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Summary: really bad
Review: This book was poorly written, poorly edited, and abounds in bad and misleading metaphors and badly presented explanations of the industry and its technical concepts. Even a few grammar and vocabulary slip-ups. Stuff I can't believe got past his editors. This book deals with a fascinating topic in such a slipshod way that it is maddening to read, and impossible to respect as a piece of journalism. I want my money back.So lousy I was moved to write my first amazon review!
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Summary: naked display of trader arrogance --
Review: lowenstein tells the story of a bunch of very very very smart guys who could do three things: trade, raise money, borrow money. unfortunately, it turns out that they really could only do two things, raise money and borrow money. as for trading, they committed the ultimate sin of arrogance -- they BELIEVED they had hedged away all the RISK. anyway, this is not a literary work, but is a very good read.
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Summary: Liars Poker Part Deux
Review: Some of you may remember Liar's Poker by Michael Lewis, written over ten years ago about the author's experiences at Salomon Bros. One of the central characters (John Meriwether) is back in 'Genius - this time at the helm of a hedge fund employing sophisticated quantitative methods in the bond and equity markets. Along with Meriwether, the hedge funds partners include names like Robert Merton that (literally) wrote the book on Corporate finance and asset pricing. The aim of LTCM is to 'beat the market' and it does so consistently in the early stages, before going bust in spectacular style. What are we to conclude from this meltdown? The author clearly believes that the theories the firm used to predict financial market behaviour are incomplete and ill equipped to model extreme turbulence and crowd behaviour. It's difficult to disagree, as LTCM's collapse happened largely a result of adhering to them without question. Author Lowenstein wouldn't have got much help from Meriwether in writing this, but he appears to have produced an accurate and highly readable account, extensively indexed and well noted. I couldn't put it down.
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Summary: Volatile Combination of Leverage and Hubris
Review: These fund managers may have been the brightest in the business, yet they began to think they could call the direction of the market based on historical data. Hubris and leverage is a volatile combination. I read this book shortly after reading "Credit Derivatives and Synthetic Structures 2nd Edition," by Janet Tavakoli. She talks about hedge funds leveraging returns using total return swaps and how they refused to disclose the volume of these off-balance sheet transactions even to the banks doing business with them. For finance professionals it is good background to how banks got in over their head by supplying implied loans to LTCM without asking for sufficient collateral. This is a good read even without that background, and I highly recommend "When Genius Failed" even to people without a background in finance as an insight into how human intelligence can be compromised by pride.
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Summary: Riveting account of the life and death of a business
Review: I have learned much about the finance world by reading this book. I admired Merriwether and his clever partners on their way to success, and I was terrified (not an exaggeration) at the force with which LTCM came crashing down without anyone being able to do everything to stop the fall.
The book is a lesson in economy, and a glimpse into a world of gains so fantastic that would leave 99.9% of common people with their mouth gaping. The highly skilled partners had the magic touch, but they failed to follow basic business rules, and no matter how good they were the strength of the market destroyed their businees like an infuriated God wiping a small planet out of its orbit with the back of his hand. Excellent book, excellent writer, great reading experience.
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Summary: Fascinating Read
Review: This was a fascinating read for me. The author does a good job of telling the story of Long Term Capitol Management and along the way he gives at least a small glimpse of how firms on Wall Street operate.
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Summary: Hubris causes downfall
Review: This is a classic story just begging to be dramatized for some other entertainment medium. A motley, yet extremely intelligent, cast of characters playing with enormous sums of other people's dollars come crashing down to earth. The negative ramifications were deemed to be so extreme that the Federal Reserve was asked to step in and lead a bailout by the leading Wall St. banks. Mr. Lowenstein journalistically tracks the rise and fall of the group of men that caused a financial crisis of the utmost significance. While the arcane details of the finance can be difficult, Lowenstein does an excellent job of clarifying and simplifying the concepts into laymen terms. In the same vein as other books of brawny banking (i.e. Barbarians at the Gate, Liar's Poker), When Genius Failed expertly shows the reader the gamesmanship an inside world and its arrogant players. This is a definite-read for finance and non-finance people alike.
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Summary: Fascinating view into LTCM....
Review: I used this book to gain an insight into the world of options trading...It also taught me a thing or two about balancing intellectual horsepower and hubris/greed. The book is well written and gives an interesting account into the rise and fall of LTCM. Towards, the end, I sympathised with the founders as they had indeed created a vision for something grand, but events outside their control prevented them from reaching their goal.
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Summary: Hubris
Review: Roger Lowenstein tells us in full detail the downfall of John Meriwether's LCMT fund.
It is a tale of colossal hubris, with staggering amounts of money involved, and with people who believed that tomorrow's risk could be inferred from yesterday's volatility. In fact, the fund speculated against the whole world, putting the whole market system at risk: seven thousands derivative contracts covering $ 1.4 trillion notional value, with a leverage which amounted at a certain moment to 100 to 1. The fund could conceal its positions until it ran in trouble and was forced to open its books. The counterparts saw that they were in a win/win position and forced the fund into receivership: $ 3.6 billion disappeared in just five weeks. Roger Lowenstein's book gives us a clear picture of the characters involved and of the evolution of the speculation.
He criticizes rightly the Fed who rescued everybody (men and companies) in this monstrous speculation: '(the Fed) regrettably squandered a choice opportunity to send the markets a needed dose of discipline.' (p. 230)
But the players were too big to fail. More, the culprits could start again with a new fund. Unbelievable. Some other aspects of this story are truly amazing, like the colossal losses on Russian and South-American bonds! Lowenstein did a magnificent job to unravel this big jumble. This book should be read as an example of a 'safe' speculation that went out of hand. For a correction of the following sentence: 'In 1992, Soros' Quantum fund became celebrated for "breaking" the Bank of England and forcing it to devalue the pound (which) he had relentlessly sold short' (p. 24), see Gene G. Marcial 'The secrets of the Street' - p. 209-210.
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Summary: Excellent To Know LTCM
Review: Roger Lowenstein (RL) gives a lucid account of a complex thing called LTCM fiasco. For someone who isnt into derivatives, black scholes, volatility, RL makes it very easy to understand. And here in lies the beauty of the book. While lot of people have heard about the risks in investing in hedge funds and the LTCM collapse only a few people understand how and why the fund lost $ 4 billion in a few weeks. RL starts with the background of the founders and gives a nice warm up. He starts off with John Meriwether and his rise to fame at Solomon Brothers. The book then continues to account for the rise of LTCM covering such things as how it got Robert Merton and Myron Scholes on board, the traders Hillibrand and Haghani etc. Its a fascinating account. The second part deals with the fall of LTCM. How the Fed got involved to get LTCM out of the mess it got itself into, the perils of over-leverage and equity vol trading etc. Its very clear and the flow is excellent. You dont want to put the book down. For any reader interested in hedge funds, derivatives etc, he/she must get this book. LTCM is a remarkable event in the history of modern finance. Its perhaps the only fund that got finance academics (all the professors in the fund) putting their money where their mouth is. It made more money than ever imagined and lost all of it too. It got together all of Wall Street for the first time to solve a major debacle. It teaches quite a few lessons. And they are worth learning.
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