Friday, March 13, 2009

What Woud I Have Done?

Bernie Madoff is in jail. Good! The extent of his crime is not known, it is in the billions, but who knows what the final tally will be or if it will ever be determined? What we do know is that many people, charities and rich friends are severely damaged or even financially ruined. Shame on Bernie. He said he is sorry as he plead guilty to 11 counts of criminal activity. Bernie will also perhaps spend the rest of his life in prison, and he should.

Yet what do experts tell us about investing? Keep a balanced portfolio. Now mine is not, however I accept that my investments are 401 (k) type with reputable firms. So many of Bernie's victims violated one of the basic rules of investing.

Don't you think a steady return level of above 40% would send up the old warning flag of "if it seems too good to be true it probably is." Yet, one of the funds I am invested in had an over 100% return back in the dot com bubble, but then so were a lot of tech funds achieving unheard of results. I should've been smarter to move my money earlier before dot com tanked. However, I think a steady diet of above 40% returns would've made my timbers shiver.

In the end, there is a likely possibility that had I invested with Madoff I would've stayed in the game. There are stories of people networking with those who knew Bernie so they could put in a good word and maybe Bernie would take them on. Holy smokes, people actually standing in line to be fleeced.

We can blame old Bernie for his dastardly deed. Don't the victims also bear some shame for allowing greed to blind them to what appeared to be "easy money." Even worse, what would I have done?

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