Customer Reviews:
 good read May 14, 2008
This is a great book detailing the failed Long term capital management (LTCM). Do not need a lot of time to read, and serves a great cautionary story for investors. Good buy.
"It was the arrogance of people... who really believed that they were more intelligent than others." March 17, 2008
Even supposedly smart people can get utterly carried away. Perhaps they weren't as smart as they believed. In any case, we should always remember to take information and advice from "the experts" with a grain of salt.
Incidentally, Bear Stearns was the firm that cleared LTCM's trades. And now, like LTCM, Bear Stearns is pretty much no longer.
Entertaining read on complex subject March 16, 2008
1 out of 1 found this review helpful
It's a common story, a group of extremely talented and smart individuals done in by their own hubris, greed, and carelessness. What distinguishes this story from others is that we get a reasonably lucid description of the complex world or hedge funds and exotic investments. There is also good storytelling here of a largely unkown firm of a couple hundred people, that nearly took down several major banks with them.
Excellent and education read March 8, 2008
History repeats itself and one can be better armed for volatile times when they understand the catalysts that lead to LTCM's failure. Excessive leverage and simple stress testing is not enough anymore. As Buffet says, When the tide goes down, we see who was swimming without their bathing suits.
The story of of Long-Term Capital Management February 29, 2008
3 out of 3 found this review helpful
I liked this book so much that I have re-read it twice in row before writing this review. As you see, this book is so popular that I'm the 200th reviewer of this title on amazon.com.
The book tells the story of Long-Term Capital Management (LTCM), a hedge fund founded in 1994 by John Meriwether (the former vice-chairman and head of bond trading at Salomon Brothers). On its board of directors were Myron Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economics. Initially enormously successful with annualized returns of over 40% in its first years, in 1998 it lost $4.6 billion in less than four months and became a prominent example of the risk potential in the hedge fund industry. On the precipice of not only an American financial disaster, the fund's imminent collapse had significant international monetary implications, jeopardizing the financial system itself. Prompted by deep concerns about LTCM's thousands of derivative contracts, in order to avoid a panic by banks and investors worldwide, the Federal Reserve Bank of New York stepped in to organize a bailout with the various major banks at risk.
Roger Lowenstein, the author of this book, is an American financial journalist, reported for the Wall Street Journal for more than a decade, including two years writing its Heard on the Street column, 1989 to 1991. He is also the author of the famous title "Buffett: The Making of an American Capitalist", published in 1995, which is one of my favorite books. What is prominent about the Lowenstein's way of writing is the ability to analyze the facts that he describes. The books of Roger Lowenstein not only improve the reader's awareness in a field of economy, but also educate the reader by giving the knowledge of the market and its behavior, and by developing the abilities to understand the financial system better.
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