Meriwether & Co. truly believed that their finely tuned computer models had tamed the genie of risk, and would allow them to bet on the future with near mathematical certainty. Thanks to their cast - which included a pair of future Nobel Prize winners - investors believed them. Four years later, when a default in Russia set off a global storm that Long-Term's models hadn't anticipated, its supposedly safe portfolios imploded. In five weeks, the professors went from mega-rich geniuses to discredited failures. The firm's staggering $100 billion balance sheet threatened to drag down markets around the world. At the eleventh hour, fearing that the financial system of the world was in peril, the Federal Reserve hastily summoned Wall Street's leading banks to underwrite a bailout.
Best selling author Roger Lowenstein captures Long-Term's roller-coaster ride in gripping detail. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein crafts a story that reads like a first-rate thriller from beginning to end. He explains not just how the fund made and lost its money, but what it was about the personalities of Long-Term's partners, the arrogance of their mathematical certainties, and the late-90s culture of Wall Street that made it all possible.
Executive Producer: Dan Zitt
Producer: Paul Ruben
Original cover design Kapo Ng
©2000 by Roger Lowenstein
(P)2001 Random House, Inc.
"This book is story-telling journalism at its best." (The Economist)
"Lowenstein [is] one of the best financial journalists there is¿" (New York Times Book Review)
In an era where the foolishness of the efficient market hypothesis pervades and is being taught to future generations in almost all otherwise respectable business schools, the saga of LTCM remains and powerful warning to those few people clear headed enough to realize that human irrationality will never be successfully modeled nor eliminated.
Of course most of Wall Street and most of the average person willfully forgets past unpleasantness for the illusion of future wealth, but hopefully this well written account of the history of LTCM will allow perhaps just a handful of people to remember to remain rational even when geniuses tout nonsense.
If you can keep your head while others about you are losing theirs, you have an edge over even the brightest minds.
Performance sounded a little boring but fine once you get used to it.
The author does an excellent job of bringing the characters and the hedge fund business to life. When I finished it I started from the beginning again.
The narrator. I usually get through all of the books I start to listen to, even if they are bad. But this one, I just couldn't take it after a while. 4-5 words, pause, 4-5 words, pause, 4-5 words, pause... you get the picture.
Perhaps, because the story has enough lessons to learn from.
Anyone who has banked on modeled performance and is unwilling to accept when it is time to back off the plan.
This was very factual, and not nearly as enjoyable to listen to as say a Ben Mezrich or Michael Lewis story. That said, it was well researched and a good account of the LTCM story.
Gone to the dogs...
Good book. Crazy to think this was going on while I was asleep. I won't be caught off guard this time as Central Banks have made the entire world LTCM...
This is an in-depth review of the events that took place and nearly brought down the global financial world. Can it happen again, with more severe ramifications? The answer from the book is yes
The need for those working in the financial markets to ALWAYS weigh. the risks being taken, is critical, whether seemingly large or small. LTCS was a "model" for arbitrage. The men who rode it to glory could not foresee the potential for problems arising until it was much too late. And they were not alone among financial entities in this position. The euphoria of money piling in "proving" their model to be right far overshadowed any doubts that this was a strong and capable way to grow money, with little risk. The clause immediately preceding this sentence was, indeed, proven to be incorrect. The risks were very great and ultimately brought those who had previously benefited close to the brink of ruin, in reputation, careers, and their personal solvency.
As good as the big short, fascinating look at bond and merger arbitrage. Book also fills in details around the liars poker story and salomon brothers, how they made so much money. This would make a great movie if done right.
What an excellent story of how complicated financial models can steer even the brightest people toward financial doom. Such an interesting story of genius, success, and ultimately failure. A must listen for those in finance.
Aside from being genuinely entertaining, it was quite educational. As someone with a career in investment management, specifically in bonds, I found it to be very useful. I highly recommend it.
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