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Dear Mr. Buffett: What An Investor Learns 1,269 Miles From Wall Street
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Product Description

Janet Tavakoli takes you into the world of Warren Buffett by way of the recent mortgage meltdown. In correspondence and discussion with him over 2 years, they both saw the writing on the wall, made clear by the implosion of Bear Stearns. Tavakoli, in clear and engaging prose, explains how the credit mess happened beginning with the mortgage lending Ponzi schemes funded by investment banks, the Fed bailout and its impact on the dollar. Through her narrative, we hear from Warren Buffett and learn how his enduring principles caused him to see the mess that was coming well in advance and kept him and his investors well out of the way.

Customer Reviews:

  • Eye-opening expos¨¦ into the origins of the credit crunch
    A sobering and detailed account of the shenanigans which led us (predictably) to our current economic predicament. Having formerly worked in the industry I had been aware of many of the facts and excesses detailed in the book but Janet was able to fuse them all together. I liked her use of Warren Buffett as a metaphor for what is sensible versus what was the short-term, greedy, expeditious route.

    When you read the analysis you can see that the so-called credit crunch was completely predictable and you also worry that the current course of government action will not produce a happy ending.

    Essential reading for students of the markets....more info
  • An objective and educational description on 'what happened?'
    I used to take a simplified view on the `division of labor': while the manufacturing sector is responsible for "value-adding," the financial sector got the role of "price allocation."

    As an engineer, I'm used to look at the economical activities only from the value-adding chain: e.g., from crude oil, to polymer, to fiber, to fabric, to cloth and carpet, etc. Engineers are keenly aware of various self-serving conducts involved in this production chain that put integrity and honesty at risk. Leaving unchecked, environment polluted, workers' safety compromised, child labor abused, lead paint got into toys, unsafe peanuts became food, and melamine added to milk. The list is long. The financial people, on the other hand, are fine. The market is efficient, and they do not deal with real material anyway.

    I should have known better.

    Tavakoli's book succinctly educated this reader that the financial sector also has its fair share of misconduct driven by greed, dishonesty, and fear familiar to all; and the damages can be even more dramatic. By misaligning prices to the corresponding values, price-following manufacturing activities would consume limited (natural) resources to their inefficient usages. (e.g., building cars and houses people cannot afford).

    By Tavakoli's description, if I read it correctly, this price misalignment was exuberated by excessive leverage, compounded by aggressive risk-taking, and fueled by greed and dishonesty of some. While logic and the fundamentals both point to the un-sustainable, human mind tends to believe and hope for "more of the same (profits) should still be there." Now the damage has became painful to bare for the society as a whole.

    The book must be useful for those in the financial sectors. But need not be limited there. All who share the genuine interest on the growth and prosperity of this earth could benefit from the lessons described.

    As for those whose primary interest is self-advancement in a fair and civil society (me for one), Mr. Buffett also has a point: "start with what is legal, but always go on to what we would feel comfortable about being printed on the front page of our local paper." (page 109)
    ...more info
  • Telling Us What We Need To Know About Wall Street and Washington
    Being a polymath, Janet Tavakoli was already an expert in the intracacies of complex financial instruments and derivatives. Now, she has brought that experience to the world of Main Street, as she lunches with Warren Buffett, and brings us back to the basics of common sense investing. Focusing on risk and opportunity, she points out that what went so deparately wrong with our capitalist system -- that has generated great wealth in this country and raised our standard of living to historic levels -- was not the complex financial instruments, but people.

    Chapter by chapter, she tells us about those people. The people on Wall Street (mainly all those bright MBA types, CEOs and their boards of directors) who manipulated those complex instruments for their personal short term gain at the expense of the company and stockholders who they worked for. The people at the SEC and other regulatory agencies who were supposed to be the public's gatekeeper, but who let the true barbarians sack our corporate treasuries. The people in the rating agencies who couldn't properly assess total business and credit risk adequately, who, based on their standard "single default" strategy, have no idea how to price out a black swan event to protect investors, instead, preferring to take fees from their corporate customers in what would be considered a bribe for the rest of us. The people in political Washington who don't really represent the American public or investor anymore, and who instead collude with Wall Street, its lawyers and lobbyists to disenfranchise investors and pensioners from their hard-earned money. And the people at the Treasury and Federal Reserve, who are looking out for the big Wall Street commercial and investment banks and their friends (who will give them that cushy next job with its big pay check) after they fail to keep all the rest of us out of financial harm's way while mortgaging our children's and grandchildren's future through the same kind of reckless borrowing that got us into this financial trainwreck in the first place.

    Yes, Janet Tavakoli -- in her person style, and irregardless of what you may think of it -- tells us once again, through her stories of Buffett and her personal business experiences and early warnings, what we all should have known earlier, but weren't listening to. Don't listen to all those talking heads in the newsprint and electronic media, or all those Wall Street hucksters. Do your homework before investing. Search for companies with value and a purpose. Forego the short term profit in exchange for the long term value.

    There are many so-called financial experts, lemming economists, and other political operatives and talking heads out there wailing against the current Wall Street mess, but none with Janet's knowledge, experience and position of authority when it comes to how financial instruments really work. I recommend Dear Mr. Buffet to anyone who prefers truth over obfuscation. Besides, considering how much people are willing to pay to have lunch with him -- her best endorsement -- you've got to be pretty smart to get Warren to pick up your lunch tab!...more info
  • There are valuable lessons from Ms. Tavakoli to be learned.
    As soon as I received my Kindle2; my first purchase was this book by Janet Tavakoli.
    (A benefit using Kindle2 is that I can quickly refer to my notes that I digitally highlighted as I carry my Kindle2 with me everywhere).

    I have watched and listened to her while she was a guest on CNN in the past but her true value comes to light reading her words. Her writing was much, much more than what I expected.

    She explains the current financial situation of banks and mortgage lenders in such detail that she is able to identify and explain the most elementary function of what has happened and why it happened and can present viable solutions.

    I also enjoyed reading about her business relationship with Warren Buffett and can understand that connection.

    I hope that President Obama will read this book; as to recognize her wisdom and intellect as well as her brilliant business insight.

    Rating: 5 Stars.

    Robert L Crivelli PhD
    ...more info
  • Like Drinking From a Fire Hose
    My advice to anyone who starts reading this book is to have several highlighters available, because there is so much usable material in this book that it is like drinking from a fire hose. Tavakoli's book is simply fantastic, it is a resource book, and it is entertaining, gossipy, enlightening, funny, very educational, and helpful as an investment guide as well as a general business manual. It also makes the reader the conversation starter and raconteur at this season's cocktail/dinner party circuit. ...more info
  • An education in finance with a refreshing dose of logic and insight
    Most of us will never get a lunch invitation from Warren Buffett, but Janet Tavakoli did. What does it take to earn one of those?

    Well, for starters, it doesn't hurt to be the kind of person who persists in pointing out the flaws in our financial system until BUSINESSWEEK calls you "The Cassandra of Credit Derivatives." Warren Buffett has amassed one of the largest fortunes the world has seen by making his own way, independent of Wall Street's herd mentality. When one independent mind meets another, there is an unmistakable thrill of recognition. After reading Tavakoli's book, CREDIT DERIVATIVES AND SYNTHETIC STRUCTURES, Buffett responded to that feeling of recognition by inviting her to join him for lunch.

    Tavakoli's account of her meeting and subsequent correspondence with Buffett gives us a sense of their respectful cameraderie. Even better, it gives the rest of a us a chance to learn about the financial markets that affect us all, right at a time when those markets seem to be disintegrating before our eyes.

    If at any time in the past few months, you've found yourself reading the newspaper and thinking, "I'm no financial wizard, but I believe I have better sense than to loan a lot of money to someone who obviously can't pay it back," this book offers a glimpse of a man whose success is based on a deep understanding of the marketplace, rather than a mystical trust in computer models that seem to do a pretty poor job of predicting value. I recommend DEAR MR. BUFFETT to anyone who'd like a better understanding of how our economy has arrived at this difficult point and how the individual investor can best survive and thrive in today's marketplace.

    Mary Anna Evans...more info
  • Like a Structured Investment Product itself, this book is hard to rate!
    My interest in this book was sparked by Janet Tavokoli's appearance on CSPAN and a fascinating interview conducted by Brian Lamb. Written by an insider who knows and works in the arcane world of derivatives and structured investment products, this book provides useful insight into the chronology of this decade leading up to and including the collapse of the investment banks/AIG in the 2008. The author was clearly "in the know" as one who knew that the financial world had devised a ticking time bomb that was set to go off and leave value destruction in its wake.

    Like CDOs and SIVs, it is very difficult to bring the book into focus as it touches a number of bases (the middle east, various personalities, etc.) and rambles off course at varous junctures, detracting from the narrative flow. Thus, like SIVs and CDOs, this book is composed of various "tranches" (forgive me for using these financial terms but they do help describe this book) that intermingle and are hard to separate. Plus, the constant refrain of "Warren and I" becomes quite tiresome. Yes, she knows him and the two discussed their mutual interest in finance but this oft-repeated reference seems to place her in the realm of close friend and colleague, which she isn't. Still, when the definitive history of the financial crisis that began in 2007 is written, this book will be referenced and cited. Until then, we must wait on that history. ...more info
  • The Sub-Prime Crisis: The Good, The Bad, and The Guilty
    Janet Tavakoli, a well-known expert in the world of credit derivatives and structured products (yes, those toxic assets) has written a remarkably entertaining and insightful book in which she combines Mr. Buffett's wisdom and advice with her own views about the credit crisis. Tavakoli's previous books, all about highly technical topics, allowed her to show only one set of skills, albeit an important one: her ability to explain technical issues in an accessible manner. In Mr. Buffett, however, a book for the general public that contains no formulas or equations, she demonstrates that she can write not only with clarity but with wit. Her prose is agile and precise, and her words punch her victims always fatally, and not once, but just in case, many times. Hints of this refreshing style were somehow present, although not totally in the open, in her previous book (Structured Finance & Collateralized Debt Obligations). Despite the subject matter she managed to include comments about triboluminescense, sexual positions, and the Nogorno-Karabakh dispute while making reference to characters as diverse as Michael Moore, Richard Feynman, Shakespeare and Paul Marcinkus.

    Mr. Buffett started with an invitation by The Sage of Omaha to Tavakoli in June 2005 ("Be sure to stop by if you are ever in Omaha and want to talk credit derivatives") after she had mailed him a copy of her latest derivatives book. Knowing that she would never have any reason to be near Omaha, Tavakoli volunteered a few days to visit. Shortly thereafter, she flew from Chicago (where she lives) to have lunch with Mr. Buffett in a place "with no d¨¦cor but good food." That started a dialogue between the two of them (through subsequent phone calls, e-mails, and letters) that seems to be still going on.

    In a sense, Tavakoli's book is more about the current crisis rather than Mr. Buffett, although there is enough about him to satisfy the Buffett-curious reader. He comes across as a deceptively affable man who advises her not to neglect her love life, enjoys and values gossiping, reads financial reports the way a teenager reads Playboy, and believes there is no difference between value and growth stocks. This came as personal relief because I always failed to see the difference between them no matter how hard all the mutual funds prospects I have seen try to make that point. On a more serious note, Mr. Buffett seems not to take the Efficient Market Theory (or dogma?) too seriously. Not a surprise if you think that his track record as investor is a living proof of the fallacy of the theory. More important, Buffett reminds us of the danger of leverage: anyone can show great investment returns with leverage (inflated revenues, he calls them). It is when things go the other way, and leverage magnifies the mistakes, that you can really see who has been swimming naked.

    But the backbone of the book (and its most interesting aspect) is the critique and analysis of the current financial crisis that Tavakoli intertwines cleverly within her own dialogue with Mr. Buffett. She makes a convincing case that at the root of the present crisis there was a bad combination of dishonest executives and bankers under the surveillance of incompetent, and probably equally dishonest, regulators.

    For example, the chapter about the backdating of stock options scandal, although not strictly related to the credit crisis, makes you wonder about the character of the people running corporate America: in the 2006-2007 timeframe more than 120 U.S. companies were under investigation for accounting irregularities; 85 ended up amending their earning statements. She is very critical of the role played by the Office of the Comptroller of the Currency (OCC), which invoked an obscure 1862 provision to undermine the states' ability to police predatory lending. This decision, she believes, had a very negative effect on mortgage origination standards and their subsequent re-packaging by investment bankers. Additionally, she castigates the Securities and Exchange Commission (SEC) for failing to oversee the investment banks. And when it comes to the rating agencies, which blessed some of these securitizations with AAA ("very safe") ratings, she employs the term "financial astrology". Enough said! Ironically, Mr. Buffett, who through its investment company (Berkshire Hathaway) owns almost 20% of Moody's stock, has admitted to her that this is one investment he is not proud of.

    Tavakoli also paints a disturbing picture when she describes the collapse of two Bear Stearns investment funds (she received a "thinly veiled threat" by the fund manager after she was quoted in the press saying something he did not like); when she explains how the well-connected Carlyle group got help from the Fed while a less plugged-in fund, Peloton, was let go; and when she shows that her initial assessment of AIG, Merrill, and Citigroup losses (all made in late 2007 and early 2008 and in contradiction with the information released by those companies at the time) was ultimately right on the money. The list of financial and ethical shenanigans is long and compelling, full of juicy anecdotes, and supported by solid data and well-articulated reasoning. Although is fun reading about these issues it is quite depressing to think about them: you get the sense that the story is more in tune with the doings of a corrupt military dictatorship in a third world country rather than the oldest democracy in the world.

    Much has been said about the acronyms used to describe the financial instruments involved in this crisis: CDOs, SIVs, CPDOs, ABS, MBS, CDS, ABCP, etc. Ironically, the list of government entities which, in her view, have something to apologize for is almost as long: SEC, FED, OCC, FDIC, FHFA, OTC, OFHEO, etc. To what extent these regulatory entities, which sometimes overlap, but also leave voids, will survive in a global market is something to ponder. The case for one regulatory body with wide international authority is becoming stronger as the case for state-level bodies become more dubious. Although Tavakoli does not make these two points explicitly, one wonders.

    Some readers might feel turn off by a few Warren-and-I type of statements that seem a bit self-serving. And a case can be made that perhaps many investors deserved what they got because in their greedy quest for unreasonable returns they overlooked basic principles of prudence --a point that does not come across very strongly in the book. Lastly, Chapter 13 (The Fogs of War, Religion and Politics), a very interesting chapter in its own right, is probably better suited to be dealt with in a separate (next?) book. That said, these are minor sins in an otherwise excellent book.

    The following paragraph, which appears close to the end of the book, summarizes the main thesis,
    "Washington is supposed to provide a strong national defense; but we were attacked from within our borders-sometimes by those charged to protect us. Washington failed in one of its more important duties, Washington failed to protect our money."

    Further down she adds, "Homeland security requires a secure homeland currency." I doubt that anyone would be left indifferent by these provocative, but well-argued, points.

    There is no free lunch they say, at least according to most economists. And certainly lunch with Mr. Buffett is far from free ($ 2.11 million, according to eBay, June, 2008). Clearly, Tavakoli made a good decision when she accepted Mr. Buffett's lunch invitation. However, for the rest of us, who are unable to pony up the two million or unlikely to get invited by the great investor, this book is a very good substitute.
    ...more info
  • Need a real editor.....
    The book was very interesting about Warren and the demise of Wall Street, but I must say that the editor who was supposingly have edited the book is the worse I have ever came across. Is the editor still in elementary school?...more info
  • A great book for our times
    If you are looking for a book that explains the complexities of the financial world and how Wall Street and Main Street worked together to create the biggest bubble (Ponzi scheme) in recent history, this is it. As a bonus Janet Tavakoli gives us a peek into Mr. Buffet's investment style which can be summarized in two words Common Sense. Her prose is easy to follow and the anecdotic style keeps you wanting more. Definitely a five-star rated that should be on everybody's bookshelf. ...more info
  • Dear Mr. Buffet
    I apologize if this appears terse.

    This book (not including all of the author's self ego stroking) gives little information that has not been stated about Warren Buffet investing philosophy before. There is a lot of fluff around it that may get frustrating to navigate for those who did not buy this book for it's story-telling value. I recommend reading the amazon review of this book if you only desire to learn the principles. Alternatively, you can read Securities Analysis or The Intelligent Investor where you will see the exact same principles in Dear Mr. Buffet except in much greater detail ,along with all the other principles of value investing, and without all the fluff junk (which is not impressive in the first place). ...more info
  • Very knowledgeable author
    Author has a depth of understanding worth listening too. And Warren Buffet knows that. Sharing this knowledged is very much appreciated and very helpful....more info