formulae. The personal, human sides of the story - the aspects that had me up until 3 AM devouring "Too Big To Fail" - only appeared in the last forty or so pages, and only then in spits and spurts. And that is a very relevant comparison, because the LTCM story rings as a surreal foreshadowing of what came in 2008.

In "The Smartest Guys In The Roo More...

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Jul 17, 2011

Tim rated it:

A guy at work recommend this book as a good starting point for learning about the culture of finance as well as some the history and jargon. It's very well written and interesting. If I've taken anything away from this book it's that I don't want to get deep in the world of finance. When Genius Failed is a tamed enlightening into the world kept from the newspapers and CNBC. Wall St has a lot of nefarious things that happen in surprisingly unsinister way. This book is a good way to understand how More...

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Feb 14, 2012

Nicola rated it:

This is a great tale about how greed and ego caused the collapse of a hedge fund that boasted profits that turned out to be too good to be true. Lowenstein, who covered the story about Long Term Capital Management as a reporter at the Wall Street Journal and the New York Times, gives an insider's look into the personalities of the managers who worked to turn millions into billions, the Nobel prize winning economists who thought their fancy models were foolproof and the Wall Street bankers who d More...

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Mar 18, 2011

Phillip rated it:

What happens when you cull twenty-five Phds, two Nobel Laureates, hundreds of years of cumulative experience? the result is a loss of virtually all of your capital!

I think far too many people commit the argumentum ad verecundiam fallacy (appeal to authority). Just the other night, a friend of mine referred to a strategy and added it was created by a Nobel prize winning economist. I think one should have to argue why a particular idea has merit than merely cite the fact it was accorded More...

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Feb 22, 2011

Sagar rated it:

Lowenstein crafts a superb narrative around the failure of the immense hedge fund, Long Term Capital Management. The details of the failure are complex, but I found myself returning to the fact that so many factors cited as contributing to the near-collapse of the financial system in 2008 were evident ten years earlier with the demise of LTMC:

* Unregulated shadow banks
* Spiraling complexity of derivatives which few understood
* Over-reliance upon computer models which failed t More...

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May 27, 2010

John and Kris rated it:

The collapse of Long-Term Capital Management (LTCM) in 1998, a hedge fund that lost nearly $4.5 billion in a matter of weeks, a firm that needed the blessing of an orchestrated bank bailout by the Federal Reserve, makes one wonder if Wall Street has any foresight beyond huge broker fees and if our current recession, kicked off by the events of 2008, could’ve been avoided with a bit of regulation and oversight in the late nineties. As most Americans grappled with what President Clinton did or di More...

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Jan 09, 2011

Aaron rated it:

I've had this book for a few years and after reading The Big Short I wanted to circle back to this book, because I suspected that part of the situation with irresponsible leveraging found in the recent financial crisis could be tied to the Fed-organized bailout of Long-Term Capital Management. After reading this book, I think I'm right.

From page 231: "If the Long-Term episode proved anything, it is that the system of disclosure that has worked so well with regard to traditional More...

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