Can anyone explain this whole Madoff thing to me? (1 Viewer)

[It Will Never Last]

I mean, what the fuck?

How did people who are supposed to have the smarts with money think that a pyramid scheme was a good investment?

May as well stuck a sawbuck on Lucky Joe in the 3rd at Belmont.

Fuck it, may as well shoved all in with 52o UTG.

Are our banking institutions showing their caring side by employing complete fucking woodeners? It is bad enough that Cowen and co can't count past the fingers on one hand, but fuck sake like.

Where's me hand basket, this country is off to hell?

 

[7 - No tomorrow]

He didn't tell anyone it was a pyramid scheme.
He told them he was investing their money in equities and securities.
But he operated, like a lot of hedge funds, on a 'black box' model - i.e. "I can't tell you how I invest your money, because it's proprietary information. And if other investors found out they would copy me and hurt your investment"
Everyone kept making money (on paper) and no one had a problem withdrawing any until this recent crisis.

He didn't offer big returns, just steady double digit profits year after year. Not for people to get rich (to be in his club you already had to be rich) but for people to stay rich for a long time. This is a very attractive model for those who just want to keep what they've got.

It's an almost unbelievable story.

 

[It Will Never Last]

So basically he promised people he'd make them money, but told them it was secret and he couldn't tell them how he'd make them money...and they fell for it?

Wow, it's like a wallet inspector for the rich.

I don't know who is stupider, them for falling for it, or me for not trying it before him.

 

[It Will Never Last]

According to Barrons Magazine (via wikipedia) the strategy worked like this:

Typically, a position will consist of the ownership of 30-35 S&P 100 stocks, most correlated to that index, the sale of out-of-the-money calls on the index and the purchase of out-of-the-money puts on the index. The sale of the calls is designed to increase the rate of return, while allowing upward movement of the stock portfolio to the strike price of the calls. The puts, funded in large part by the sale of the calls, limit the portfolio's downside

Simple really.

There's a whole lot of 4by2s been sucked into this.

 

[7 - No tomorrow]

So basically he promised people he'd make them money, but told them it was secret and he couldn't tell them how he'd make them money...and they fell for it?

Wow, it's like a wallet inspector for the rich.

I don't know who is stupider, them for falling for it, or me for not trying it before him.

Sounds so easy.
It's how a lot of hedge funds operate though.

Part of his scam was to only accept certain clients. Lots of people asked could they invest with him and he knocked them back. So investing with him had an air of snobbish exclusivity.

I got this off the Madoff site before the Justice Dept shut it down. Haha.

In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner's name is on the door. Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark.

No mention of the giant whellbarrow he used for his carrying his balls around.

 

[It Will Never Last]

It would be great if it was only rich greedy fucks who were affected, but looks like there's pension funds and charities out of pocket as well.

I'm going back to money under the mattress in future, can't be any more risky than trusting the banks.

 

[shitepipe]

It would be great if it was only rich greedy fucks who were affected, but looks like there's pension funds and charities out of pocket as well.

pension funds are the greediest fucks out there. and as far as i see it, anyone who invests in funds that promise double digit rises year on year is a greedy fuck who deserves to crash and burn, including charities.

 

[It Will Never Last]

Unfortunately shitepipe, pension fund managers often hold the future of rather normal people in their hands. When it all goes to shit it's the person hoping to draw their pension who ends up fucked.

 

[shitepipe]

Unfortunately shitepipe, pension fund managers often hold the future of rather normal people in their hands. When it all goes to shit it's the person hoping to draw their pension who ends up fucked.

this is true. however most private pensions involve choosing which fund you want your money to be invested in. it's the state pensions that are particularly fucked, another shining example of the wonders of privatisation of people's futures.

 

[It Will Never Last]

this is true. however most private pensions involve choosing which fund you want your money to be invested in. it's the state pensions that are particularly fucked, another shining example of the wonders of privatisation of people's futures.

I believe one of the funds affected is the Korean Teachers Pension Fund. Not nice.

 

[egg_]

The housing bubble was, essentially, a pyramid scheme. The sub-prime loans market was too

 

[Pantone247]

worth remembering Madoff was head of NASDAQ at one point

he wasn't exactly Del boy Trotter

 

[7 - No tomorrow]

worth remembering Madoff was head of NASDAQ at one point

The bigger the lie...

 

[It Will Never Last]

worth remembering Madoff was head of NASDAQ at one point

he wasn't exactly Del boy Trotter

Yeah, but he sold this scheme with the tag "this time next year..."