Three quarters of all hedge funds lost money in August, and Long-Term did the worst of any of them. In one dreadful month, Meriwether’s gang lost $1.9 billion, or 45 percent of its capital, leaving it with only $2.28 billion. The Soros opportunity was gone—hopelessly gone. And Long-Term’s portfolio still was dangerously bloated. The fund had $125 billion in assets—98 percent of its prior total and an extraordinary fifty-five times its now-shrunken equity—in addition to the massive leverage in its derivative bets, such as equity volatility and swap spreads.
