Long Term Capital Management - When Genius Failed (Myth20c - Ep289)

Long Term Capital Management - When Genius Failed (Myth20c - Ep289)

Author: Myth of the 20th Century - "Only the truth is banned." March 17, 2025 Duration: 2:52:34

In 1998, Long Term Capital Management received a $3.6 billion bailout from a private consortium of Wall Street banks. This amount, while staggering to most, belied an even greater $1 trillion in notional liability LTCM was facing if circumstances had worsened. What led to the firm’s insolvency was a confluence of extreme events in the markets ranging from the Asian Financial Crisis to the Russian sovereign debt default, compounded by an over-reliance on complex mathematical models and high amounts of leverage. What was even more surprising, however, was how this failure was led by a team of world renowned financiers, including two Nobel prize winners, who were seen as having the Midas touch. Tonight we are joined by returning guest Ace Niederhoff to delve into the inner workings of this infamous hedge fund, and draw lessons about the risks of overconfidence and the broader consequences of financialization of a society.

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Very special guest Ace Niederhoff

https://x.com/aceniederhoff

with Adam Smith and Hans Lander

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-- References --

- The Intelligent Investor, Graham (1949)

- Liar’s Poker, Lewis (1989)

- Barbarians at the Gate, Burrough (1989)

- Buffett on the risks LTCM’s management took, Berkshire Hathaway (1999) - https://buffett.cnbc.com/video/1999/05/03/buffett-on-the-risks-ltcms-management-took.html

- History of U.S. Gov't Bailouts, Nankin and Schmidt (2008) - https://www.propublica.org/article/government-bailouts

- My Life as a Quant: Reflections on Physics and Finance, Derman (2008)

- When Genius Failed, Lowenstein (2000)

- Trillion Dollar Bet, Nova (2000)

- The Smartest Guys in the Room, Elkind and McLean (2003)

- BANKING CRISIS - After Dark, Myth of the 20th Century (2023) - https://myth20c.wordpress.com/2023/03/17/banking-crisis-after-dark/f

- Confessions of a Private Equity Operator, Myth of the 20th Century (2024) - https://myth20c.wordpress.com/2024/06/02/confessions-of-a-private-equity-operator/

- Enron - The Smartest Guys in the Room, Myth of the 20th Century (2024) - https://myth20c.wordpress.com/2024/10/13/enron-the-smartest-guys-in-the-room/



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Myth of the 20th Century is a show that digs into the stories we think we know and examines the forces that shaped them. Guided by the principle "Only the truth is banned," this podcast peels back the layers of official narratives, exploring the intersections of history, current events, and power. Each episode is a deep dive into the foundational myths-political, social, and cultural-that define our modern world, particularly those emanating from and surrounding the American experience. The analysis is grounded in a belief that what is often presented as settled history is anything but, and that contemporary headlines cannot be fully understood without this crucial context. You'll hear detailed explorations of pivotal events, ideological movements, and the figures who championed or challenged them, all framed by a critical perspective that questions mainstream consensus. This isn't a recitation of dates and names, but a connective investigation into how the past actively informs the present. For those who find standard historical accounts lacking or suspect that news cycles are missing crucial depth, this podcast offers a different lens. It’s for listeners who want their history and politics presented without the usual filters, where the focus is on the underlying patterns and enduring consequences of twentieth-century dogma and ambition. Tune in for a challenging and consistently detailed audit of the century that made us, asking persistently whether the sun truly never sets on the American empire or if that itself is the most potent myth of all.
Author: Language: English Episodes: 50

Myth of the 20th Century
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