Business Insider – Twenty years ago, one bond-trading hedge fund grew from launch to over $US100 billion in assets in less than three years. It saw yearly returns of over 40 per cent. It was run by finance veterans, PhDs, professors, and two Nobel Prize winners. Everyone on Wall Street wanted a piece of their profits.
But by 1998, that firm was primed to expose America’s largest banks to more than $US1 trillion in default risks. The demise of the firm, Long-Term Capital Management (LTCM), was swift and sudden. In less than one year, LTCM had lost $US4.4 billion of its $US4.7 billion in capital.
