BUT HE BELONGED TO BOCA RIO AND FRESH MEADOWS!

12/12/08

Just a brief note on the $50 billion Bernard Madoff scandal, in which Mr. Madoff is accused of an ongoing swindle that will cost lots of people, including pension funds, funds of funds, wealthy socialites, and wealthy socialite wannabes, enormous sums of money:

Anyone who makes his or her investment decisions based on the skiing ability, the country club memberships, or the pedigree of the investment manager deserves what he gets…but only if it’s bad. If such an “investor” stumbles onto a good hedge fund or other investment vehicle because, say, “the manager rowed crew at Yale, and his father belongs to our club,” s/he ought to just be grateful, but, in most cases, will instead be braggadocious about his “investment acumen.”

Many “sophisticated investors,” even, or perhaps especially, according to the SEC’s definition, know lots of people…and very little else. They fall for slick presentations and repeatedly (not only in their investments but in their choices of cars, houses, vacation spots, etc.) mistake style for substance. They can’t even take the time, or perhaps lack the cranial capacity or the intestinal fortitude, to examine their “investments” in light of the old adage “If it seems too good to be true, it probably is.” (If you think about it, this adage should be "If it seems too good to be true, it probably isn't." Although this misuse is sui generis with the careless "I could care less," I will make this nod to convention...this time.) Apparently for years people were too timid, or too dull of mind, to even ask Mr. Madoff for the most routine information. I suppose he was so smart and knew so many wealthy people that it was gauche to bother him with such mundane requests.

I’ll bet his PowerPoint presentations, if he had any, were terrific: plenty of bright colors, cool icons, and sounds of clicking cameras. None of that boring numbers stuff. And he knew so many of the right people!

I hope these patheticoes who invested with Mr. Madoff don’t come crying to the government for some sort of bailout, but so many of the “right” people will be around the White House, and will then be replaced by other “right” people, that I wouldn’t be surprised if such requests were to find a sympathetic ear in the Paulson/Geithner Treasury Department.