Mug Shot of Charles Ponzi
Mug Shot of Arthur Fonzie
As the Madoff situation continues to ripple through the investing world, I’m absolutely personally incredulous that some VERY sophisticated investors simply put on the blinders to another investment that was “too good to be true”… and probably definitely was.
This investing “thing” is difficult… very difficult… I mean VERY VERY VERY DIFFICULT. This idea that someone, somewhere has a “secret”, or a magic touch, or the ability to defy the odds… well, it’s not possible, never has been possible and never will be possible. If someone is showing you an investment that can’t lose, or has never lost, or will never lose… they are telling you that they have defied the laws of physics. Be smart and know this isn’t possible.
Mug Shot of Bernie Madoff?
This seems a good time to trot out something that I wrote a number of years ago that is a part of my “Personal Prospectus”, which is a document that I give to all potential new clients:
Ripping Off Investors
When you read in the paper about investors getting ripped off by a scam artist running a Ponzi scheme and you wonder about how it happened and how anyone could be so “gullible”, here’s your answer: Promises of outsized returns and impossibly unsustainable income projections should immediately sound off all kinds of alarms and warnings in the head of any investor with at least a little tertiary knowledge of what is real and realistic in the investment arena. Those who get ripped off are usually those that refuse to do their homework.
The old adage, “If it seems to good to be true, it probably is”, is more true in the investment business than in any other situation you are likely to come across. Trust me when I tell you that nobody cares about your money more than you do.
Here’s what really blows my mind… The amount that Mr. Madoff just made off with is more than enough to bail out all three of The Big Three automakers. Not that Florida retirees should’a bailed out The Big Three, I’m just saying they could’a.
