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The Need for Long-Term Drought Policy: From Crisis to Risk Management

The Need for Long-Term Drought Policy: From Crisis to Risk Management

Farmers everywhere are at the mercy of the weather. Drought, perhaps the most threatening challenge, can cause profound devastation to soil, livestock, crops, and livelihoods. In the context of more severe and frequent droughts, there are calls to include longer-term risk management policies, to complement existing short-term crisis funding.


Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.

Long-Term Capital Management Hedge Fund Crisis

Long-Term Capital Management was a massive hedge fund with $126 billion in assets. It almost collapsed in late 1998. If it had, that would have set off a global financial crisis.

LTCM's success was due to the stellar reputation of its owners. Its founder was a Salomon Brothers trader, John Meriwether. The principal shareholders were Nobel Prize-winning economists Myron Scholes and Robert Merton.

LTCM's founders were all experts in investing in derivatives to outperform the market.

Investors paid $10 million to get into the fund. They were not allowed to take the money out for three years, or even ask about the types of LTCM investments. Despite these restrictions, people clamored to invest. LTCM boasted spectacular annual returns of 40% in 1995 and 1996.

That was after management took 27% off the top in fees. LTCM successfully hedged most of the risk from the 1997 Asian currency crisis. It gave its investors a 17.1% return that year.

But by September 1998, the company's risky trades brought it close to bankruptcy.   Its size meant it was too big to fail. As a result, the Federal Reserve took steps to bail it out.

Key Takeaways

  • Long Term Capital Management was a hedge fund.
  • Its success in the derivatives market was due to to the reputation of its owners.
  • LTCM’s investments began losing value after the Russian financial crisis.
  • The Federal Reserve’s intervention in LTCM’s collapse brings up questions about the government's role in protecting private financial institutions.