Warren Buffett on the 'Genius' hedge fund “Long-Term Capital Management" (LTCM) (1999)

Warren Buffett gives his thoughts on the prestigious, “Long term Capital Management”, a hedge fund comprised of famous Nobel laureates, investment bankers, mathematicians and economists from top Wall Street firms, and several top Ivy league universities around the world. LTCM was wiped out from over-leveraged positions that caused losses so severe, they were forced to liquidate and sell everything. Their closure had resulted in an immense economic impact to GDP due to their fund size.

Founded in 1994, Long-Term Capital Management L.P. (LTCM) was a hedge fund based in Greenwich, Connecticut and used absolute-return trading strategies combined with high financial leverage in derivatives instruments. Initially successful with an annualized return of over 21% (after fees) in its first year, 43% in the second year and 41% in the third year, in 1998 it lost $4.6 billion in less than four months due to a combination of high leverage and exposure to the 1997 Asian financial crisis and 1998 Russian financial crisis. The master hedge fund, Long-Term Capital Portfolio L.P., collapsed in the late 1990s, leading to an agreement on September 23, 1998, among 14 financial institutions for a $3.6 billion recapitalization under the supervision of the Federal Reserve. The fund liquidated and dissolved in early 2000

LTCM partners:
1) John Meriwether: Former vice-chair and head of bond trading at Salomon Brothers; MBA, University of Chicago

2) Robert C. Merton: Leading scholar in finance and Co-author of Black-Scholes model; Ph.D., MIT; Professor at Harvard University

3) Myron Scholes: Co-author of Black–Scholes model; Ph.D., University of Chicago; Professor at Stanford University

4) David W. Mullins Jr.: Vice chairman of the Federal Reserve; Ph.D. MIT; Professor at Harvard University; was seen as a potential successor to Alan Greenspan

5) Eric Rosenfeld: Arbitrage group at Salomon; Ph.D. MIT; former Harvard Business School professor

6) William Krasker: Arbitrage group at Salomon; Ph.D. MIT; former Harvard Business School professor

7) Greg Hawkins: Arbitrage group at Salomon; Ph.D. MIT; worked on Bill Clinton's campaign for Arkansas state attorney general

8) Larry Hilibrand: Arbitrage group at Salomon; Ph.D. MIT

9) James McEntee: Bond trader

10) Dick Leahy: Executive at Salomon

11) Victor Haghani: Arbitrage group at Salomon; Masters in Finance, LSE
Buffett Books:
Intelligent Investor: https://amzn.to/3cY7rTP
Warren Buffett: 43 Lessons for Business & Life: https://amzn.to/3lMvjOf
The Essays of Warren Buffett: Lessons for Corporate America: https://amzn.to/3ccnIFy
The Snowball: Warren Buffett and the Business of Life: https://amzn.to/3vROoTM
The Warren Buffett Way: https://amzn.to/2NITWii
Buffett: The Making of an American Capitalist: https://amzn.to/31b3FkM
Security Analysis: 6th Edition, Foreword by Warren Buffett: https://amzn.to/3cbcbq7
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Видео Warren Buffett on the 'Genius' hedge fund “Long-Term Capital Management" (LTCM) (1999) канала Buffett Answers