Synopsis
Financial Classic on Securitization, Derivatives, and Global Systemic Risk
The definitive book on the built-to-fail mortgage-backed securities, collateralized debt obligations, corporate bonds, and other flawed structured credit products that led to the global financial crisis by derivatives expert Janet Tavakoli. Structured Finance and Collateralized Debt Obligations (Paperback Textbook, Second Edition) exposed that corporations and financial institutions had massive hidden value-destroying exposure. Banks and corporations fluffed their accounting numbers to cover it up. Tavakoli explains not only what does not work but also what does work. She demonstrates how to profit from the madness of crowds to protect investment portfolios.
Law firms, Congress, and scholarly publications reference her work. She provides real time evidence. John Wiley & Sons published the hardcover edition of this book in September 2008 just as the market imploded. This eTextbook edition is a print replica published by Lyons McNamara. Page numbers are identical to those used in public references.
Among the wealth of practical information, in chapter eight under the subsection “A Good Year for Some,” Tavakoli explains the short ABX Index trade. The index was comprised of flawed mortgage-backed collateralized debt obligation tranches. She published eighteen months before Michael Lewis made the trade famous in his book, The Big Short.
Tavakoli shines a bright light on fraud. She explains how to recognize it in advance. Fraud that affects leveraged corporate debt, asset-backed securities, and other fixed income assets creates a unique opportunity for short sellers. The bonds come to market at par. The short’s downside is limited, cost of carry is minimized, and upside is enormous.
She addresses a wide range of structured financial product issues. Uses and abuses of special purpose corporations and entities, beyond investment banking and corporate finance, are explained in detail.. Other topics include equity-linked notes, credit linked notes, cross-border securitization, and exotic structures.
“Janet Tavakoli has been able to dissect with a brisk style the intricacies of many structured products. Not only does she explain in a clear and insightful manner how certain things work, but more important, why others DO NOT WORK!!! Highly recommended and very much needed.”
Arturo Cifuentes, Ph.D. (formerly Moody's) Professor/Business School en Universidad Adolfo Ibanez. Member, Investment Committee, Chilean Sovereign Fund
“Tavakoli uses her broad professional experience to examine the CDO market in simple and clear language. —Risk
Janet Tavakoli is exceptional in having worked extensively both in mortgage securitization and structured credit at major financial institutions. In this clearly written book, she shares her in-depth knowledge of structuring, valuation, and risk management of structured products. This book is a must read for regulators and risk managers to keep up with the latest developments in structured finance."—Joseph Masri, PhD, Barclays Global Investors, Regional Director, Professional Risk Managers' International Association (PRMIA)
“Janet Tavakoli warned the world this disaster was coming well in advance. Now she explains it again for those who did not listen before as well as why it is not over yet. You need to read this book to understand the biggest credit bubble in world history.”—Jim Rogers, author of A Bull in China, Hot Commodities, Adventure Capitalist, and Investment Biker.
“Stan O'Neal, Marcus Ospel, and more than a few other bold-face names in finance might still have jobs if they'd taken the trouble to read this book.”—Greg Newton, Founding Publisher, MAR/Hedge
Review
"...Tavakoli uses her broad professional experience to examine the CDO market in simple and clear language."
--Risk
"Tavakoli...does what she can to address this market's growing pains in...this intriguing book"
--Hedge World
"Janet Tavakoli warned the world this disaster was coming well in advance. Now she explains it again for those who did not listen before as well as why it is not over yet. You need to read this book to understand the biggest credit bubble in world history."
--Jim Rogers, author of A Bull in China, Hot Commodities, Adventure Capitalist, and Investment Biker,
"Janet Tavakoli's new book provides an insider view into the opaque world of structured finance and collateralized debt obligations. With its clear explanations of numerous structured-finance innovations, I expect this book to become the 'Rosetta Stone' for deciphering these markets. This book is a service to the investment community."
--Hilary Till, Cofounder, Premia Capital Management, LLC
"Janet Tavakoli explains the complex world of structured finance with unusual flair and colorful anecdotes from securitization's front lines. An indispensable and up-to-date guide for anyone seeking greater understanding of the CDO market."
--Charles C. Henneman, CFA, Head, Educational Programs and Events, CFA Institute
"Janet Tavakoli has been able to dissect, with a brisk style, the intricacies of many structured products. Not only does she explain in a clear and insightful manner how certain things work, but more important, why others do not work!"
--Arturo Cifuentes, PhD, Managing Director, R.W. Pressprich & Co.
"Stan O'Neal, Marcus Ospel, and more than a few other bold-face names in finance might still have jobs if they'd taken the trouble to read this book. Janet Tavakoli takes the complexities of today's derivatives markets and makes them both comprehensible and digestible for everybody from the practitioner to the interested observer."
--Greg Newton, Founding Publisher, MAR/Hedge
"Janet Tavakoli is exceptional in having worked extensively both in mortgage securitization and structured credit at major financial institutions. In this clearly written book, she shares her in-depth knowledge of structuring, valuation, and risk management of structured products. This book is a must read for regulators and risk managers to keep up with the latest developments in structured finance."
--Joseph Masri, PhD, Barclays Global Investors, Regional Director, Professional Risk Managers' International Association (PRMIA)
Praise for Janet Tavakoli
"ConsultantJanet Tavakoli made no bones about the risks lurking in structured financevehicles"Business Week, January 2008
"Tavakoli'sstrong opinions have earned her some high-profile admirers. Warren Buffett invitedher to stop by..."
University of Chicago Magazine
"Anintelligent analyst whose command of the arcane world of securitization mixedwith a brutally honest analytical framework makes it a pleasure to hear andread her work."
AsiaTimes Online
"Tavakoliwrites in a clear, sprightly way."
ADAM SMITH (George J. W. Goodman), author of The Money Game
"Intelligent analyst whose command of the arcane world...mixed with abrutally honest analytical framework makes it a pleasure to read her work."
Asia Times Online
"Tavakolimakes for an attractive pundit--she knows her stuff, has strong opinions, andturns a colorful quote."
Financial Times
"Tavakolihas been railing against emperors wearing no clothes in the credit derivativesmarkets forever. If only people had listened."
AndrewTobias, author of The Only Investment Guide You'll Ever Need
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