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

Author: Roger Lowenstein
All Hacker News 8
This Month Hacker News 1


by PorterDuff   2019-09-14
That sounds too much like this:


As I remember, beaucoup back testing, hilarity ensues anyway.

by kevas   2018-11-10
Based on your listings, you may also enjoy When Genius Failed, which is based on LTCM and their downfall.

Link: https://www.amazon.com/dp/0375758259/ref=cm_sw_r_cp_api_i_j0...

by caudicus   2017-08-19
Yes, I am. They are not synonymous in this context. Don't take it personally.

Projected to be less tomorrow? Says who? I would think that JP Morgan would not accept even a $2/share buy out if they thought it would be worth less tomorrow. They would only make such an offer if they thought it was a good deal to them with a potential upside. Thus they are willing to buy a "illiquid" asset and provide "liquidity" for "value" to themselves. It's how the world goes 'round. Illiquid and crappy may be the same thing now, yes, but investment is, by definition, making decisions for future profit. This is why, in terms of net present value, crappy and illiquid are not the same thing. JP Morgan is thinking "This is a great opportunity".

In terms to my reference to LTCM as being hardly reassuring: get over it. We are in a credit crunch. We were in '98, we are now. It's bad, yes. This is probably worse than LTCM. I never said this was good, I said that 'illiquid' and 'crappy' are not by definition the same thing. That's all I said.

I'm not even going to address your Buick analogy. Read this book - http://www.amazon.com/When-Genius-Failed-Long-Term-Managemen... - it will give you a good idea how credit markets operate and how they can act irrationally.

Right now the major issue is that no one knows how to value themselves because no one else knows how to value themselves because no one can value their portfolios. And in that uncertainty no one can judge who is right and wrong, who is getting a good deal and getting a bad deal. This is exactly why this situation is so screwed up. And this is exactly why the Fed is offering to provide liquidity for the rest of the market: because no one else is liquid enough to. Yes, it is a moral hazard, it sucks, but it is how it is.

Look, this isn't a zero sum game. For all we know, inaction by the Fed could lead us down a more damaging path. There are smart people working there, with far more education and experience than both of us and then some. Let us not be so quick to judge.

by trimbo   2017-08-19
For anyone interested in this topic, be sure to read "When Genius Failed". I finally read it last year and it's excellent.


by mattyb   2017-08-19
An excellent book on LTCM is 'When Genius Failed' (not an affil link):