Long Term Capital Management

Paper Summary:

This paper provides an analysis of the conditions and events that led to the near collapse of Long Term Capital Management (LTCM) in September 1998. The author discusses the mistakes made that ultimately led to this downfall and outlines lessons to be learned by the hedge fund industry.

From the Paper:

"Three years before energy industry giant Enron Corp. sought protection from creditors and came under the harsh light of scrutiny for the complex web of off-balance sheet deals that masked the firm's huge debt, a very similar scenario unraveled among some of Wall Street's most celebrated financial players. But while Enron unsuccessfully sought eleventh-hour aid from the power brokers it has bankrolled in Washington D.C., a "who's who" of global financial institutions stepped up to bail out hedge fund Long Term Capital Management (LTCM) in September 1998. Not coincidentally, the bankers arguably had more to lose from the impending collapse of LTCM than they faced in the more recent debacle."

More papers on Long Term Capital Management:

• Research Paper # 5112 : "Long-Term Capital Management"
• Essay # 46154 : "Long-Term Capital Management"
• Research Proposal # 105998 : "Working Capital Strategies: A Research Proposal"

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