When Genius Failed

This riveting account transcends the market landscape to explore universal themes of risk, triumph, hubris, and failure. In this business classic, now featuring a new Afterword that connects the narrative to the recent financial crisis, the author captures the dramatic rise and fall of Long-Term Capital Management (LTCM). Utilizing confidential memos and interviews with key players, the narrative reveals how the personalities of LTCM’s partners, their overconfidence in mathematical models, and the broader Wall Street culture contributed to their spectacular success and subsequent collapse. Founded in 1993, LTCM was celebrated as the most remarkable hedge fund in history, amassing a staggering $100 billion in just four years. However, it faced catastrophic losses that threatened not only major banks but also the stability of the entire financial system. The story of LTCM’s downfall serves as a chilling precursor to the broader financial crisis that would engulf Wall Street a decade later. In the Afterword, the author argues that LTCM’s collapse should be viewed as a template for future market failures in an era of instability, highlighting the critical lessons that Wall Street and government have tragically overlooked.