Madoff gets the maximum

[buckeyemike]

One word: GREED. If you think about it it's very easy to believe. And I'm not talking about him. I'm talking about the people that fell for his scheme.

 

 

Their greed is what's evil. He tapped into that. They were fools and I don't really feel all that sorry for them. He's still a bastard but they didn't have to invest with him.

 

I agree, for the most part, with Chef.

 

You and I could never have been victimized here, because Bernie Madoff didn't take clients who came to him. He came to you. The super rich, the wealthy, and well-known. It was all a Ponzi scheme, and I'm convinced that his wife and sons knew about it, if they were not assisting him.

 

Madoff took advantage of those who were wealthy and thought that they could play the system, if not outright beat it. Rich people, like everyone else, want more money. The wealthy desire to be ultra-wealthy. The wealthy desire to be far above you and me in the money department, which made them perfect targets for the scheme. Madoff played into the basest of human vices (greed), and probably would have gotten away with it had the economy not collapsed last fall.

 

I thought the sentence would be somewhere around 75 years, which would be a life sentence anyway. The federal prison system does not have parole, but it does have "good time". A federal prisoner usually serves about 85% of the sentence, and Madoff would die in prison with anything over a 25 year term. The 150 years surprised me.

[Chef Jim]

I agree, for the most part, with Chef.

 

You and I could never have been victimized here, because Bernie Madoff didn't take clients who came to him. He came to you. The super rich, the wealthy, and well-known. It was all a Ponzi scheme, and I'm convinced that his wife and sons knew about it, if they were not assisting him.

 

Madoff took advantage of those who were wealthy and thought that they could play the system, if not outright beat it. Rich people, like everyone else, want more money. The wealthy desire to be ultra-wealthy. The wealthy desire to be far above you and me in the money department, which made them perfect targets for the scheme. Madoff played into the basest of human vices (greed), and probably would have gotten away with it had the economy not collapsed last fall.

 

I thought the sentence would be somewhere around 75 years, which would be a life sentence anyway. The federal prison system does not have parole, but it does have "good time". A federal prisoner usually serves about 85% of the sentence, and Madoff would die in prison with anything over a 25 year term. The 150 years surprised me.

 

Everyone is looking for the get rich scheme. Whether it's the lottery, or investing (see tech, real estate, gold etc) but it doesn't happen especially when you're talking about investing. It's a long process. You want to average 8-10% over the long run and if you're patient (that's the hard part for people)start when you're young, stay conservative, diversify, rebalance and dollar cost average you will be in good shape. Start when you're 30 and save $500 a month in your 401k when you're retired you'll have a million dollars. Unfortunately you'll need four million to replace your income.

[BuffaloBill]

There are all sorts of regulations to prevent this. As a matter of fact the SEC was made aware of it some time ago. That's why I love the fact that everyone says we need more regulations. Well if the government wasn't so lazy and did their job enforcing the rules that are already on the books a lot of this stuff would be caught. It's like CA communities making smoking on the beach illegal because of all the butts littering the beach (yes that was the rationale), well you dipshiits, littering is already illegal. Fuggin' politicians.

 

 

no argument from me on these points

[BuffaloBill]

While I agree with you that the investors bear some responsibility for their losses, I think ENVY is actually a bigger factor than greed. Many of his new investors came by client referral. Those clients were envious of their friends making a great "secure" return of 10% while their stuff was probably only returning 5-7%. Maybe 50-50 GREED/ENVY.

 

Quick story - I was at a Panthers tailgate and someone was telling me about a guy there that was making 10% PER MONTH on his $100k investment with a FOREX trading firm. 6 months in and all 6 months $10k was hitting his bank account. The guy telling us about it (not the investor) asked me and my business partner, "You guys are in the business, what do you think of this." My partner said, "I know what Hops thinks." Everyone turns to me and I say, "It's a scam. It's called a Ponzi scheme." This was about a week before Madoff. Two months later, the jig was up and the firm was caught. Not by the CTFC, but by early redemptions. I'm afraid to ask the guy about the thing.

 

The Madoff case was fraud. The SEC should have caught it earlier with Harry Markopolos basically bird-dogging the thing for them. New regulations won't prevent it any more than laws against burglary will stop breaking and entering. Bad people will do bad things.

 

Oh yeah, and DC Tom is 110% correct. The SS system is most definitely a Ponzi scheme. And the redemptions are coming.

 

 

great post

[dpbillsfan]

Everyone is looking for the get rich scheme. Whether it's the lottery, or investing (see tech, real estate, gold etc) but it doesn't happen especially when you're talking about investing. It's a long process. You want to average 8-10% over the long run and if you're patient (that's the hard part for people)start when you're young, stay conservative, diversify, rebalance and dollar cost average you will be in good shape. Start when you're 30 and save $500 a month in your 401k when you're retired you'll have a million dollars. Unfortunately you'll need four million to replace your income.

 

Very good post.

I'm sure there are decent money manager's out there, but the only two I can think of at this moment are Peter Lynch and Warren Buffet who have performed equal to or beat market returns over the years. Lynch has long since retired from Fidelity after his spectacular run.

[PromoTheRobot]

Right.

 

My town is dripping with with people that commit horrible...repeated assaults. Put their victims into a lifetime of disability and pain.

 

They usually still roam the streets. After 20 or so arrests or so, they might spend a few days in the clink. Maybe.

 

But they of course were victims themselves, according to liberals...never at fault. Prejudice, bad childhood, Republicans, drugs and alcohol, abusive parental figures, sexual dysfunction, addictive personality disorder, you name it.

Liberals...is there anything that isn't their fault? So are you sticking up for Bernie? Want to get government off the back of the small ponzi scheme operator?

 

PTR

[Steely Dan]

you beat me to the post ..... what a story .. it will be the stuff of b-school case studies for years to come. It is hard to believe that the scheme could be so massive and have gone on for this long. I also find it amazing that when all is said and done his wife will still be left with $2.5MM while "poor" by her lofty standards - better than some investors who lost everything with Madoff.

 

She should be left with a 1999 Hyundai Accent.

 

 

was he a friend of yours?

 

 

One word: GREED. If you think about it it's very easy to believe. And I'm not talking about him. I'm talking about the people that fell for his scheme.

 

So anytime a broker does well a person should pull their money out because it's obviously a scam?

 

 

Their greed is what's evil. He tapped into that. They were fools and I don't really feel all that sorry for them. He's still a bastard but they didn't have to invest with him.

 

How many people do you know outside of your industry that are attuned to investment scams? It wasn't greed it was trust.

 

There are all sorts of regulations to prevent this. As a matter of fact the SEC was made aware of it some time ago. That's why I love the fact that everyone says we need more regulations. Well if the government wasn't so lazy and did their job enforcing the rules that are already on the books a lot of this stuff would be caught. It's like CA communities making smoking on the beach illegal because of all the butts littering the beach (yes that was the rationale), well you dipshiits, littering is already illegal. Fuggin' politicians.

 

Just out of curiosity, are there fewer butts on the beaches now?

 

 

I agree, for the most part, with Chef.

 

You and I could never have been victimized here, because Bernie Madoff didn't take clients who came to him. He came to you. The super rich, the wealthy, and well-known. It was all a Ponzi scheme, and I'm convinced that his wife and sons knew about it, if they were not assisting him.

 

Madoff took advantage of those who were wealthy and thought that they could play the system, if not outright beat it. Rich people, like everyone else, want more money. The wealthy desire to be ultra-wealthy. The wealthy desire to be far above you and me in the money department, which made them perfect targets for the scheme. Madoff played into the basest of human vices (greed), and probably would have gotten away with it had the economy not collapsed last fall.

 

I thought the sentence would be somewhere around 75 years, which would be a life sentence anyway. The federal prison system does not have parole, but it does have "good time". A federal prisoner usually serves about 85% of the sentence, and Madoff would die in prison with anything over a 25 year term. The 150 years surprised me.

 

IIRC, some people were approached but by friends who were investing with him at the time. When you look at the list of investors you'll see banks, rich people, charitable foundations, pension funds and other people who's life savings were taken away. The people involved in a pension fund don't invest their money directly with Madoff. They gave their money to the fund and let the fund invest it for them. Saying that only the GREEDY were harmed is a ridiculous statement.

 

I feel sorry for a lot of these people. I'd think that investment professionals would realize that a lot more than just rich investors were scammed.

[HopsGuy]

Very good post.

I'm sure there are decent money manager's out there, but the only two I can think of at this moment are Peter Lynch and Warren Buffet who have performed equal to or beat market returns over the years. Lynch has long since retired from Fidelity after his spectacular run.

 

WB is great, and I'm a big fan of his partner Charlie Munger. Lynch wrote the first book I read on investing when I wasn't even in the game. David Swensen is another guy in the conversation.

 

I recommend reading John Hussman's comments. Another guy I respect is Mebane Faber.

[TPS]

150 years for you, motherf***er

Yes, how nice that someone is going to jail for the worst financial crisis in history. I'm glad they got the guy that forced the government to payout 12 trillion dollars to save the financial system. We got our man!

[Chef Jim]

So anytime a broker does well a person should pull their money out because it's obviously a scam?

 

 

 

 

How many people do you know outside of your industry that are attuned to investment scams? It wasn't greed it was trust.

 

When a broker does impossibly well like Madoff promised you have to wonder how. When you're dealing with investments and you find something that's too good to be true, it usually is. It was the perfect storm, he fed off of people's greed. I had a prospect last week when I asked him what his expectation were regarding investments returns he replied at least 15%. I told him I was not the right person for him and ended the meeting. And anyone who promises that is not on the level. And no it wasn't trust as much as it was greed. You trust someone who offers conservative returns based on past performance. You lust after someone who promises you double digit returns every year regardless of what's happening in the market.

[dpbillsfan]

WB is great, and I'm a big fan of his partner Charlie Munger. Lynch wrote the first book I read on investing when I wasn't even in the game. David Swensen is another guy in the conversation.

 

I recommend reading John Hussman's comments. Another guy I respect is Mebane Faber.

 

Thanks for the links will have to check them out.

 

All in all it's still tough to beat the S & P 500 index year in and year out.

[PromoTheRobot]

Yes, how nice that someone is going to jail for the worst financial crisis in history. I'm glad they got the guy that forced the government to payout 12 trillion dollars to save the financial system. We got our man!

Well we either put him in jail or we let him walk. Killing him won't bring the money back.

 

PTR

[Steely Dan]

When a broker does impossibly well like Madoff promised you have to wonder how. When you're dealing with investments and you find something that's too good to be true, it usually is. It was the perfect storm, he fed off of people's greed. I had a prospect last week when I asked him what his expectation were regarding investments returns he replied at least 15%. I told him I was not the right person for him and ended the meeting. And anyone who promises that is not on the level. And no it wasn't trust as much as it was greed. You trust someone who offers conservative returns based on past performance. You lust after someone who promises you double digit returns every year regardless of what's happening in the market.

 

The trust came in the form of the friends who were suggesting him. After taking a look at his client list I don't think it's too stupid to want to get into it. You also ignored my point about the pension funds.

[Chef Jim]

The trust came in the form of the friends who were suggesting him. After taking a look at his client list I don't think it's too stupid to want to get into it. You also ignored my point about the pension funds.

 

I didn't see your part about penion funds. But now that you've brought it up I'll let you know pension funds are some of the stupidest investors ever. Why do you think some many pension funds are !@#$ed? One word and one word only Greed. If pension funds could invest in lottery tickets I wouldn't be suprised if they did.

[Steely Dan]

I didn't see your part about penion funds. But now that you've brought it up I'll let you know pension funds are some of the stupidest investors ever. Why do you think some many pension funds are !@#$ed? One word and one word only Greed. If pension funds could invest in lottery tickets I wouldn't be suprised if they did.

 

What does that have to do with the people who depend on them? The point is a lot of innocent victims were caught up in this thing. I don't believe that everybody in this was in it for Greed unless you believe all investors are in it for greed.

[Tcali]

One word: GREED. If you think about it it's very easy to believe. And I'm not talking about him. I'm talking about the people that fell for his scheme.

Because people wanted over 10% return on their life savings--and believed the guy was legit...you pass them off as being greedy and deserving of losing all their money??

Gee wish I were as ungreedy and as wise as you.Must be a burden.

[Chef Jim]

Because people wanted over 10% return on their life savings--and believed the guy was legit...you pass them off as being greedy and deserving of losing all their money??

Gee wish I were as ungreedy and as wise as you.Must be a burden.

 

From Bloomberg.

 

New details of the alleged fraud emerged in the 25-page criminal information filed today. Madoff promised returns of up to 46 percent annually and “created a broad infrastructure” at his firm to give the appearance of “a legitimate investment advisory business in which client funds were actively traded.”

 

You invest with someone promising 46% returns you're either stupid or greedy. Not many of these people were stupid.

[Steely Dan]

From Bloomberg.

 

 

 

You invest with someone promising 46% returns you're either stupid or greedy. Not many of these people were stupid.

 

That I agree with but 46% had never been brought up before. If you invest because you believe the 46% number then you are greedy. Greedy and excessively stupid. My point still is a lot of people were unaware of where their money was being invested and so innocent people were harmed.

[Chef Jim]

That I agree with but 46% had never been brought up before. If you invest because you believe the 46% number then you are greedy. Greedy and excessively stupid. My point still is a lot of people were unaware of where their money was being invested and so innocent people were harmed.

 

Well I had not heard the 45% either but I had heard in the 20% range. But what I also heard was that people were scratching their heads long ago trying to figure out how he was able to produce those high returns even in down years in the market. It's great to have someone you trust, that's how I build my practice but as I mentioned if it's too good to be true it often is.

 

Here's another story

 

Of course, we never heard the name Madoff — which has a peculiarly Dickensian ring now — and had no idea how he achieved such fantastic returns over the past 40 years. All we knew was that my wife's entire family had been in the fund for decades and lived well on the returns, which ranged from 15% to 22%.

 

The way it was vaguely described to us was that the "New York people" had a system whereby they placed a series of instant trades — at once with futures, currencies and stocks — and out of this magic recipe fell a tiny 1% guaranteed, no-risk profit for the group. You do that 20 times a year, take away management fees and, voilà, a steady 15% return

.

 

Come on people...don't be stupid. With a 5% management fee, oh that's real nice.

[Tcali]

From Bloomberg.

 

 

 

You invest with someone promising 46% returns you're either stupid or greedy. Not many of these people were stupid.

u just dont get it...save your judgments....they were mislead and lied to. If you believed you could get a higher rate of return on your money you would go for it too. Someone might be promising you 9%. Maybe thats greedy as well. Esp if you get ripped off--according to your logic. You can't proclaim yourself the judge of what is greedy and what isnt. Those people got duped.And they have as much right not to be ripped off as you . They likely worked very hard for their money. They deserve none of what happened to them.