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

[lightreads]

When Genius Failed

3/5. Financial history. Story of the bond arbitrage hedge fund that rose – and rose and rose and rose – in the mid-90's, only to collapse spectacularly, over-leveraged, nearly taking the rest of the financial system with it.

Totally infuriating. And here I was hoping for some dry, soothing nonfiction. This is dry, and it isn't very good at explaining the financial instruments underlying the activity here, but boy. *Grinds teeth*. I know a lot of hedge fund guys – they're all guys, BTW, I mean that literally – and this book captures their arrogance, their secretiveness, their obsession with financial dick-measuring, their maniacal focus on making more more more money for no other reason than to have it.

Mostly, though, it's really hard to swallow that people continue to believe in rational markets, continue to teach that economic model, continue to trade on that basis. I mean, these traders watched their model go down in flames, then immediately turned around and said, "well, it was a hundred year flood, that's different, we were just unlucky, let's start again." Yeah bros. I'm sure it had nothing to do with the University of Chicago being full of crap.

Comments

[jadelennox]

I loved the hedge fund office I worked in during the mid-1990s, until some of the actual brokers came to work in our software development branch office. Those guys left porn on the office printed while they knew we were troubleshooting it, and then denied it was theirs even when we revealed receipts. Also they smashed office phones. Literally smashed those hard plastic nortel mofos, with their fists. Motherfuckers.

[lightreads]

Yep I believe all of this.