Long-Term Capital Management


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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.
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That was followed by the collapse of Long-Term Capital Management in the late 1990s, and especially given that this was a firm driven by the brains of some of the most widely respected finance academics, it was not a subject many talked about with anything other than admirable awe in the years before.
A decade later, we experienced the near economic meltdown of the hedge fund Long-Term Capital Management, which operated under almost no regulation.
Health care company Aetna (NYSE:AET) disclosed on Friday the launch of a reinsurance arrangement with Vitality Re VIII Limited under its long-term capital management strategy.
The most well-known example is the 1998 failure of Long-Term Capital Management, a fund with $4 billion in net assets under management but over $125 billion in gross assets, and over $1 trillion in gross exposures before its failure.
As part of our long-term capital management strategy, we are pleased to announce our exit from the SBLF program,' said Christopher R.
Think of the past decades -- the Long-term Capital Management bailout, the dotcom bubble, the aftermath of the dotcom bubble, the housing bubble and finally, the "rescue" of the economy in the wake of the financial crisis.
Some see the move in gold as a possible flashpoint for a broader economic and markets shock comparable to the collapse of hedge fund Long-Term Capital Management in 1998 and even the financial crisis a decade later.
The trickle-down effect from the fall of the Asian Tigers did not end there, for it also contributed to the 1998 Russian financial crisis, which in turn caused Long-Term Capital Management in the US to collapse, after losing $4.
He was at one time employed at Long-Term Capital Management, a hedge fund whose 1998 collapse nearly caused a global crisis.
The book covered the collapse of Long-Term Capital Management (LTCM), a hedge fund that over-leveraged on its arbitrage deals and blew up when Russia defaulted on its debt in 1998.
Ellenberg calls it, as used by Long-Term Capital Management, a Martingale continuous double-down scam.
4 on Thursday, noted author Roger Lowenstein will deliver the breakfast keynote address titled "The Liquidity Trap: From Long-Term Capital Management to Lehman.
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