When Genius Failed  (English, Paperback, Lowenstein Roger)

Long-Term Capital Management came into being as a dynamic force for the financial universe of Wall Street and after four years of successfully churning out billions, it just as suddenly spiralled into losing astronomical sums of money. Lowenstein brings this story alive in When Genius Failed: The Rise And Fall Of Long-Term Capital Management 1st Edition with an incisive investigation that not only recounts these events but also indulges the genius and arrogance of the creators of Long-Term Capital Management. 

Summary Of The Book

Long-Term was founded in 1993 and its visionary albeit aggressive tactics delighted Wall Street for all the four years that it made money off speculation. Long-Term’s arbitrage policies were nothing short of high handed. However it was backed by Nobel laureates who claimed their intellectual capacity made it impossible to rebuke the validity of the suspicious accounts. Lowenstein doesn’t stop at the chilling story of Long-Term by merely stating facts or imploring dubious economic theories. He makes it a point to set the whole story straight by driving a pick into the vital organs of this organization.

The elusive John Meriwether, the board of directors and the Nobel laureates, Myron Scholes and Robert C. Merton have all been accounted for in this historical excavation. Capital market theory and the arbitrage policies and modus operandi of traders have all been investigated into by Lowenstein. Why Genius Failed: The Rise And Fall Of Long-Term Capital Management 1st Edition doesn’t just back up the narrative with the authorities involved but also provides analogies to the recent financial crisis. It is a work borne in shouldering responsibility and therefore recognizes the fairness and follies involved in the financial world in equal measure.

Lowenstein explains the inner workings of Long-Term beautifully through the use of numerous memos and interviews he collected over the years. All his research serves him well to sufficiently embellish the narrative of this book. Long-Term lost all vestige of power soon after its downfall in 1997 because of the mathematical risks that were involved in the game of assumption that Long-Term operated on. While on its way down, the hedge fund even transformed into a minor black hole. The fallacies it endorsed jeopardized not just its own existence but also that of the financial system itself. Lowenstein, in his afterword makes special mention of the fact that the Long-Term case isn’t a one off and draws enough analogies to drive this point home.

Why Genius Failed: The Rise And Fall Of Long-Term Capital Management found itself generously praised and Lowenstein took home a number of accolades. It has duly found a place among the best business books of 2000 as chosen by BusinessWeek.

About Roger Lowenstein

Roger Lowenstein is a well known American financial journalist.

He has written for the Wall Street Journal for over ten years and has five books to his credit. His book, Buffett: The Making Of An American Capitalist turned him into a bestselling author.

In addition to writing books and columns for financial journals, he is a prolific columnist and reviewer for the The New York Times magazine. He is also one of the directors of the Sequoia Fund. After graduating from Cornell University, he became a journalist and is now a revered industry honcho in the universe of finance. He lives in Westfield, New Jersey and is married with three children.