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

In this business classic—now with a new Afterword wherein the creator draws parallels to the up to date financial crisis—Roger Lowenstein captures the gripping roller-coaster ride of Long-Term Capital Management. Drawing on confidential internal memos and interviews with dozens of key players, Lowenstein explains not just how the fund made and lost its money but also how the personalities of Long-Term’s partners, the arrogance of their mathematical certainties, and the culture of Wall Street itself contributed to both their rise and their fall.

When it used to be founded in 1993, Long-Term used to be hailed as essentially the most impressive hedge fund in history. But after four years wherein the firm dazzled Wall Street as a $100 billion moneymaking juggernaut, it all at once suffered catastrophic losses that jeopardized not only the biggest banks on Wall Street however the stability of the financial system itself. The dramatic story of Long-Term’s fall is now a chilling harbinger of the crisis that would strike all of Wall Street, from Lehman Brothers to AIG, a decade later. In his new Afterword, Lowenstein shows that LTCM’s implosion will have to be seen not as a one-off drama but as a template for market meltdowns in an age of instability—and as a warning call that Wall Street and government alike tragically ignored.

Praise for When Genius Failed

“[Roger] Lowenstein has written a squalid and fascinating tale of world-class greed and, above all, hubris.”—BusinessWeek

“Compelling . . . The fund used to be long cloaked in secrecy, making the story of its rise . . . and its ultimate destruction that a lot more fascinating.”

“Story-telling journalism at its best.”—The Economist