Title: When Genius Failed: The Rise and Fall of Long-Term Capital Management
Author: Roger Lowenstein
First published January 1, 2000
264 pages, Paperback
ISBN: 9780375758256 (ISBN10: 0375758259)
Rating: 4.2
Overview
In When Genius Failed, Roger Lowenstein takes readers on a thrilling journey through the tumultuous rise and fall of Long-Term Capital Management. Drawing from confidential internal memos and interviews with key players, Lowenstein examines not only how the fund made and lost its money, but also how the personalities of Long-Term’s partners, the arrogance of their mathematical certainties, and the culture of Wall Street itself contributed to both their rise and their fall.
When it was founded, Long-Term was hailed as the most impressive hedge fund in history, but after four years of success, the firm suffered catastrophic losses that jeopardized the stability of the financial system itself. Lowenstein’s exploration of LTCM’s collapse is a chilling harbinger of the crisis that would strike Wall Street a decade later.
This business classic is a must-read for anyone interested in risk, hubris, and triumph.
About the Author
For over ten years, Roger Lowenstein has been writing for the Wall Street Journal and has also contributed to The New York Times and The New Republic. He is the writer behind Buffet: the Making of an American Capitalist, published by HarperCollins.
Editoral Review
When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein is a non-fiction book that chronicles the spectacular rise and fall of a hedge fund that was founded in 1994 by a group of elite investors including Nobel Prize-winning economists, a mathematician, and a retired Wall Street bond trader. Lowenstein, a journalist and financial writer for The New York Times Magazine and Wall Street Journal, provides a gripping account of the events that led to one of the biggest financial crises of the 20th century.
The book is written in a journalistic style, with a strong emphasis on detail and analysis. Lowenstein recounts the events leading up to the formation of Long-Term Capital Management (LTCM), which quickly became the darling of the financial world due to its impressive returns and impeccable pedigree.
However, as the fund grew to epic proportions and became increasingly complex, cracks began to appear in its risk management strategy, and the fund soon found itself on the brink of collapse. Lowenstein’s narrative is expertly woven, with a cast of characters that includes John Meriwether, the charismatic founder of LTCM, as well as numerous other financial luminaries.
The book is set against the backdrop of the booming 1990s and the explosive growth of the financial industry, making it a timely and relevant read for anyone interested in the history of finance and its impact on the global economy. One of the strengths of When Genius Failed is the attention to detail that Lowenstein brings to the subject matter.
He explains complex financial concepts in a clear and concise manner, making them accessible to the lay reader. Moreover, Lowenstein portrays the events of the crisis in a fair and balanced way, including both the successes and failures of those involved.
The book is also well-researched, drawing on interviews with the key players involved, as well as a wealth of primary source material. However, one of the weaknesses of the book is that it can be a bit dry at times.
The financial jargon and the intricacies of the various financial instruments used by LTCM can be overwhelming for readers who are not well-versed in finance. Additionally, while Lowenstein provides a detailed account of the events leading up to the crisis, he spends less time exploring the broader implications of the crisis on the financial industry and the global economy.
Overall, When Genius Failed is an excellent book that provides a fascinating glimpse into the world of high finance. Its strengths far outweigh its weaknesses, making it a must-read for anyone interested in the history of finance or the impact of financial crises on the global economy.
I would highly recommend this book to anyone looking for a well-researched, engaging, and informative read. On a scale of 1-10, I would give When Genius Failed an 8.5, based on its thorough research, engaging narrative, and timely relevance.
