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

For those who want to learn about the financial turmoil of the late 1990s with the advent of the hedge funds, you need to read When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein.  The book follows the life of a team of PhDs and other “brains” who are gathered together under the leadership of John Meriwether, who was a successful trader through his early days at Salomon Brothers.  The story gives those non-wall street junkies, like myself, a good schooling on who the players were in the 1990s, a number of whom no longer exist – Lehman Brothers, and a number of the banking corporations due in part to much of what Meriwether and his partners tried to do.  The company (Long Term Capital Management) experienced unprecedented growth during its early years, only to crumble and be salvaged by the Federal Government.  The cast of characters, and their utter greed, is exposed throughout the book.  Negotiating to save Meriwether’s company included a hostile takeover by Warren Buffett, George Soros, and even Bill Gates.  Jon Corzine, former chief executive of Goldman Sachs, was also involved in trying to resolve the issues of bankruptcy by Meriwether’s group.  The reader will learn a great deal about the economic climate of the time, the hedge fund model, and how the market collapsed in the late 1990s do in part to the hedge fund model.  For those who don’t have the understanding of the market, a good overview.  For those who don’t have a great knowledge of what happened in the 1990s and are WSJ junkies, a great behind the scenes inner workings of a complicated scheme gone bad and you’ll love it.  A quick read with some technical terms helpful for anyone who ever manages money.  A good read!