Saturday, December 13, 2008
The 50 Billion Dollar Scumbag
So hedge fund operator and former Nasdaq chief Bernard Madoff somehow bilked investors of $50 billion in a gigantic Ponzi scheme. (If you don't know what a Ponzi scheme is, it's pretty much like Social Security, except in the long run, less destructive.)
The idea that this guy can raise so much money, so easily, just by working the country clubs around Long Island and Palm Beach, doesn't speak too well for the financial acumen of our socialite class, all of whom just heard what they wanted to hear.
The first imperative of investing - the prime directive - is to provide for the return of capital. Anything else is speculation. Establishing a small position in an opaque hedge fund for a low correlation to more standard asset classes is one thing. But anyone who was ruined by this man is a fool.
I don't know what it is about Florida and Boca Raton that makes people so gullible. But speaking as a legit financial services guy myself, it's frustrating as hell to see this kind of thing happening again and again.
Due diligence, and the safe return of capital. Do not risk what you and your family have and need for something you and your family do not have and do not need. No less an investment mind than Warren Buffett said that.
Why these wealthy individuals would be taking stupid risks with someone who can't guarantee their principal back, when it's so easy to do, is beyond me.
How to do due diligence on fund managers? Read my pre-Countercolumn piece for Registered Representative here.
Splash, out
Jason
The idea that this guy can raise so much money, so easily, just by working the country clubs around Long Island and Palm Beach, doesn't speak too well for the financial acumen of our socialite class, all of whom just heard what they wanted to hear.
The first imperative of investing - the prime directive - is to provide for the return of capital. Anything else is speculation. Establishing a small position in an opaque hedge fund for a low correlation to more standard asset classes is one thing. But anyone who was ruined by this man is a fool.
I don't know what it is about Florida and Boca Raton that makes people so gullible. But speaking as a legit financial services guy myself, it's frustrating as hell to see this kind of thing happening again and again.
Due diligence, and the safe return of capital. Do not risk what you and your family have and need for something you and your family do not have and do not need. No less an investment mind than Warren Buffett said that.
Why these wealthy individuals would be taking stupid risks with someone who can't guarantee their principal back, when it's so easy to do, is beyond me.
How to do due diligence on fund managers? Read my pre-Countercolumn piece for Registered Representative here.
Splash, out
Jason
Labels: Crime, finance, investing
Comments:
"Establishing a small position in an opaque hedge fund for a low correlation to more standard asset classes is one thing."
I understood every word in that sentence, but could make no sense of it at all. :)
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I understood every word in that sentence, but could make no sense of it at all. :)
# posted by 
: 9:55 AM
: 9:55 AM
