By Jeff Harding
Back in February I wrote about John Meriwether’s latest fund skidding about 42%. Mr. Merriwether, you may recall, was responsible for the Long Term Capital Management fiasco in 1998, when his fund almost caused the collapse of the known world, according to some. His latest fund used the same investment strategies as did LTCM. You would think he would learn.
He just announced that he is closing his firm:
John Meriwether is shuttering his hedge-fund firm and splitting with his closest long-time partner as efforts to jump-start their investment business have failed.
Mr. Meriwether, 61 years old, in March returned most outside money to clients in his Relative Value Opportunity fund, once the flagship of his firm JWM Partners LLC, people familiar with the matter say.
JWM at its peak oversaw some $2.6 billion but now has just a minimal staff and no traders working in the same Greenwich, Conn. offices that previously housed the firm that made Mr. Meriwether famous, Long-Term Capital Management.
I’ve written a lot about investment risk and my admiration for Nassim Taleb’s ideas about risk that were described in his wonderful book, The Black Swan. If Wall Street refuses to listen to him, then they will keep failing because of their outmoded ideas about investment risk. Obviously Mr. Meriwether doesn’t get it. Nor did his partners in LTCM, Myron Scholes and Robert C. Merton (a Nobel laureate economist) who developed the risk models that they used.
Mr. Meriwether has caused a lot of damage, perhaps he should retire.
For another interesting story about hedge funds and risk, see the article on Peloton Partners.
