-- Posted Monday, 15 December 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Monday, December 15, 2008
“Phenomenally accurate forecasts
The $50 billion Ponzi scheme that rocked the investment world last week makes swindlers from the good old days look like pikers. Even after adjusting for inflation, the $220 million that Robert Vesco supposedly stole would amount to only a billion dollars. Bernie Cornfeld? Tito D’Angelis? Stanley Goldblum? These con artists of yesteryear no longer rate even a dishonorable mention in the Guinness Book of Records now that Bernie Maduff has come along with a scandal truly worthy of these times.
The celebrated money manager and Palm Beach socialite had boasted 10 percent returns stretching back through good times and bad as far as anyone could remember. Some were skeptical of his success, and in 1999 one of his competitors, Harry Markopolos, asked the SEC to investigate Madoff’s impressive streak, claiming no one could have compiled such an impressive track record honestly. “Bernie Madoff’s returns aren’t real, and if they are real, then they almost certainly would have been generated by front-running customer order flow.”
Mild Accusation
Markopolos didn’t know the half of it, since front-running is one of the least-prosecuted crimes on Wall Street. Nearly everybody does it, and for Markopolos to accuse Madoff of mere front-running was like accusing a tavern owner of watering drinks. Madoff was able to shrug off the accusation publically, telling Barron’s in 1991 that the charges were “ridiculous.” And so they were, to the extent they egregiously underestimated the brazenness of Bernie Madoff’s thievery.
Madoff has already copped to the crime, and it was his own sons who turned him in after hearing the full story straight from the horse’s mouth. As details emerge concerning who among the rich-and-famous got burned, and for how much, the Madoff saga promises to be the most entertaining story out of Wall Street since Enron. Those who even qualified to park funds with him were bound to have more money than they knew what to do with, and their sob stories are going to be about as touching in print as those of the late, unlamented Leona Helmsley.
We’re All Dupes
Meanwhile, does anyone appreciate the irony here -- that we’re all in the same boat, more or less, as Madoff’s clients? Their great misfortune was to have qualified financially for an investment opportunity that was much too good to be true. But the rest of us will continue to support an even bigger Ponzi scheme – the Social Security System -- for the rest of our working lives. In the end, the deflating away of illusory wealth will bring rich and poor alike to the maw of penury: the former, because they leveraged their considerable savings in ultimately worthless paper; the latter, because they had relatively little in savings to begin with -- other than inflated real estate.
Literally overnight, revelations of criminal misdeed have reduced the value of Bernie Maduff’s portfolio to zero. But -- let’s not kid ourselves -- when the assets held by the rest of us eventually are marked to market, it is quite possible they will turn out to have performed no better than Madoff’s criminally mismanaged portfolio.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Trading in futures and options contract can be extremely risky, and it is possible to lose your shirt before you even realize what has hit you. For that reason, you should consult with your broker as to your suitability to such trading before you attempt it. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 15 December 2008 | Digg This Article | Source: GoldSeek.com
