But aside from the uncommon lucidity they share, the two books couldn't be more different. "Liar's Poker" portrayed the trading floor of Salomon Bros., then the hottest firm on the Street, as a pinstriped version of "Animal House." Lewis' milieu was a raucous, macho fraternity where slobbering, swaggering dudes like "The Human Piranha" (who shouted the "F" word in every breath) prided themselves on cajoling and intimidating clients into buying "dog shit" bonds. It was a realm ruled by balls, not brains, and the story line was how Lewis -- an urbane art history major from Princeton -- learned to fit in with crude boys and establish himself as one of the "Big Swinging Dicks."

Lewis' narrative was wonderfully entertaining, but according to Lowenstein's first-rate book, it turns out that another contingent on the Salomon trading floor was making a helluva lot more money than Lewis' Neanderthals. Salomon recruited a bunch of quiet, aloof, socially awkward supernerds -- mostly economics professors from top universities -- to sit among the frat boys. While the others traded based on gut instincts, these geeky geniuses were the ultimate rationalists, relying on complex mathematical models and harnessing staggering amounts of computer power to discern extremely subtle trends in the markets.

Their leader, John Meriwether, the head of trading at Salomon, wasn't at all like Lewis' bad boys. He had a strict Roman Catholic upbringing and kept rosary beads and prayer cards in his briefcase. Even as a teenager he was so cautious and methodical that he wouldn't bet on his hometown team, the Chicago Cubs, until he got a weather report about the winds at Wrigley Field.

The nerds were Meriwether's real stars. Lewis thought he was a big shot when he got a $225,000 year-end bonus, but that was nothing compared with the $23 million that one of Salomon's professors pulled down in 1989.

In "When Genius Failed" (published by Random House, the same parent company that published my new book, "The Second Coming of Steve Jobs") Lowenstein picks up the story in the early '90s, as Meriwether takes the fall for an underling's lawbreaking and leaves the firm. He brings the professors with him to the preppy haven of Greenwich, Conn., where they create a new firm called Long-Term Capital Management, raising buckets of cash from famous rich guys like Hollywood agent Mike Ovitz and Nike CEO Phil Knight. Long-Term Capital was a hedge fund, meaning it was a private partnership open only to a small number of high-net-worth individuals who could afford to take big risks with their money.

Long-Term Capital was instantly and fabulously successful. In 1996, the firm made an astonishing $2.1 billion, eclipsing the profits of huge, established companies such as McDonald's, Disney or Xerox. The trick wasn't that its investments shot up in value. It was that it was playing with staggering amounts of other people's money that it had borrowed. The firm squeaked out only a measly 1 to 2 percent return on its bets, but because of its massive borrowing, the crumbs of profit were billion-dollar crumbs. It wound up controlling assets worth a shocking $140 billion. That made Long-Term Capital two and a half times the size of one of the largest mutual funds, Fidelity Magellan, and even bigger than investment banks like Morgan Stanley.

Meriwether was able to borrow great sums mainly because of the aura surrounding his team of academic geniuses, which included two Nobel Prize winners. Long-Term Capital was cast as the math whiz with the mental ability and emotional discipline to count cards at blackjack. It was as if everyone pooled their hard-earned savings and sent him to Las Vegas, where he would watch patiently for hours until he knew that the deck would be stacked in his favor.

It was a good system, but it was too good to last.

In 1998, the firm's portfolio crashed disastrously, after adverse world market movements triggered massive selling. Long-Term Capital's collapse threatened to create a panic on Wall Street, since many major banks had lent it such huge sums. Despite the public backlash that would result from rescuing a bunch of rich speculators, the Federal Reserve orchestrated a multibillion-dollar bailout.

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