Long-Term Capital Management

(redirected from Long Term Capital Management)
Also found in: Acronyms.

Long-Term Capital Management

A defunct hedge fund, established in 1993, that, at its height, held positions worth more than $1 trillion. Its investment strategy was to take advantage of arbitrage opportunities in bonds and other fixed-income securities; profits on individual transactions were small, so LTCM was required to borrow massive amounts of money in order to operate. It was at first enormously successful, with a 40% annualized return after fees. However, when Russia defaulted on its government bonds in 1998, there was a steep drop in bond prices, endangering LTCM's positions because of its high leverage. Because LTCM controlled upwards of 5% of the bond market at the time, defaulting on its loans would have caused global financial panic. It was eventually bailed out by a consortium of organizations under the supervision of the Federal Reserve.
References in periodicals archive ?
To be sure, some are; the 1998 collapse of Long Term Capital Management and its bailout by the Federal Reserve made headlines around the world and no doubt scared off many potential hedge fund investors.
Russia had defaulted on its debts and the Long Term Capital Management hedge fund neared collapse.
More to the point, the disastrous downfall of whiz-kid hedge fund Long Term Capital Management earlier this year may have cast a pall on any financial strategies that rely on the heavily leveraged approach that hedge funds may take.
They make fun of everybody from little old ladies (the Beardstown Ladies) to high-powered geniuses (the Nobel Prize winners at Long Term Capital Management hedge fund).
BusinessWeek dubbed her "The Cassandra of Credit Derivatives" after she predicted the collapse of the global credit bubble, the thrift industry, Long Term Capital Management, and First Alliance Mortgage.
October 22, 1987 -- Portfolio insurance selling triggered the historic stock market crash -- August 30, 1990 -- Oil prices spiked ahead of the first Iraq War -- September 3, 1998 -- Russia defaulted on its debt and the bailout of Long Term Capital Management -- September 11, 2001 -- The stock market plummeted after the attack on the World Trade Center -- July 25, 2002 -- The dot com bubble burst and ended "Irrational Exuberance"
A combination of financial problems in Russia and south-east Asia, coupled with the collapse of hedge-fund manager, Long Term Capital Management, led to a swift sell-off in shares in the summer of that year.
The epicenter for the transformation of risk analytics from a service provided by outsourced vendors to an internal process starts with events such as Long Term Capital Management and the more general expansion of leveraged products in the financial world.
Regulators want to avoid a repeat of the spectacular collapse of US hedge fund Long Term Capital Management (LTCM) in 1998, which prompted fears of a meltdown in the financial system.
His specific reference is to one of the most recent financial crises--the near collapse last summer of giant hedge fund Long Term Capital Management, the blame for which he correctly lays as much on the firm's imprudent lenders as on the principals themselves.
In our back-test, the index's positive returns since 1989 corresponded to significant declines in the S&P 500 such as around the time of the collapse of Long Term Capital Management in 1998, following the attacks on September 11, 2001, and during the Gulf War in 1990.
Full browser ?