When Genius Failed
Roger Lowenstein chronicles how Long-Term Capital Management — staffed by Nobel laureates and Wall Street's brightest minds — leveraged $4.7 billion into $1.25 trillion in positions before nearly collapsing the global financial system in 1998. The failure demonstrated that mathematical models cannot capture tail risks and that leverage transforms small errors into existential crises. The Fed-orchestrated bailout set precedents that shaped responses to future crises.
The rise and collapse of Long-Term Capital Management. The cleanest case study in how leverage, complexity, and brilliance can compound into catastrophe.
Tagged intermediate in the Ledge Reads catalog: assumes working familiarity with market and accounting basics.
What it covers
- LTCM
- Leverage
- Tail Risk
- Nobel Laureates
- Convergence Trading
- Russian Default 1998
- Fed Bailout
- Model Risk
- Bond Arbitrage
- Systemic Risk
Where Oxford Ledge teaches these ideas
Concepts this book covers appear in these LEARN modules:
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ISBN-10: 0375758259
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