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

Description

“When Genius Failed: The Rise and Fall of Long-Term Capital Management” is a non-fiction book written by Roger Lowenstein, an American financial journalist and author. The book was first published in 2000 and explores the dramatic rise and subsequent catastrophic fall of Long-Term Capital Management (LTCM), a highly influential and ultimately disastrous hedge fund.

The book provides a detailed account of the events leading up to LTCM’s rise and its eventual collapse in the late 1990s. LTCM was founded by a group of renowned financial experts, including Nobel laureates in economics and Wall Street veterans. The fund was initially celebrated for its mathematical and financial prowess, as well as its ability to consistently generate high returns on investment.

However, the book delves into how LTCM’s strategies became increasingly risky and leveraged, leading to a severe financial crisis in 1998. The crisis had far-reaching implications for global financial markets, and it required intervention by major financial institutions and central banks to prevent a broader collapse.

Roger Lowenstein’s “When Genius Failed” explores the hubris, overconfidence, and systemic risks that contributed to LTCM’s downfall. It also provides insights into the personalities and dynamics of the individuals behind the fund. The book serves as a cautionary tale about the complexities of financial markets, the limitations of mathematical models, and the potential for even the most brilliant financial minds to make catastrophic mistakes.

The book has been praised for its in-depth research and narrative style, making it accessible to both financial experts and general readers interested in understanding the intricacies of high finance and the risks associated with it.