When this post originally appeared in 2009, Bernie Madoff had just pleaded guilty to fraud. Investors worldwide were still processing the fallout of the financial crisis. In hindsight, the scandal became a defining example of how unchecked trust and opaque investment strategies can lead to catastrophic losses.
With the financial world showing glimmers of hope this past week, we also see that Bernie Madoff pleaded guilty to 11 charges including fraud. They had a bunch of his “victims” on TV the night before. They talked about how he had ruined their lives. I suspect Bernie is not going to be getting much leniency. He may be in the slammer for an extended period of time. Remember if it sounds too good to be true, it probably is.
Could that kind of fraud happen in Canada? Maybe not on the scale that was seen. However, I am sure there are “get-rich-quick” schemes or Ponzi schemes going on right now. Be vigilant in your research of any investment scheme.
My March Thoughts
- Random Thoughts, spring ahead for a time change.
- The Eaton’s Catalogue and The Sweater a great story for the Winter.
- Down to the Wire with Taxes don’t put the pro in procrastination.
- Is Canada in a Good Place? I hope so.
Random Financial Thoughts
This week more news to cause investors to be more nervous, and Warren Buffett telling us the U.S. economy fell off a cliff (gee thanks Mr. B., that must have added a lot of confidence to the whole mess).
- The N.C.F.B.A. met again this week and as usual much discussion of useful financial ideas and Preet from Where Does All My Money Go finally met Larry MacDonald, I urge you to read the blogs that are under the N.C.F.B.A. title in my right hand column, they are excellent sources of personal finance and investing ideas.
- Larry MacDonald asks, Is Now a Good Time to Buy Berkshire Hathaway? It is very cheap right now, however, there are many bargains on the Stock Market right now. Better still what happens if Mr. Buffett falls off a cliff?
- The Canadian Capitalist mentioned to me about the importance of rebalancing even in tough times, and he had an update for the Sleepy Portfolio (that I actually use in one of my RRSP accounts). The re-balancing spreadsheet is very useful.
- Preet at Where Does All My Money Go has some interesting projects on the go, and he discussed with us The Psychology of money and how he may be using this in a future TV project.
- Michael James resurrects one of my favourite " why it was bad to invest in Nortel stories with Nortel vs. Beer. This one, when I first read it, I didn't laugh, because at the time, I'd just lost a lot of money and didn't buy beer. Mmmm... beer...
Ponzi Jokes & Red Flags
Classic Ponzi scheme warning signs:
🚩 “Guaranteed returns.”
🚩 Consistent profits in volatile markets
🚩 Secret investment strategy
🚩 Pressure to recruit other investors
Ponzi Scheme Documentaries (Excellent Ones)
Here are three excellent documentaries about the Madoff scandal:
Madoff: The Monster of Wall Street (Netflix)
A detailed multi-episode documentary explaining how the fraud operated and how regulators missed it.
The Wizard of Lies (HBO)
https://www.hbo.com/movies/the-wizard-of-lies
A dramatized but very accurate portrayal starring Robert De Niro as Madoff.
Chasing Madoff (PBS Frontline)
Focuses on Harry Markopolos, the analyst who warned regulators about Madoff years before the scandal broke.
That Mike Z videos were hilarious. Thanks for the link! Cheers!
Thanks for the mention. If Madoff ever gets out of jail, the justice system in the US is broken. I certainly hope they round up all of his fellow conspirators.