Inventing Money : Long-term Capital Management and the Search for Risk-free Profits, Paperback Book

Inventing Money : Long-term Capital Management and the Search for Risk-free Profits Paperback

3.5 out of 5 (1 rating)


LTCM was the fund that was too big to fail, the brightest star in the financial world.

Built on genius, by legends of Wall Street and two Nobel laureates, it spiralled to ever greater heights, commanding unimaginable wealth.

When it fell to earth in September 1998 it shook the world.

This is the story of the rise and fall of LTCM and the legends behind it.

A brave and ambitious work, Inventing Money was written by leading financial journalist Nicholas Dunbar.


  • Format: Paperback
  • Pages: 280 pages, portraits
  • Publisher: John Wiley and Sons Ltd
  • Publication Date:
  • Category: Investment & securities
  • ISBN: 9780471498117



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I was prompted into buying this book after seeing a truly hopeless Channel 4 documentary about the LTCM collapse which attempted - but failed entirely - to explain what LTCM was all about: What the Black/Scholes formula did, how Meriwether and cohorts used it to make money, and how they managed to singlehandedly bring western world as we know it to the brink of financial collapse with a formula which is supposed to completely eliminate risk. Dunbar's very readable book scores on two fronts: firstly, it succeeds in explaining how these putatively "risk free" trades manage to make profit and be (to 'all' intents and purposes) perfectly hedged, when conventional wisdom would suggest that a perfectly hedged position must by definition be 'flat', and secondly, it serves as an excellent primer for anyone wanting to understand how the debt markets in general, and credit derivatives in particular, work. And all this in a little over 200 pages. Great going!The subject matter isn't easy, but nor (at the level to which Dunbar takes it) is it rocket science, and to his immense credit Dunbar manages to resist the temptation to write it off as 'baffling rocket science by Harvard Graduates which is far too hard for the stupid reader to understand' (which is what said Channel 4 documentary did) or to insert unpenetrable graphs, equations and formulae to show just how clever he and the LTCM sort of person is. Still, while the casual observer of the Stock Market (you know, the sort who watches the news each night to see if it went up or down) might find little in this book to light their candle, those in the industry and short on specific knowledge, or with aspirations of getting into it, could hardly find a better place to start.

Also by Nicholas Dunbar