Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization 2nd Edition

I agree with an earlier reviewer - the problem with the book is not so much that the author doesn’t know and communicate the subject matter, nor that her thoughts on how the structures can be misused aren’t interesting and insightful. The main issue is that the editing is very poor - there are many instances where the book talks about topics which won’t be defined until much later, and it often veers between being very general and very specific.

I echo the praises of this book sung by previous reviewers. But I can also say in all sincerity that this is the most fun book I can ever recall reading about finance.The book isn't an overview of the current credit crisis per se, but a detailed look at some of the building blocks that came tumbling down (as well as some that might collapse in the future, such as total-rate-of-return (TRO) swaps). It's addressed to a professional audience, so if you're shy about reading books with some equations you might not enjoy it so much. Most of these are pretty simple, though, and none involve calculus.Still, I'd recommend that you not be put off by the quantitative bits and professional terminology. To a greater extent than most other finance books, Tavakoli uses diagrams to explain the deal structures. The pictures aren't always understandable separately from the text, but they are generally very lucid and valuable. Most importantly, interspersed with the material for practitioners are extended narrative, historical and critical passages, which will give you an insider's insights into the role human nature plays in quantitative finance. Although she's a financial professional herself, Tavakoli isn't afraid to call 'em how she sees 'em, often with a bit of appropriate cynicism, e.g. "Hedge funds have made massive leveraged credit bets, knowing that their upside is billions in fees and their downside is millions in fees" @ 430. I even laughed out loud in a couple of places, which was a personal first for a book of this genre.Occasionally Tavakoli uses terminology that isn't explained until later (such as "value at risk" (VaR), which is mentioned @ 87 but not explained until the next chapter, @ 94ff); unfortunately, the index is an erratic aid in this situation (e.g., VaR's first entry in the index is for page 97). But these are very minor quibbles, and shouldn't discourage you from reading this terrific book.

Janet Tavakoli has done a great job with her latest edition of Structured Finance and CDOs. This is a must read for anyone trying to understand these markets and the human factor behind the deals that have turn sour in the recent events of the US housing and global credit crises. Great timing for a revised edition!It is a known fact that the structured finance world has changed dramatically after the recent events but it won't cease to exist. As Ms. Tavakoli puts it, structured finance allows for the creation of synthetic deals than can and will continue to be used for valid business purposes but can also be used, and will continue to be used, as instruments to defraud investors in many instances, hence the call for regulatory bodies that can keep up with the manufacturing of complex financial structures and the way the market players interact driven by greed.The book doesn't give the reader the answer to the current crisis but it definitely serves as a tool to understand it and craft an educated guess of how and why things happened they way they did. If you are new to the field let Ms. Tavakoli, a real and experienced practitioner, walk you through the inner workings of the industry; you won't regret it.

I found the book confusing. The author frequently uses terminology that is defined later in the book, while focusing on very specific matters (e.g. peculiarities of various SPV forms) before introducing key concepts, such as how a simple CDO is structured. This does not help in understanding the material, since one is unable to understand what is the purpose of the material that is being covered.

If you are going to buy only one book on this topic, this is the one to buy.First, it covers all the critical aspects of structured products: quantitative, qualitative, legal, etc.Second, it provides an insightful analysis that makes it easy to grasp the issues behind the current financial crisis [What, Why & Who]Third, it is written by somebody who understands the topics and has done the stuff (NOT by somebody who talked to somebody who thinks is an expert, but cannot know for sure because he(or she) does not really know the topic well).Fourth, it is written in a style that is fresh and engaging, but precise: neither the pedantic language of some academics nor the infantilizing language of some amateurish journalists.Chapter 17 (The Credit Crunch and CDOs) is a MUST for anyone involved in the structured products market.ARTURO CIFUENTES

This 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.In addition, the book includes a lot of nuggets of wisdom on applying a value-investor discipline to structured finance. This is something that I hadn't expected since the complexity of structured-finance instruments would give one the impression that this field is (and was) only a realm for rocket scientists. For example, in Chapter 5, Janet Tavakoli describes "The Leverage Paradox" whereby levering up equity (or even commodity) positions that are deeply distressed can make sense as a systematic strategy since the dramatic returns for correct bets can compensate for the inevitable downturns from such a strategy. But when leverage is applied to non-distressed debt securities, as was the fashion during the credit boom, disastrous results can (and did) happen with any air-pocket in the market, whether it is because of isolated cases of fraud or temporarily difficult liquidity conditions.

More informative and anecdotical than educational