When Genius Failed: The Rise and Fall of Long-Term Capital Management

by Roger Lowenstein

The Arbitrage Group, about twelve in all, became incredibly close. They sat in a double row of desks in the middle of Salomon’s raucous trading floor, which was the model for the investment bank in Tom Wolfe’s The Bonfire of the Vanities. Randy Hiller, a mortgage trader in Arbitrage, found its cliquish aspect overbearing and left. Another defector was treated like a traitor; Meriwether vengefully ordered the crew not to even golf with him. But very few traders left, and those who remained all but worshiped Meriwether. They spoke of him in hushed tones, as of a Moses who had brought their tribe to Palestine. Meriwether didn’t exactly return the praise, but he gave them something more worthwhile. His interest and curiosity stimulated the professors; it challenged them and made them better. And he rewarded them with heartfelt loyalty. He never screamed, but it wouldn’t have mattered if he had. To the traders, the two initials “J.M.”—for that was his unfailing sobriquet—were as powerful as any two letters could be.