When Genius Failed

This fascinating read tells the story of the rise and then spectacular fall of the once celebrated hedge fund Long-Term Capital Management.

What made LTCM so attractive to Wall Street investors was its stable of "dream team" quants and financial minds, led by the laconic John Merriweather. Merriweather (featured in the opening Chapter of Liar's Poker) was a former Solomon Brothers bond-trading guru, who after leaving the firm amid a scandal managed to assemble a team of financial powerhouses that included two Nobel Laureates as well as a cadre of respected traders.

From 1993 to 1997 LTCM's returns were… show more.

A successful investor over the long run should always be worried about what can go wrong.

One of the greatest contributors to catastrophic loss is overconfidence and the belief that you can’t lose. This book offers a real-life story about some of the smartest, most resourced investors losing everything.

Hopefully it will instill the appreciation that it isn’t just about being a market genius but about recognizing that far too often unforeseen market events actually happen without warning. 

How financial rocket scientists were bested by financial markets. When Genius Failed is the rise and fall of the giant hedge fund Long-Term Capital Management. Its principals involved the best of Wall Street and two of the inventors of the Nobel-winning option price formula. Famed for its expertise in financial modelling, the firm leveraged its bets to make large returns but only for a while. It became unstuck when Russia defaulted on its debts in the summer of 1998 and was only saved from failure by a Fed bailout, which thereby set a bad precedent for the future: favoured Wall… show more.

The true story behind the rise and fall of Long Term Capital Management. Most people think it was simply about excess leverage. When you read Lowenstein’s account, you will see that there was a lot more to it than that. As a financial author, I admire authors who can take esoteric financial subject material and transform it into a comprehensible and entertaining narrative. In this respect, this book is similar to Michel Lewis’s The Big Short.