Morgan Stanley's David M. Darst on Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street
In 14 Chapters, 265 pages, and 443 footnotes drawing upon 119 sources, structured finance and derivatives consultant and expert witness Janet M. Tavakoli writes about her “meeting with Warren Buffett on the eve of the greatest market meltdown in history” and how meeting him subtly changed the way she looks at global financial markets.
But Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street is much more than a personal investing bildungsroman. The book is so loaded with lessons, warnings, admonishments, and recommendations that readers will find themselves copiously underlining the text and filling the margins with stars, checkmarks, and exclamation points. Dear Mr. Buffett is wide ranging and hard hitting, written with humility, great specificity, honesty, humanity, and historical awareness.
Captious (or offended) readers may criticize the book as: too harsh in parts; overly broad-brush in its treatment of micro and macro events; and possibly bordering on solipsism when Tavakoli frequently cites her own articles, letters, e-mail exchanges, telephone conversations, and television appearances. Serious financial debacles in the post-Millennium years have left plenty of blame to be apportioned among firms, regulators, the financial system, and let’s face it, human nature, and though polite and deferential, Tavakoli (called by Business Week “the Cassandra of credit derivatives”) is not reticent. At times, her tone can be Biblically prophetic.
That said, Dear Mr. Buffett is worth its weight in gold for two main reasons. First, the timeless investment lessons laced throughout the book. To cite a few:
Warren does not rely on a price because that is what you pay. He relies on value because that is what you get (page 23).
The five most dangerous words in business may be “Everybody else is doing it” (page 38).
Janet Tavakoli’s Theory of Everything in Finance: The value of any financial transaction is based on the timing of cash flows, the frequency of cash flows, the magnitude of cash flows, and the probability of receipt of those cash flows (page 69).
One of Warren Buffet’s core principles: Don’t lend money to people who can’t pay you back. If you do not understand something, do not invest (page 105).
The fraud triangle: need, opportunity, and the ability to rationalize one’s behavior (page 199).
Second, the book contains lucid, lapidary descriptions of options backdating (Chapter 3); mortgages (Chapter 5); complex structured products, securitizations, and off-balance sheet vehicles (Chapter 7); and the perils of leverage and the developments leading to the difficulties at Bear Stearns, Lehman Brothers, and other financial enterprises (Chapters 8 and 9).
Parts of the book read like replaying a YouTube video of a hurricane. Whether or not you agree with Tavakoli in all cases on the details and/or her approach, what comes through in every sentence is her conviction and courage in recounting what happened and her creativity and concretization in proposing safeguards and solutions. In the Preface, she says she is “still learning,” and the financial realm stands the richer from her energy, discernment, persistence, erudition, curiosity, insight, and human empathy.
Read this book as soon as you can. As Warren Edward Buffett has said, “Janet Tavakoli should have been listened to much more carefully in the past... and will be in the future.”
David M. Darst is a Managing Director at Morgan Stanley. He serves as Chief Investment Strategist of the firm's Global Wealth Management Group and is the Chairman of the Asset Allocation Committee. Darst is also the founding president of the Morgan Stanley Investment Group. Prior to joining Morgan Stanley in 1996, he was with Goldman Sachs for over twenty years, where he served as a senior executive in the Equities Division. Darst is often quoted in the New York Times, Wall Street Journal, and Financial Times, among others. He is also a frequent guest on CNBC, Bloomberg, and FOX News. He earned his MBA from Harvard Business School and received a BA in economics from Yale University. Darst is a CFA charterholder.
Review
Altogether this book is an excellent read, loaded with information about the goings-on in the financial sector in the US till as recently as September 2008. The is informal, almost like a conversation in a lounge bar, racy, laced with wit and when it comments on leading actors in the drama, dipped in vitriol. Tavakoli is a name we will be hearing about frequently in the near future. (_Business Standard_)
"_Dear Buffett_ is must reading . . . in a way that only Tavakoli could provide. . . Tavakoli knows her stuff. She knows where the bodies are buried in the complex formulas. . . And, almost as a bonus, we get Buffett's views and insights into his derivatives trading. There's nothing more you could ask for in a financial book in this day and age of financial derivatives meltdown." (_Economic Policy Journal_)
"...full of anecdotes, details and character sketches that add depth...she knows her stuff, has strong opinions and turns a colourful quote." (_Financial Times_, February 21st 2009)
"A clear and pacy run through the multitude of sins and sinners in the modern financial world. . . full of anecdotes, details and character sketches that add depth and colour to even the best known episodes of the past two years. [Tavakoli] also covers events only a few years before the current crisis that should have been big warning signs. The correspondence between Buffett and Tavakoli over the past three years reinforced her existing views on the dangers of complex finance. And with Buffett's blessing, this book will find a ready-made fan base with little marketing effort. . . Tavakoli makes for an attractive pundit - she knows her stuff, has strong opinions and turns a colourful quote. . . There is a healthy dose of "I told you so" about this volume - but, to be fair, Tavakoli is one of the few who did." (_Financial Times_)
"[Tavakoli has] been railing against emperors wearing no clothes in the credit derivatives markets forever...
Description:
Amazon.com Review
Morgan Stanley's David M. Darst on Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street
In 14 Chapters, 265 pages, and 443 footnotes drawing upon 119 sources, structured finance and derivatives consultant and expert witness Janet M. Tavakoli writes about her “meeting with Warren Buffett on the eve of the greatest market meltdown in history” and how meeting him subtly changed the way she looks at global financial markets.
But Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street is much more than a personal investing bildungsroman. The book is so loaded with lessons, warnings, admonishments, and recommendations that readers will find themselves copiously underlining the text and filling the margins with stars, checkmarks, and exclamation points. Dear Mr. Buffett is wide ranging and hard hitting, written with humility, great specificity, honesty, humanity, and historical awareness.
Captious (or offended) readers may criticize the book as: too harsh in parts; overly broad-brush in its treatment of micro and macro events; and possibly bordering on solipsism when Tavakoli frequently cites her own articles, letters, e-mail exchanges, telephone conversations, and television appearances. Serious financial debacles in the post-Millennium years have left plenty of blame to be apportioned among firms, regulators, the financial system, and let’s face it, human nature, and though polite and deferential, Tavakoli (called by Business Week “the Cassandra of credit derivatives”) is not reticent. At times, her tone can be Biblically prophetic.
That said, Dear Mr. Buffett is worth its weight in gold for two main reasons. First, the timeless investment lessons laced throughout the book. To cite a few:
Second, the book contains lucid, lapidary descriptions of options backdating (Chapter 3); mortgages (Chapter 5); complex structured products, securitizations, and off-balance sheet vehicles (Chapter 7); and the perils of leverage and the developments leading to the difficulties at Bear Stearns, Lehman Brothers, and other financial enterprises (Chapters 8 and 9).
Parts of the book read like replaying a YouTube video of a hurricane. Whether or not you agree with Tavakoli in all cases on the details and/or her approach, what comes through in every sentence is her conviction and courage in recounting what happened and her creativity and concretization in proposing safeguards and solutions. In the Preface, she says she is “still learning,” and the financial realm stands the richer from her energy, discernment, persistence, erudition, curiosity, insight, and human empathy.
Read this book as soon as you can. As Warren Edward Buffett has said, “Janet Tavakoli should have been listened to much more carefully in the past... and will be in the future.”
David M. Darst is a Managing Director at Morgan Stanley. He serves as Chief Investment Strategist of the firm's Global Wealth Management Group and is the Chairman of the Asset Allocation Committee. Darst is also the founding president of the Morgan Stanley Investment Group. Prior to joining Morgan Stanley in 1996, he was with Goldman Sachs for over twenty years, where he served as a senior executive in the Equities Division. Darst is often quoted in the New York Times, Wall Street Journal, and Financial Times, among others. He is also a frequent guest on CNBC, Bloomberg, and FOX News. He earned his MBA from Harvard Business School and received a BA in economics from Yale University. Darst is a CFA charterholder.
Review
Altogether this book is an excellent read, loaded with information about the goings-on in the financial sector in the US till as recently as September 2008. The is informal, almost like a conversation in a lounge bar, racy, laced with wit and when it comments on leading actors in the drama, dipped in vitriol. Tavakoli is a name we will be hearing about frequently in the near future. (_Business Standard_)
"_Dear Buffett_ is must reading . . . in a way that only Tavakoli could provide. . . Tavakoli knows her stuff. She knows where the bodies are buried in the complex formulas. . . And, almost as a bonus, we get Buffett's views and insights into his derivatives trading. There's nothing more you could ask for in a financial book in this day and age of financial derivatives meltdown." (_Economic Policy Journal_)
"...full of anecdotes, details and character sketches that add depth...she knows her stuff, has strong opinions and turns a colourful quote." (_Financial Times_, February 21st 2009)
"A clear and pacy run through the multitude of sins and sinners in the modern financial world. . . full of anecdotes, details and character sketches that add depth and colour to even the best known episodes of the past two years. [Tavakoli] also covers events only a few years before the current crisis that should have been big warning signs. The correspondence between Buffett and Tavakoli over the past three years reinforced her existing views on the dangers of complex finance. And with Buffett's blessing, this book will find a ready-made fan base with little marketing effort. . . Tavakoli makes for an attractive pundit - she knows her stuff, has strong opinions and turns a colourful quote. . . There is a healthy dose of "I told you so" about this volume - but, to be fair, Tavakoli is one of the few who did." (_Financial Times_)
"[Tavakoli has] been railing against emperors wearing no clothes in the credit derivatives markets forever...