Long Term Capital Management (LTCM), once a prestigious hedge fund managing over $126 billion, collapsed in 1998 after its complex, highly leveraged strategies failed due to unexpected events like the Russian debt default. The firm lost nearly 90% of its capital in weeks, leading the Federal Reserve to organize a $3.6 billion bailout from major banks to prevent wider financial instability. This incident underscored the dangers of over-leveraging and the unpredictability of financial models.
