Inventing Money
The Story of Long-Term Capital Management and the Legends Behind It
by:
Nicholas Dunbar
in:
Investing
Summary:
The book delves into the rise and fall of Long-Term Capital Management (LTCM), a hedge fund that collapsed spectacularly in 1998. It explores the complex financial models used by the fund's Nobel Prize-winning founders and the impact of their strategies on the global financial system when their risk management failed.
Key points:
1. Leverage Risks: LTCM used borrowed money to increase potential profits, but this also meant small market changes could cause huge losses, as seen in the 1998 crisis.
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