Diana B. HenriquesReseñas

Taming the Street by Diana B Henriques is a thoroughly researched account of FDR trying to reign in a destructive (to democracy anyway) capitalism that is also a page-turner.

We're talking Wall Street, the Securities Exchange Commission, and the government, not usually topics that just make me think I'm going to enjoy reading the book, even if I want to read it to learn about an important historical moment. Yet this book was indeed an enjoyable read. I think, in addition to the relevance to our contemporary situation, the reason this is actually a good read is because we are dealing with the people involved, not just the concepts. This is a human drama, personal in the case of those involved with supporting or opposing the SEC but also personal in what it means for so many regular citizens and their ability to confidently participate in the country's capitalism.

While certainly enjoyable as a history book, it is important because of the cautionary tale it offers us today in trying to wrest control of government back from big business and the cronies willing to sell the populace down the river to line their pockets and pretend they are in power, when in fact they are puppets of the ultra rich.

While I would definitely recommend this to those with an interest in US history, particularly mid 20th century, I think anyone concerned about the growing disparity in income and wealth can learn a lot about what they're fighting against as well as some tactics that worked in the past. We can all learn some valuable lessons here, about our past, our present, and what our future could hold.

Reviewed from a copy made available by the publisher via NetGalley.½

Having recently read an equally riveting and well written account of greedy rich people, The Empire of Pain, it was interesting to compare the Madoffs to the Sacklers. I ended up feeling sorry for the Madoffs who, if not having paid for the misery of their victims, did pay in full in their family—the son who killed himself, the other son who died prematurely of cancer, the wife who was dispossessed of everything. And the three of them were bystanders to Bernie’s crime. And Bernie himself was hapless, self-deluded, in over his head. His 150 year prison sentence was just and deserved. But the Sacklers—oh my, they are still out there slithering around protecting their assets.

A first-class book on the flash crash of 1987, which didn't happen nor recover quite as quickly as everyone remembers. Extensively well-researched, the author takes pains to lay out the likely causes and impetuses for the big day without seeming to lay the blame unfairly on any given sector. I was pleased that she drew connections to both the modern day and more modern crashes (2008) without swamping the rest of the work. It's a little dry, sure, but given the subject matter I'd say it actually overachieves with regard to readability. An excellent retelling of this chapter of financial history.

I enjoyed this book - I learned a lot about Bernie Madoff. A lot of court cases were still pending when the author wrote this book, so I might have to google a few names. I picked it up at the library to read as a company I used to work for is mentioned in the book. We handled quite a few Madoff accounts. (Won the lawsuit, though, not guilty!)

Straightforward and clear explanation of how the Madoff Ponzi scheme worked, and why it was not discovered until it had been years in the running. There's also an interesting discussion of the dispute as to how clients would recover (or even if they could recover) their monies. Recommended for a good overview of the scandal.½

Wasnt as hard hitting as I had hoped. author was very repetitive within the same section of the book. Kept saying the same thing in multiple different ways. has to be a better story about the fraud and how it worked. But she did interview Bernie.

Arrived Lausanne

The Wizard of Lies: Bernie Madoff and the Death of Trust by Diana B. Henriques is the story of Bernie Madoff and his incredible Ponzi scheme. The man comes off as evil, unfeeling and pitiful. Interesting he screwed mainly the rich Jews from the pale for the most part. Gradually his market widened to include many more. The details of the scheme are very well analyzed if a little intricate and boring, but the second half when the book turns toward the personalities involved it becomes much more interesting. I had no intention to read this book because the story was so well covered in the news but it became available for free on my kindle I said give it a shot. And I am glad I did.

Very informative look back on the 1980's financial world.

First things first: You do not have to perfectly understand high finance to understand this book. It certainly helps if you know the differences between stock index options, future contracts, thrifts and physical commodities (among many other things), and how they all interact with each other, but it's not required.

The narrative covers the evolution of major American exchanges, mostly in New York and Chicago, and a variety of financial products in the 1980s. There are lots of names, organizations and types of financial products flying around. Despite this, the overall course of events can be followed and major threads followed. Towards the end it was difficult for me to put down, mostly due to the resemblances between 1987 and 2008.

The author wrote the book partly as a warning to the audience - this sentiment makes up a chunk of the epilogue. The stock market in the '80s had ever-growing investors (huge corporate clients dwarfed and pushed out smaller ones, and especially individual investors), ever-increasing technology, and ever more arcane financial derivative products that were poorly understood, poorly regulated, and tied various financial firms and companies together in ways that nobody understood or expected. Neither the federal government nor the financial system come off particularly well - the American financial system is depicted as a sports car being driven at high speed in the dark with the hope that nothing goes wrong, while appointed officials frequently fight with each other over turf and elected officials frequently don't understand or care, provided they can get re-elected.

Can't speak for everyone else, but I found this to be a very informative and interesting book, even though I drowned a bit in unfamiliar terminology.

An event that happened 30 years ago still has an effect on us today. It seems that no one learned from the disaster of that time and some elements come back in 2008 to change the course of history again. The book is a must read to look at the events that led to Black Monday and almost changed the financial system of America.

I was only a teenager when "Black Monday" happened in 1987, and I've always been curious about the circumstances that led to it. After reading Henriques' book, I have a deeper understanding of both it and the subsequent financial crisis of 2008. This book is both informative and entertaining, as it reads more like a Dan Brown thriller than a Wall Street exposé. I came away from reading it with a better understanding of how the stock market works, and a new appreciation for just how fragile our financial system really is.

Well written and very interesting reading, this book is a good warning of what might very well happen again to the U.S. economy. It is amazing that so few individuals have such enormous influence in the financial market. This is thought provoking to say the least. As I discussed it with my daughter, we both concluded that we needed to change our investment strategy.

The first half of this book deals with the run up to the Wall Street Crash of 1987. While I found it
useful in reviewing all the Stock Market jargon, the real meat of this Stock Market crash appears in the last half of this book which describes the actual collapse of the Stock Market in detail.
However, the first half of this book does provide a healthy list of Stock Market jargon, terms,
and other brokerage terminology which anyone who dabbles in the stock market will find useful.
I highly recommend this book to anyone with money in the Stock Market. Especially troubling is the book's conclusion that nothing has really changed in the stock Market and another collapse could come at any moment !

I have no background in the information presented here, so can’t critique the facts and narrative. That said, I found the book fascinating, well written and informative. It is clear from the title that the book will end up with the huge stock market crash of 1987, but the author presents the background chronologically, in detail, and with a growing buildup of tension. It is hard not to exclaim “oh no” as you read about decisions being made that will exacerbate problems to come. The people, the firms, and the markets involved are well described, with their strengths and weaknesses fairly presented. While it is very clear that chance did play a role in the crisis, the author makes a good case that issues could and should have been foreseen and dealt with well ahead. I won’t quote the last paragraph and sentence, because mine is a pre-pub copy, but it is chilling and you can’t help but watch the current economic news and stock market quotes with a completely different view after reading this book.

Rahm Emanuel, the mayor of Chicago, once famously noted that a Chinese symbol for ‘crisis’ may be interpreted as ‘opportunity’. He said this in the depths of the 2008 financial meltdown, when the Lehman Brothers investment firm failed and triggered a cascading world-wide recession worse than anything since the 1930s.

This crisis had its roots -- in fact, nearly mirrors -- another misunderstood catastrophe, that of 1987, when the combination of institutional traders, unregulated securities, and electronic transactions first conspired to crash the markets and show strains in the regulatory safety net.

The crisis in 1987 was, as Henriques shows in her well-documented text that nonetheless reads like a political thriller, thankfully averted. Yet as opportunity was also lost, and more than thirty years later, we are still trying to rebuild the markets so they can withstand future shocks.

This is the story of the biggest one-day stock market drop in history. Monday, October 19, 1987 the Dow Jones index dropped 508 points. This huge drop did not cause a depression, but the whole financial structure of the western world was unsteady for the next couple of years and remains fragile to this day.
The author begins the story in March, 1980 when the Hunt brothers could not produce the cash required to cover the obligations they had incurred in their failed attempt to corner the silver market. The story goes all the way to the 1988 and the election year failure to put in place changes which might have prevented a drop like that of October,1987 from happening again. It is a story of rivalry between commodity futures in Chicago led by the Chicago Board of Trade and the Chicago Mercantile Exchange on the one hand and the New York Stock Exchange on the other. It is also a story of struggle between the various federal agencies involved with financial regulation--the Commodity Futures Trading Commission, the Securities Exchange Commission, the Federal Deposit Insurance Corporation and the Federal Reserve's Open Market Committee.
In telling this story, the author tries to explain all the different investment instruments such as futures, options, index funds, etc. I found it rather difficult to follow just how the markets for these instruments interact with each other and influence each other.
There seem to be several basic points: 1) The financial system of stocks, bonds, derivatives, short-term loans, swaps, insurance, futures, options, etc.is so intertwined that a failure of one major player can easily bring down the entire system and create a financial disaster. 2) Neither the markets themselves nor the federal agencies that regulate them have responded adequately to the advent in the 1980s of huge institutional investors--pension funds, mutual funds, institutional endowments, hedge funds, etc. when they simultaneously move in the save direction. 3) Partly due to the currently reigning political philosophy that government regulation of economic activity is inherently bad, regulation remains to this day fragmented, weak, and indecisive. 4) The self-regulating markets hypothesis is nonsense. 5) The present financial structure is just as fragile as ever. A few bad decisions by large institutional players in the market could bring a melt-down at any time.
That last conclusion above comes in an epilogue that examines the 2008 crash without even mentioning the Dodd-Frank legislation which tries to address the problems discussed. Despite this weakness, the book is highly recommended.

A first-class book on the flash crash of 1987, which didn't happen nor recover quite as quickly as everyone remembers. Extensively well-researched, the author takes pains to lay out the likely causes and impetuses for the big day without seeming to lay the blame unfairly on any given sector. I was pleased that she drew connections to both the modern day and more modern crashes (2008) without swamping the rest of the work. It's a little dry, sure, but given the subject matter I'd say it actually overachieves with regard to readability. An excellent retelling of this chapter of financial history.

I'm not a financial expert so I can't vouch for the technical correctness of this book. But it was a fascinating look at an event which I remember but don't remember as being bad as described. In 1987, I was an engineer for a manufacturing company, a company that made money the old fashioned way, by making and selling stuff. Black Monday had little impact on my company, as far as I remember. It probably had some impact on my savings but I was a long way from retirement and don't remember being very concerned.

The author tells this story as a story of individuals, rather than as a technical story of stock exchanges, options trading and hedges. It makes for a good read. She attempts to explain some of the arcane world of high-stakes trading but frankly I barely understood it. But I didn't have to as she deftly gets across how perilous the markets (the NYSE and the Chicago options market) had become due to high-speed trading (via computers), new and complicated investment 'products' and the lack of coordinated regulatory oversight. She draws parallels to the events of 2008, which I did pay much more attention to. According to her, 2008 showed that we've hardly learned anything from the crash of 1987, when the stock market lost 22.6% of its value in one day. And it seems we've barely learned anything from the disaster of 2008.

Even if you're not a financial wizard, I recommend this.

5487. A First-Class Catastrophe The Road To Black Monday, The Worst Day in Wall Street History, by Diana B. Henriques (read 19 Jul 2017)The day referred to in the title is 19 Oct 1987, a day I remember well as my wife and I were driving from Dubuque headed for Muscatine, Iowa, to see a friend of mine who was a financial wizard so far as making money in the stock market is concerned. As we rode along we heard the horrendous news emanating from the crashing stock market and resolved when we got to Muscatine we would be urging my friend not jump out of any window a la what was done during 1929's crash. As it turned out we did not see my friend since he was hunting deer in Wisconsin and not agonizing over what was going on in Wall Street. This book tells of the run-up to 19 Oct 1987 and the account of the day's events is indeed exciting. Dolefully, however, the author indicates that the things that led up to that crash have not been fixed and suggests a similar debacle could re-occur. To fully appreciate this book one needs to be a more astute student of Wall Street than am I so I did not find reading the book over-enlightening. I did get the book free in return for an honest published review, which I submit this is, at least as far as being honest is concerned.

Thirty years ago the equities markets in this country had a very bad day. On October 19,1987, the DOW fell 22.6%, and all financial markets were badly wounded. This, compared to a 12.8% drop in the 1929 crash. The DOW did not return to its pre '87 crash level for about two years.

This book examines, in lucid and fast-moving writing, why this happened and what lessons we have learned - and mostly NOT learned - from this "catastrophe". Diana Henriques, a financial journalist of some renown, seems to have examined every piece of available evidence on her subject, including interviews with the players who are still alive. She begins approximately a decade before October 1987 and describes the developments that permitted the crash: massive trading in futures, options, swaps and other off-exchange derivative products; portfolio insurance and related arbitrage; program trading and the use of vast institutional leverage; the growth of very large traders, including pension funds, mutual funds and insurance companies.

As the markets became more complex and intertwined, the disparate regulators (SEC, CFTC, Federal Reserve, FDIC, Treasury Department, and the exchanges' administrators themselves) could not begin to keep up.

"Greedy lawyers and unethical bankers did not increase the structural risks of this new marketplace, but gigantic and increasingly like-minded institutional investors did. These new risks did not arise because the regulatory system failed to police takeover practices or criminal trading activity; they arose in a regulatory community that was poorly equipped, ridiculously fragmented, technologically naive, and fatally focused on protecting turf rather than safeguarding the overall market's internal machinery."

A commission charged with investigating the '87 disaster (headed by Nicholas Brady, soon to be Treasury Secretary) concluded that " . . . technology and financial innovations had welded once-separate markets into a single marketplace, but government, the financial industry, and academia had failed to see what had happened and adapt to it." Virtually no corrective actions, either by government or the financial industry, came about as a consequence of the Brady commission's findings.

Thus, markets today are more vulnerable than ever. "Left to shape its own future [after 1987], Wall Street created profit-driven electronic markets catering to its richest and most powerful customers; today's corporate-owned exchanges barely even pay lip service to the notion that they serve anyone but their own shareholders. . . . In recent years, even the individual investors' surrogates, mutual funds and pension funds, are being drowned out by the demands of an immense army of high-speed traders and algorithm-weilding speculators, all trying to squeeze drops of profit from an increasingly volatile, robot-driven market."

A scary conclusion.

The main problem with this book is the structure. It is to be published September of this year to commemorate the 30th anniversary of the great stock market flash crash in October 1987. One would expect the book to be mainly about that day. But instead the author devotes just a very few pages to that day, with hardly anything about what actually happened. Then she starts the story at the beginning of 1980. After two thirds of the text she finally gets to the beginning of1987, in chapter 17. What worked for me was to skip to that chapter, read to the end, then go back to finish the rest of the book.½

A page-turning account of persons, times, crises and markets.

A First-class Catastrophe (subtitled, The Road to Black Monday, the worst day in Wall Street history) by Diana Henriques (Henry Holt, Sep 2017) (pp 282 book+ pp 90 notes) is a well-researched and page-turning account of the eponymous event. The book is comprised of four parts, part 1 Vanishing Borders (setting the stage, the Chicago Merc, futures trading, loans and banks, financial deregulation) part 2 Titans And Wizards (setting the scene from Continental Illinois's bad loan portfolio, next Rubinstein’s firm for portfolio insurance “LOR”), part 3 Contagion (dealing with failing banks, witching hours, questions about rational markets) and part 4, The Reckoning ( or the actual event). An Epilogue summarizes lessons learnt.
There are more than 80 pages of notes at the back of the book with sources ranging from Congressional testimonies to news articles to statements on record from key personnel such as John Phelan president of the NYSE, David Ruder Chairman of the SEC, Leo Melamed on board of Governors of the Merc, NY Fed President Jerry Corrigan.

Part 2 begins with examiners of loan books of Continental Illinois in 1982 finding a billion dollars of bad loans, many of which had originated from a tiny bank in Oklahoma named Penn Square, that resold its oil loans of 2 billion dollars. Examiners reporting to Paul Volcker, Chairman of the Fed, Bill Isaac chairman of FDIC, Donald Regan Treasury Secretary found bank- wide bad practice at Penn Square. They decided the bank would have to be liquidated with FDIC Deposit Insurance covering deposits only up to limited amount. This had repercussions on the banking industry as creditors received cents on the dollar. Continental's share price fell 10%, the two losses on its Penn Square loans putting it 61 million dollars in the red in the second quarter. A crisis of confidence in banking had begun. It would not be the first nor would it be the last.
The Dow Jones Industrial Average in 1982 having reached the height of 1000 was hovering around 800 during this high inflation Volcker era. The next few years were a period of deregulation and growth. The Dow would climb to 2662 by the summer of 1987 but I am getting ahead of my and Diana Henriques’ story.
With the first takeover, a rash of corporate mergers increased the trading volume on the stock exchange. The exchanges were ready for what was then the big bull market.
At the same time American Banks lobbied Congress and their own regulators to approve products that allowed bundling of services The Brokerage could buy several banks outright. Big Banks could get bigger. “Jerry Corrigan who addressed the American Bankers Association conference in Atlanta October 19th privately worried about public trust and confidence in individual banking organizations. Taking in deposits in his mind was a sacred responsibility. Putting money in a bank was an Act of Faith.” builds up Henriques, in the setup for the crash.
Then as now, moral hazard forced our regulators’ hand in undesirable ways. The crisis at Continental Illinois was worsening and the Feds had to supply emergency loans. There was inherent tension between the Fed's goal of preserving stability and public confidence and the Regulator’s desire for serious reform in lending practices and banking. Continental Illinois had been forced to rely on Emergency Loans from the Fed.
Next, the author moves to introduce the important theoretical underpinnings of portfolio insurance. Mark Rubinstein and Hayne Leland invented an investment product using stock sells and cash to safeguard against losses. Rather than put options ( for which you paid an upfront premium and you had a expiry date for the contract), Leland created synthetic put options with the combination of stocks and cash with the help of Rubinstein. Together with O'Brien, LOR (Leland, O’Brien, Rubinstein) peddled their model to investors and funds to insure against losses.
(Basically if you wanted to insure your portfolio of stocks beyond a 10% drop, you liquidated all your portfolio, selling as the market goes lower, raising cash 100% by the time the market is down 10%. You buy dynamically as the market recovers. Below 10% you stay in cash. Thus you are, in theory, 90% protected. Hence the strategy is called synthetic put).
After first securing small investments in their strategy summing to $50 million, LOR took out advertisements. In backtests they claimed that a dollar invested in 1971 would have grown to $2.61 compared to $.1.89 from the S&P and $2.18 from T-bills, we learn from Henriques. Bruce Jacobs, an attendee at one of their presentations, realized that the assumption that the stocks could be sold in a falling market without price jumps was questionable.
“With portfolio Insurance you are deliberately supposed to buy when prices are rising, and sell when they were falling in order to raise cash to make the synthetic put. The portfolio insurance success depended on a lot of other people believing the strategy was in fact wrong. It assumed there would always be a large population of bargain hunters who persist in buying low. Panic selling by index funds was not taken into account. Although [Bruce Jacobs] had put his finger on the nub of the problem Jacobs did not worry because there was so little money in portfolio insurance.” writes Henriques. How wrong that assumption of Jacobs about so little money would prove to be.
LOR had grown from 150 million to 600 million dollars in assets protected by “Dynamic insurance”. The implementation still used stock selling which was too much trading. As index future trading at the Merc had matured somewhat from its infancy, Mark Rubinstein was investigating Futures Trading on SPX index and OEX index( an index of 100 stocks). On the plus side transaction costs reduced. On the negative, this needed his clients to be on board with the idea.
Next, for the reader to follow the story, it is important to understand the symbiotic relationship between the growing Index arbitrage and portfolio insurance. Futures Contract Trading had size limits preventing the largest portfolio insurers from trading into the open market. But there was a need on the part of index arbitrageurs to buy index futures and sell a spot basket of stocks. If this demand continued to provide liquidity in a sell-off, portfolio insurance could work.
Henriques next covers some important happenings of 1984: the bailout of Continental Illinois and the creation of big raiders such as Icahn and Boesky.
Meanwhile an ambitious option trade settlement lawyer Brodsky took over as Executive Vice President at the Chicago Merc. Under him the Merc expanded. Its Program Trading became big.
Wild gyrations of prices were noticed in the last hour of trading on triple witching days (third Fridays, when these coincided : expiration of index options, index futures and stock options) This was clearly a consequence of market innovation and trading strategies. With all the program trading, for the first time ever, a broad index could move several percentage points in a short amount of time.
The market opened October 19th Monday 1987 following an already volatile week when the DJIA had fallen 10% (or 17.5% percent since its August peak, more than 475 points) . On the fateful day of October the 19th, when the market sold off, and in response, stocks were being sold by portfolio insurers, a specialist on the NYSE said “boom another sell order then boom another sell order like it would never stop.” “At 2 p.m. for some reason it stopped.” Between 1 p.m. and 2 p.m. when the Dow drops 112 points as rumors about closing of the exchange began to circulate index arbitrageurs refused to step up to buy [futures] afraid that they would not be able to execute the other side of the trades” writes Henriques. The gap between the cash index and the future prices widen to unprecedented levels. The Dow Jones Industrial Average finished the day down 508 points.

The question was whether to stay open on Tuesday for trading. Behind the scenes, reserve fears and liquidity runs at the Merc and on a giant clearing firm called First Options were being addressed. The Fed issued a statement that it was willing to pump liquidity into the banking system.
The Dow initially climbed a record setting 11.5% (or 200 points) before intense selling began in greater force. The Dow was hovering above 1700, 38 points below Monday’s worst. The shortage of index arbitrage buyers in Chicago and whispers about crisis at the Merc clearing house sent the futures into a free fall. Between 10 am and 12:15 pm (NY time) the futures fell a whopping 27%, a level showing implied cash for the DJIA to be actually 1400.

Now came a turning moment. Phelan in a call with Melamed, and in a separate call with Baker, Corrigan, and Ruder, put a war plan into action. The Merc determined to stay open. A thinly traded future called MMI (Amex Major Market Index) showed green. It rallied beyond a sensible level. Trading desks such as Salomon Brothers began buying. Goldman Sachs, too, in a coordinated effort bought halted stocks. Henriques writes ‘They wanted to make a profit, obviously, but they also had to consider “ the good of the system“. ‘(The quotes are the author's). The Amex and Nasdaq continued to lose ground but the DJIA ended the day at 1841, up 102 points or 6%.

In 1988 the Brady task force presented its findings about the Financial meltdown.
Two initiatives came out of this.
One, the introduction of circuit-breakers,or halting trading when prices in spot and futures markets had moved to an extreme degree. A plan would be put in place later that summer.
Two, CFTC recommended that swaps and other OTC derivatives be regulated, viz. Traded on a regulated futures exchange.
There was harsh negativity to this proposal, with a top Treasury aide and chairman of the President’s working group opining that the proposal of swaps’ regulation would “seriously inhibit the efficient operation of financial markets”. The comptroller of the currency was equally negative. SEC fiercely opposed this saying the proposed rule would have a “chilling effect” .It accused CFTC of turf encroachment. Top bankers echoed the sentiments saying these were professional investors not retail, they could look after themselves. So CFTC backed off in 1988
“These unregulated derivatives would play a major role in several subsequent crises, most devastatingly in 2008, when hidden swaps losses threatened the survival of a major insurance giant and the investment banks to which it owed billions of dollars” writes Henriques.

In the Epilogue, Henriques observes that “the ‘87 crisis should have, but did not, produce a more flexible, better-coordinated, regulatory framework - not even after its bitter lessons were reinforced by the 2008 meltdown.” Although she suggests no alternative, she says “even the most obvious policy lesson from 1987 - that is, do not let a linchpin firm collapse in the middle of a panic- was ignored in 2008 when regulators allowed Lehman Brothers to fail.”
Congress, she writes, has passed laws that greatly restrict the use of what were derisively called “bailouts”, and [ has burdened new agencies with rigidly defined missions with rules] that defy reality and common sense.
Her metaphor below is picturesque, and writing vivid.
“We are exactly where we were then: in a storm-tossed lifeboat in which all the passengers are shackled together with the obnoxious crew members who carelessly steered our ship into the storm. Imagine, if you can, that the angry passengers vote to toss the crew members overboard to punish them for their folly. That’s the current plan for dealing with a future crisis in the American financial system.
“The excuse for this insanity is that keeping the reckless crew in the lifeboat would be an undeserved “bailout”. This is a recipe for national and personal ruin--unless the shackles are first struck off”.

The research and background is solid. We are introduced to people like John Phelan of the NYSE, who stepped up and played a role in the functioning of the markets at a time when it was not clear if the financial system would itself survive the crash. The story is taken up, early from Volcker’s term at the Fed into Greenspan’s term. It includes the story of the first corporate takeover, the oil loans of Oklahoma and troubled Continental Illinois. The interconnections of the financial system including clearing, settlements, opening for business, specialists of the NYSE, program trading, index arbitrageurs are all explained, some more from first principles than others. The author introduces index arbitrage quite clearly. Portfolio insurance is 95% clear from her exposition.

I, for one, would have liked an answer we seem to get close to but not definitively. Was portfolio insurance a root cause of Black Monday’s 508 point close? The book does explain that its trading the dynamic insurance portfolio caused disconnect between cash/spot - futures prices, but was it a cause for the crash? The book also quotes people who hold that that LOR or dynamic portfolio insurance was not at fault.

As a timely reminder of panics, manias, crashes, and regulations and frequently heard promises that next time it will be different, this book is a welcome arrival to say, no it won’t.

Easy read with not a lot of other information from the liquidity crisis. Focused trully on Madoff. Would have liked to have seen more information on the lifestyle they lead, which would explain more of where did the money go.