Chapter 1. An Unanswered Invitation


Be sure to stop by if you are ever in Omaha and want to talk credit derivatives . . .

 --Warren Buffett in a letter to Janet Tavakoli, June 6, 2005

It was August 1, 2005, and I was rereading a letter in my correspondence file dated June 6, 2005. The letter was from Warren Buffett, the CEO of the gargantuan Berkshire Hathaway conglomerate. I had not yet responded and had no explanation for the delay save for a little awe. For the several years prior, Fortune listed Warren Buffett as either the richest or second richest man on the planet. He and Bill Gates annually jousted for the top spot, with the outcome depending on the relative share prices of Berkshire Hathaway and Microsoft.

Several years earlier, I had sent Warren Buffett a copy of my book, Credit Derivatives & Synthetic Structures. In his letter Buffett wrote that he had been looking at the book again and had just found a letter I had tucked between the pages, "Please accept my apologies," he continued, "for not replying to you when I first received it."[3] He invited me to stop by if I were ever in Omaha. I looked up. After all this time, I could not remember what I had written in that old letter. I did know that I had not expected a response. But certainly now a response was needed from me, a belated one. "Dear Mr. Buffett," I began.

I am an investor in Berkshire Hathaway "A" shares, but Mr. Buffett would have no way of knowing that since I hold shares in brokerage accounts. Perhaps Mr. ...

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