6min chapter

Risk of Ruin cover image

Inside Long Term Capital

Risk of Ruin

CHAPTER

LTCM's Crisis

In 1994, LTCM started trading and things went very well. In their first 42 months, they had just eight losing months. The fund was so successful that eventually they ran into problems caused by success. Their convergence trades were getting crowded at exactly the time their capital base was becoming oversized.

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