Rating: 
Summary: A cautionary tale
Review: The central lesson of this book is a warning against hubris. It is ironic, then, that the author seems so confident of his understanding of many of the technical aspects, when he demonstrates regularly his lack of understanding of these issues. The history of the incident seems to be well-researched, and it's very interesting as it's told, but it would be a more pleasant read if I weren't being occasionally hectored about how math is evil (the incorrect lesson that he seems to have picked up) and how foolish various people are. Fama believes in efficient but discontinuous markets, for example, because efficient market theory does not hold that markets are continuous; this conflation is a fabrication of the author's mind. Greenspan's views are well-reasoned, and the supposition that this incident repudiates them with no argument necessary is a failure to understand them. Even Michael Lewis's story about Meriwether from Liar's Poker appears to be misunderstood; the (apocryphal) $10M bet was made to get out of a risky situation, not to get into one, and was an illustration not of JM's recklessness but of his way of managing his environment. If you know nothing about finance, don't try to glean it from this book; if you know nothing about the dangers of hubris, pick it up immediately; it is about justifiable ideas taken too far and relied upon with too much certainty. It's an interesting read about an interesting series of events, and as long as you don't, say, believe the figure 2.45% when he forgot to add in the interest LTCM paid on its debts, you should get through this book with a net increase in knowledge.
Rating: 
Summary: A Glimpse Into Wall Street
Review: Without restating the summary provided above, this book gives readers a hint on the under-the-table deals of many Wall Street firms. This books also present a fallible aspect of fiancial models that have been taken for granted. As a firm believer in quantitative research and modeling, this book has inspired me intellectually and morally. You won't regret reading this book.
Rating: 
Summary: The fascinating story of the spectacular failure of LTCM
Review: I think the story of LTCM is fascinating. While this book isn't nearly as funny or witty as "Liar's Poker", it wasn't ever intended to be. This is solid and intelligent reporting (such as the limitations of reporting are). Here is the story of how a company almost no one outside its very specialized community knew nearly sank the global economy. How can this not be fascinating?The problem is that the financial instruments they were dealing in are not commonly understood and are not easy to grasp without some training or careful study. Most of the simplistic explanations in the papers and on (worse) TV seem to add more heat than light. All I can tell you is that Mr. Lowenstein has done a pretty good job at making this rather abstruse subject as accessible as can be while still trying to really tell the story rather than waving his arms and making extravagant and pejorative claims. Just two of the things you will see raised in this book that differ from what you will read in the popular press are: 1) Greenspan was more or less co-opted into bailing out LTCM and had very different views and considerations about letting the company fail than has been popularly reported, and, 2) there is some evidence that the debacle of LTCM's failure was made worse by their being the victim of front-running. That is, someone who knew what they had to sell got in front of those sales to undermine their position. I'll let you read the book and make up your own mind rather than my making arguments for what are really only my impressions from reading this book. It is only 236 pages, but what a read! (Four stars because it is so specialized, but it is a VERY GOOD book.)
Rating:
Summary: An Old Story With A New Twist, Very Well Told
Review: "When Genius Failed" chronicles the late-1990's ascent and implosion of Long-Term Capital Management (LTCM), for a brief time the hottest and most powerful hedge fund in the world. The author does a great job of helping the reader understand the personalities involved, and the danger to world financial markets posed by this amazingly small number of individuals. Although the LTCM debacle was noteworthy due to the sheer size of the positions that the firm took and the Nobel pedigrees of the people involved, it is ultimately a new presentation of an old story. It is the old story of inflated egos and hubris being punished by the markets. I found the story fascinating, both as an important recent event and as a study in people and markets. At the end of the story, I think the reader will come away with an appreciation of financial markets as living entities made up of people, not just numbers on a trader's display. Don't miss the scene with the late, great Vinny Mattone of Bear Stearns, a terrific judge of markets and human nature.
Rating:
Summary: Interesting and Topical
Review: What's so important about a hedge fund failing?
Why'd the government bail out a bunch of rich folks?
How can the greatest minds in Finance (who defined the rules used to value financial products) lose billions of dollars in the very markets that they defined and created?
Why is an event that happened in the mid 90s still topical? This book takes on a very heavy subject - explaining the rise and fall of the dominant player in the hedge fund industry. In a way, it's the "Behind the Music" of Long Term Capital (LTC). In very straightforward language, Lowenstein explains the background of both LTC and the hedge fund industry. He walks through the broad economic enviornment, as well as the assumptions built in to the investment that LTC was making. This is all heady work, but it's written in a way that the general reader can understand. In the end, you'll understand the answers to the questions above. You should also be a more informed reader of economics and business news too. It's a quick read, and well worth the time.
Rating:
Summary: A well told story
Review: The author has done an excellent job at telling the story surronding LTCM. It is amazing how some of the most intelligent people in the world can be so extremely arrogant that they cannot distinguish a good bet from foolhardiness. The amount of risk that LTCM took with other peoples money is mind boggling. The story also reminds us that greed is a very dangerous thing. If it overpowers you, no matter who you are, the ability to act rationally diminishes.
Rating:
Summary: When Genius Failed: The Rise and Fall of Long-Term Capital M
Review: Lowenstein has written a good descriptive tale of the rise and fall of Long-Term Capital Management (LTCM), a hedge fund begun in 1994 by John Meriwether, a practitioner who had successfully arbitraged US government securities at Salomon Brothers using academics turned practitioners. LTCM's principals were high net worth individuals including finance professors Robert Merton and Myron Scholes, 1997 recipients of the Nobel Prize in economics. Using theoretical models as guides, LTCM made sufficient profits to return capital to the principals, but by 1997 it had borrowed $125 billion with only $4.8 billion in equity. Its 1997 "bets" failed partly because they were based on the assumption that market risk could be measured by variability using the normal curve. In fact, real market events are often correlated, leading to greater extremes than would be predicted by the normal curve. LTCM was "bailed out" by other financial institutions brokered by the Federal Reserve, an unprecedented action that may have public policy implications for future bailouts. The essence of the LTCM saga and its policy implications can be found in Franklin R. Edwards's "Hedge Funds and the Collapse of Long-Term Capital Management," Journal of Economic Perspectives 13, no. 2 (Spring 1999): 189-210. When Genius Failed is recommended for public and academic libraries.
Rating:
Summary: Selling Risk
Review: This is a gripping look at the personalities and mechanics of Long-Term Capital Management, a small bond trading firm that managed to create what might have become a world-wide meltdown of the financial markets.
LTCM was founded on a theory in Economics that won Robert Merton and Myron Scholes a Nobel Prize. The theory itself is fascinating, and it is strangely unfathomable how its application equated to the ability to quantitatively 'trade risk'. Lowenstein has a fine knack of translating the numbers and financial machinery into real-world concepts so that the financial markets actually begin to make sense.
Although he appears to conclude that flaws in the scientific theory were the ultimate cause of its collapse, it is my opinion that this is not strictly speaking true. It is well-known in science (and more so in the empirical ones) that every theory has its domain of applicability outside of which it cannot be simply assumed to be equally accurate.
What I believe caused LTCM to collapse was the failure by those who applied the theory to test carefully to what extent it could be stretched before a more sophisticated refined version was needed to complement it. The sheer greed inspired by the theory's early success caused LTCM's managers to wilfully ignore warnings from underlings and throw all caution to the wind, as they expanded into ever and ever riskier trades.
The unheard-of use of borrowing exacerbated what might otherwise have been a manageable business failure. LTCM was able to obtain astronomical amounts of money by leveraging off the greed of its lenders. Lowenstein also hints that the moral hazard of the Fed acting as an 'insurer of last resort' allows traders to take wild risks with our economy.
All in all, a very interesting, exciting, and readable account of hubris.
Rating:
Summary: Great story and great written too
Review: The story of LTCM is absolutely interesting for everybody who's interested in financial markets and/or theory. In contrary to what some people in their review claim, the author is not saying that financial theory itself isn't useful. The story just shows how even 'the best finance faculty in the world' isn't unfailable, especially when there are ego's playing. The story is great written, with interesting details about the background and the character of the persons involved, and this makes the book hard to put down before you read it completely.
Rating:
Summary: Great story and great written
Review: The LTCM-story itself is of course interesting for everybody with some interest in financial markets. What was seen as the 'most brilliant finance faculty in the world' proved to be not unfailable. I think the author explains enough about financial products to understand the whole story, even if you don't have a financial background. It includes a lot of details about the persons that where envolved to make the story really interesting and fun to read. It's hard to put the book down before you've read it completely!
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