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

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Customer Reviews:

A must read for all market participants [Posted on 2008-09-16]
One of the best stories about modern finance...this book must be read by everyone committing serious money into the markets. Written approximately 10 years ago, 10 years before the bankrupcy declaration by Lehman Brothers, "When Genius Failed" presents some timely lessons that should have been learned a decade ago...but weren't for some odd reason.

#1 The issue of swaps: It is interesting that David Swenson of Yale is described here as inventing the first modern financial derivative--the swap. How ironic is it that Swenson makes no mention of investing in this toxic coolaid himself (in his books)? How ironic is it that losses in swaps were the #1 thing that brought down Long Term Capital...and all of Wall Street's titans were around to see it 10 years ago...and yet what are the financial derivatives bringing down companies like AIG today--the swap...You would have thought people would have learned! Avoid this crap!

#2 Shame on John Reed from Citibank (he was Mr. Conservative, right?)and Alan Greenspan for opposing rules that would have required regulation and disclosure related to derivatives. In retrospect, this is absolutely nuts. Certainly, Citigroup is paying the price for its participation in these same markets now---how ironic that it would likely have really benefited by regulation it opposed.

#3 It is of immense interest that Bear Sterns' Jim Cayne refused to participate with the LTCM bail out...leading other Wall Street firms to promise revenge...Well...look what happened 10 years later when Bear needed help...it was nowhere to be found.

#4 It is shocking that Wall Street never learned the lesson of LTCM's failure: leverage + deritvatives equals big trouble. That is why we are experiencing this same pain today--ten years later. LTCM should have been allowed to go bankrupt 10 years ago...bringing the banks with it...nothing else would have forced upon them a good, conservative nature. Now, unfortunately, surgery is needed to cure the patient...or it may be too late....

When Genius Failed: The Rise and Fall of Long-Term Capital Management [Posted on 2008-09-16]
An excellent read & indeed very relevant in today's' times when we see fiascos in the financial markets repeated almost every day. I expect another book from Roger Lowenstein soon on Bear Stearns, Lehman, Merrill Lynch & the state of financial markets (today). God Bless Wall Street & God Bless America! Hail Lowenstein!

Fun for everyone... [Posted on 2008-10-07]
This is a fascinating book about the collapse of one of the largest and most sophisticated hedge funds of all time. The book gives great insight to the hedge fund world, as run by Nobel prize winners and other mathematical geniuses, without being technical. Anyone with a passing interest in the world of finance is likely to enjoy this book.

Arrogance and greed [Posted on 2008-11-25]
This story about Long-Term Capital Management seems like a precursor to today's subprime mortgage fiasco that has come so close to collapsing the world financial markets. While much smaller in scope to the problems we are facing today, the LTC story demonstrates one sad truth : the big Wall Street players take on inordinate amount of risks and if they risk collapse, it is ultimately the taxpayer who has to bail them out.

Great Read, Well Written [Posted on 2008-12-03]
This book was a great read, well written, and hard to put down. Highly recommend.

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