When Genius Failed

In the history of business there have been—and always will be—many rises and falls. Cold statistics show that no company is immune to failure, and in the world of business, a downfall is an everyday occurrence, happening far more often than success.
And yet the story of the Long Term Capital Management hedge fund told by R. Lowenstein isn’t ordinary. For at least one reason: the company was unique in its intellectual potential and technical equipment. Its specialists, among them Nobel laureates R. Merton and M. Scholes, used the most advanced mathematical models and achieved impressive results in a business many compare to grabbing handfuls of small coins as a bulldozer is already bearing down.
For more than three years, the hedge fund’s traders managed to beat the market. Just when it seemed that a magical formula for permanent success had been found, everything began to collapse. The company, which had assets worth 100 billion dollars and dictated to banks the terms on which they would agree to lend (!), was pushed to the brink of bankruptcy within just a few months.