Saturday, March 14, 2009

On Bernie Madoff: I Wish I'd Said That!

I just read a phenomenal piece of original writing/thinking by Joe Nocera in today's New York Times: http://www.nytimes.com/2009/03/14/business/14nocera.html?pagewanted=1&em

It gave me that very distinct feeling that you get when you see/read/hear something that hits you in all the right places and makes you say, "I wish I had come up with that." With a tip of the hat to Mr. Nocera, I just want to say that the main thrust of his piece is that the *victims* of Bernie Madoff's Ponzi Scheme are not entirely without blame themselves.

I had been kicking that around in my head for a couple of days through constant media exposure to the "I hate Bernie Madoff more than you do" sweepstakes infecting the commentariat and the hard news itself. After all, there are only so many people who lose $5 million I can feel sorry for -- how many Americans will ever have $5 million to lose?!?? Also, any investor anywhere should appreciate that with the chance for gain should come the chance for risk -- if these very same people had continued to get the 10-12% steady returns ad infinitum, they wouldn't be queuing up to claim that it was somehow unfair or that some score ought to be settled.

Anyway, Nocera explains this all far better than I could dream to, and gives tons of other great examples where ordinary investors got screwed over by bad ideas, shaky investments, and yes, Ponzi schemes, without ever seeing any of it back.

If you've got the time, this is a great read.

2 comments:

Matt said...

Nocera is amazing. Read this column before your post, but thought of your "expert" blog post. It's so true. Nocera pointed out that very few of the Madoff victims were institutional investors/endowments. Which means they were solitary investors who were not paying the "expert" investing fee that institutions demand. They cut a corner out of hubris, and Nocera is the first one to have the balls to say that it's maybe their fault.

Also, his Elie Wiesel quote about how Madoff worked is just fantastic -- a good con man always seems like you're lucky to be in business with him

The New Englander said...

Matt,

Thanks for making that connection to the experts piece...in this case, another reason the experts stayed away from Madoff is that they smelled a rat early on when he wouldn't answer very basic questions about his operation.

I will always have a soft spot for anyone, anytime, ever, who has the cojones to stand up and slay sacred cows. Who knows how history will view all this, but Nocera definitely fits that bill --at a time when everyone was tripping over themselves to lambaste Madoff and share pity with those who lost their money, he took a slightly different tack.

The staff sergeant who sits next to me just made a small fortune (two weeks' pay overnight) speculating on Citi stock. You know what? He also could've lost it. That's why it's called risk..

best,
gp