Itemize Books In Pursuance Of When Genius Failed: The Rise and Fall of Long-Term Capital Management
| Original Title: | When Genius Failed: The Rise and Fall of Long-Term Capital Management |
| ISBN: | 0375758259 (ISBN13: 9780375758256) |
| Edition Language: | English |
Roger Lowenstein
Paperback | Pages: 264 pages Rating: 4.19 | 22157 Users | 622 Reviews
Point Containing Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
| Title | : | When Genius Failed: The Rise and Fall of Long-Term Capital Management |
| Author | : | Roger Lowenstein |
| Book Format | : | Paperback |
| Book Edition | : | Deluxe Edition |
| Pages | : | Pages: 264 pages |
| Published | : | October 9th 2001 by Random House Trade Paperbacks (first published January 1st 2000) |
| Categories | : | Economics. Finance. Business. Nonfiction. History |
Relation Toward Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
With a new Afterword addressing today’s financial crisis A BUSINESS WEEK BEST BOOK OF THE YEAR In this business classic—now with a new Afterword in which the author draws parallels to the recent financial crisis—Roger Lowenstein captures the gripping roller-coaster ride of Long-Term Capital Management. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein explains not just 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 in 1993, Long-Term was hailed as the most impressive hedge fund in history. But after four years in which the firm dazzled Wall Street as a $100 billion moneymaking juggernaut, it suddenly suffered catastrophic losses that jeopardized not only the biggest banks on Wall Street but the stability of the financial system itself. The dramatic story of Long-Term’s fall is now a chilling harbinger of the crisis that would strike all of Wall Street, from Lehman Brothers to AIG, a decade later. In his new Afterword, Lowenstein shows that LTCM’s implosion should be seen not as a one-off drama but as a template for market meltdowns in an age of instability—and as a wake-up call that Wall Street and government alike tragically ignored.Rating Containing Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
Ratings: 4.19 From 22157 Users | 622 ReviewsWeigh Up Containing Books When Genius Failed: The Rise and Fall of Long-Term Capital Management
Even complex mathematical models fails to take into account the irrational nature of human beings. These models are based on countless amount of assumptions, and they followed it blindly. Arrogance, greed and flawed models obliterated LCTM.NOTE: this "review" is less about what I thought of the book, and more about what the book itself is about. So - spoiler alert?It's All About the FundAs the title suggests, "When Genius Fails" is about the "Rise and Fall of Long-Term Capital Management." Don't expect to learn why the economy itself went to shit, causing LTCM to lose ungodly sums of money. The main character of this tale is the fund itself, and Lowenstein does a fine job of documenting its meteoric rise and catastrophic fall.LTCM
Seductive theory of efficient market and Rational Economic Man (REM) is proven wrong. The assumptions of Modern Quantitative Finance used by LTCM were too optimistic and clad with an aura of invincibility. Greed was one of the driving factor behind large speculative positions. Oh! but they weren't speculative for LTCM's point of view. They were foolishly confident of predicting future. They thought they were right and market was wrong, therefore, paid heavy price. An interesting and eye opener
This is a great account of the meteoric rise and fall of Long-Term Capital Management, a highly leveraged hedge fund run by several huge names in finance including John Meriweather, Robert Merton, Myron Scholes, and David Mullins. LTCM specialized in arbitrage trades; it generally bet that spreads on riskier assets and less-risky assets would narrow. They were able to capitalize while others fled to safety due to liquidity issues and were able to capitalize on developing, less efficient
This books gets three stars because it is a serviceable summary of its topic but is in now way outstanding. If you like finance, specifically statistical modeling and hedging strategies, you will find this tale of Nobel Prize hubris gone wrong because "muh models" didn't predict multiple standard deviation events intriguing. If you like reading about bad actors using arms of the federal government to engineer golden parachutes for them, you'll REALLY like this book.What is tough about this book
As a student of the efficient market idea I has always wondered what these guys were up to in more detail even after seeing the Nova program about the meltdown of Long Term Capital Management in 1998. This is an excellent book that explains as well as can be in a general work of literature less than 300 pages. There are several lessons here, that apparently will not be learned.Mathematical models are based on very good math with very many assumptions required to make the computations workable.
Everyone has their own opinion on what should be under compulsory literature at school. Here's mine: finance students should all read When Genius Failed. I was taught in university about the Bell curve, Black-Scholes option pricing formula, and all other various ways on how to assess risk and return. It is human nature to seek certainty, or the ability to assess probabilities. In financial markets this has been so for decades, but we do not seem to be any closer to the answer today than we were
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