When Genius Failed

Lowenstein, R. (2000). When Genius Failed: The Rise and Fall of Long-Term Capital Management. Random House.

Type

Book

Intellectual base

Review or monograph

Year

2000

Link

https://www.penguinrandomhouse.com/books/103996/when-genius-failed-by-roger-lowenstein/

Cited from

economics_finance, statistics_experimental_design

Cited by

3 citations across 3 artifacts.

Each citation links to the sentence it supports in the citing article.

Primes

• Arbitrage (Finance)
  • … left-tail exposure. The 2008 financial crisis highlighted the fragility of these trades, dynamics whose archetype was the 1998 Long-Term Capital Management collapse chronicled by Lowenstein (2000): liquidity evaporated, repo rates spiked, and positions that appeared risk-free became highly leveraged and distressed.
• Liquidity
  • A vivid pedagogical anchor is the Long-Term Capital Management collapse, narrated in Lowenstein's (2000) When Genius Failed: a hedge fund whose models assumed continuous liquidity built leveraged convergence trades that became impossible to unwind once cross-asset spreads widened in 1998, demonstrating concretely that even sophisticated arbitrage strategies depend on liquidity assumptions that can fail abruptly.
• Outlier Leverage
  • In finance, a single trader, fund, or position can dominate firm-level performance or risk — one trader collapsed Barings, a handful of trades concentrated the largest losses at LTCM, and long-tail returns make hedge-fund alpha dominated by a few vintages.

    This sourceDocuments how a handful of concentrated positions drove LTCM's losses; standard popular reference for single-actor/single-position dominance of firm-level risk (the Barings/Leeson collapse is cited as a parallel case, not documented in this source).

Verification

This reference passed the adversarial substantiation pipeline: it was checked to exist and to support the claim it is attached to. See how references were verified.

Registry ID ref:0c2956ed71b6 · see in the full table