![]() The firm's staggering $100 billion balance sheet threatened to drag down markets around the world. In five weeks, the professors went from mega-rich geniuses to discredited failures. Four years later, when a default in Russia set off a global storm that Long-Term's models hadn't anticipated, its supposedly safe portfolios imploded. Thanks to their cast - which included a pair of future Nobel Prize winners - investors believed them. ![]() truly believed that their finely tuned computer models had tamed the genie of risk, and would allow them to bet on the future with near mathematical certainty. And so Long-Term Capital Management was born. In 1993, Meriwether gathered together his former disciples and a handful of supereconomists and proposed that they become partners in a new hedge fund different from any Wall Street had ever seen. ![]() For two years, his fiercely loyal team - convinced that the chief had been unfairly victimized - plotted their boss' return. In 1991, in the wake of a scandal involving one of his traders, Meriwether abruptly resigned. John Meriwether, a famously successful Wall Street trader, spent the 1980s as a partner at Salomon Brothers, establishing the best - and the brainiest - bond arbitrage group in the world. ![]()
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