When Genius Failed: The Rise And Fall Of Long-Term Capital Management

This book is a required reading in many top B-schools and there are many good reasons for it. LTCM was one the biggest, shady and most aggressive hedge funds assembled. This book describes the origins of LTCM and its key trading strategies. Adequate background is provided on the figureheads. Starting with the mysterious and intriguing John Meriwether, its Board of Directors included Nobel laureates Myron Scholes and Robert Merton and a few other “master traders”.

Of particular interest is the Lowenstein’s description of arbitrage trading strategies, traders’ modus operandi and their belief in Capital Market theory which led them to believe they could never fail (as long as they bought time for the trade to succeed). Lowenstein emphasizes pitfalls of intellectual arrogance and of vesting blind faith in impotent theories which management professors are known to harbour. For instance, Scholes was notorious for talking down to investors and traders in the company and believed them to have an ‘intellectual deficit’ vis-à-vis himself. (This trait, however, is common among most economists and B-school professors using which they overcompensate for their ridiculous management theories.) The author also does good job of highlighting Fed intervention, and how having friends in high places (and being able to blackmail them) makes all the difference between a commoner and an elite.

This is an excellent book for people looking to get an idea of the business of investment banking in the west.

This book is absolutely fun. Its simply unputdownable, because it goes deep into the history, background of people and workings of Long Term Capital Management. The author has put a lot of hard work into the book and the output is fantastic. I thoroughly enjoyed this book and to anyone who's wondering whether to buy this book or not - don't hesitate and go ahead. Its a great buy and keep for your personal library.

This book is well researched piece of gripping writing of real life events.
Author being journalist has put the matter in an apolitical and informative way so that you don't lose interest of the track and get to know that finance world is not all fun.