Madoff Recommends Index Funds

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Madoff Recommends Index Funds

Postby matjen » Wed Jun 05, 2013 8:36 am

When the academics and the crooks both agree, you are probably onto something good. :D

Q . You have worked with some of the most elite financial firms on Wall Street. How has it changed since before you started the Ponzi scheme?

A . The individual investor is the last person that has any information. The average investor is coming up against professional financial firms, hedge funds and the professional trader and it’s easy to be scared out of the market.

Q .Where is the safest place to invest money these days with the least amount of risk for fraud?

A . The best chance for the average investor is to put money in an index fund. There are lower commission rates and more professional management with these types of firms. It’s the safest and least likely place to get scammed.

http://www.marketwatch.com/story/madoff ... atest_news
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Re: Madoff Recommends Index Funds

Postby Cut-Throat » Wed Jun 05, 2013 8:53 am

For some reason this does not make me feel good. :shock:
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Re: Madoff Recommends Index Funds

Postby Mill » Wed Jun 05, 2013 8:56 am

I read the article. He seems a little smug and unrepentant for his crimes, but I think he is genuinely trying to give good advice to people about avoiding investment scams.
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Re: Madoff Recommends Index Funds

Postby nedsaid » Wed Jun 05, 2013 8:57 am

Another thing would be to not give an advisor or a broker the ability to make decisions for you without discussing them with you first. If you hire a investment manager, he or she will follow a course that both of you have agreed on. If an investment manager makes decisions to buy and sell, it would be in accordance with what you have mutually agreed to. Never give a broker decision making power over your account.

Of course with an advisor, you want the assets held by another custodian. Some advisors hold their clients accounts at a firm like Charles Schwab. Then you are getting statements from a third party.

Index funds are wonderful. No advisor, no conflict of interest, no buying and selling. Just mirroring the market and getting the market return.
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Re: Madoff Recommends Index Funds

Postby YDNAL » Wed Jun 05, 2013 9:24 am

matjen wrote:When the academics and the crooks both agree, you are probably onto something good. :D

First, I nearly fell off my chair laughing when I read the subject line.... good one, matjen!

Second, Bernard Lawrence "Bernie" Madoff, born April 29, 1938 (age 75) in Queens, New York City, NY, is an American former stockbroker, investment advisor, financier, and white collar criminal.
Link: viewtopic.php?f=10&t=117539

For those who don't get the link, my opinion and how to treat these threads is posted there - except, in this case, he is not working (as he shouldn't).
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Re: Madoff Recommends Index Funds

Postby Fallible » Wed Jun 05, 2013 9:55 am

I wonder what John Bogle might think about one of the world's biggest financial fraudsters recommending index funds.
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Re: Madoff Recommends Index Funds

Postby Tom_T » Wed Jun 05, 2013 10:01 am

Fallible wrote:I wonder what John Bogle might think about one of the world's biggest financial fraudsters recommending index funds.

Better late than never?
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Re: Madoff Recommends Index Funds

Postby abrahampayton » Wed Jun 05, 2013 10:28 am

Somebody should really ask him this.... 8-)

Fallible wrote:I wonder what John Bogle might think about one of the world's biggest financial fraudsters recommending index funds.
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Re: Madoff Recommends Index Funds

Postby beanstock » Wed Jun 05, 2013 10:36 am

The fundamentals remain regardless who says what about index funds, for the most part.
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Re: Madoff Recommends Index Funds

Postby JW Nearly Retired » Wed Jun 05, 2013 10:51 am

Mill wrote:I read the article. He seems a little smug and unrepentant for his crimes, but I think he is genuinely trying to give good advice to people about avoiding investment scams.

:oops:
True to scam artist form, he is still trying to convince future marks (i.e., the parole board) he has turned over a new leaf. That's one genuine article crook!
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Re: Madoff Recommends Index Funds

Postby nisiprius » Wed Jun 05, 2013 10:59 am

It's perfectly simple: everyone recommends index funds unless they have a self-serving reason to want you to buy something else.

Now that Madoff has nothing to sell, he recommends index funds.

Now that Henry Blodgett isn't being paid to say "We think LFMN presents an attractive investment" while email colleagues "I can't believe what a POS that thing is," he recommends index funds.

Jim Cramer wants you to listen to his program and make bets on small numbers of individual stocks, but "if you insist on more than fifteen or more stocks, you might as well hand off your money to one of those mutual fund fellows, although the costs, in fees, will be prohibitive unless you select a passive model, such as an index fund."
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Re: Madoff Recommends Index Funds

Postby scone » Wed Jun 05, 2013 11:08 am

And this dude was once chairman of the NASDAQ. Makes you wonder how much corruption is still out there. Jack Bogle is absolutely right-- you really have to watch your back when dealing with the industry.
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Re: Madoff Recommends Index Funds

Postby gerrym51 » Wed Jun 05, 2013 11:13 am

If i was interested in how to run a ponzi scam i would listen to Madoff-otherwise no.
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Re: Madoff Recommends Index Funds

Postby Fallible » Wed Jun 05, 2013 11:22 am

abrahampayton wrote:Somebody should really ask him this.... 8-)

Fallible wrote:I wonder what John Bogle might think about one of the world's biggest financial fraudsters recommending index funds.


I wouldn't be surprised if CNBC hasn't already put a call in to him.
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Re: Madoff Recommends Index Funds

Postby Ged » Wed Jun 05, 2013 11:42 am

gerrym51 wrote:If i was interested in how to run a ponzi scam i would listen to Madoff-otherwise no.


I'd rather get advice on ponzi schemes from someone who isn't in jail.
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Re: Madoff Recommends Index Funds

Postby Random Musings » Wed Jun 05, 2013 12:05 pm

Fallible wrote:I wonder what John Bogle might think about one of the world's biggest financial fraudsters recommending index funds.


Computer hackers, after being caught, come over and work for the "right" team.

However, I don't think Madoff will ever get an endorsement gig at Vanguard. It would just drive up ER's.

RM
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Re: Madoff Recommends Index Funds

Postby neurosphere » Wed Jun 05, 2013 12:51 pm

Remember Henry Blodget? http://en.wikipedia.org/wiki/Henry_Blodget

After he was barred from being involved in securities, he was a very articulate proponent of passive investing. Which leads me to believe that many (most) money managers are smart enough to KNOW the facts, but choose to deceive for the sake of profit. This is opposed to being either 1) "brainwashed" or 2) not intelligent enough to understand the overwhelming evidence. Remove the financial incentives, and suddenly everyone is like "well DUH, index funds". :D
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Re: Madoff Recommends Index Funds

Postby Phineas J. Whoopee » Wed Jun 05, 2013 12:52 pm

Random Musings wrote:...
However, I don't think Madoff will ever get an endorsement gig at Vanguard. It would just drive up ER's.

RM

[Emphasis added.]

Maybe not by very much, though, at least if the arrangement was via Federal Prison Industries. According to prisonworldblogtalk.com, the highest wage available to a felon is $1.15 per hour, and how long could it take Madoff to say "Don't be like my victims - only buy index funds"?

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Re: Madoff Recommends Index Funds

Postby mickeyd » Wed Jun 05, 2013 3:02 pm

Q .Where is the safest place to invest money these days with the least amount of risk for fraud?

A . The best chance for the average investor is to put money in an index fund. There are lower commission rates and more professional management with these types of firms. It’s the safest and least likely place to get scammed.



I wouldn't be surprised if some "Don Draper"-type on Madison Ave. is now thinking about how this could fit into a catchy advertisement right this very moment.
Last edited by mickeyd on Wed Jun 05, 2013 3:32 pm, edited 1 time in total.
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Re: Madoff Recommends Index Funds

Postby tetractys » Wed Jun 05, 2013 3:12 pm

The Madoffs that haven't been nabbed (well maybe not quite down there with M., but close.), are still holding about 35% of the wealth lost in the great recession. Index fund investors are perhaps a good chunk of those who've been able to keep, recover, or even grow their wealth in the last 5 years or so. -- Tet
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Re: Madoff Recommends Index Funds

Postby chaz » Wed Jun 05, 2013 3:18 pm

Nice article:

"After all those years of racing to remain a step ahead of the authorities, Madoff has a few ideas about how the market can be made more fair for retail investors. Among them: The Securities and Exchange Commission should be beefed up, hedge funds need to be registered and brokerages should have independent custodians."
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Re: Madoff Recommends Index Funds

Postby staythecourse » Wed Jun 05, 2013 3:23 pm

nisiprius wrote:It's perfectly simple: everyone recommends index funds unless they have a self-serving reason to want you to buy something else.


I used to think the same thing as the reason professional folks espoused active management, but his answer below makes me think otherwise

"A . The individual investor is the last person that has any information. The average investor is coming up against professional financial firms, hedge funds and the professional trader and it’s easy to be scared out of the market."

Over the last couple of years I have met/ become friends with folks in the industry. One is a hedge fund guy, a couple of analysts, etc... From talking to them about investing I have come to the conclusion that they really do believe in active management over passive management. One of my friends has two masters from MIT and still believes in active management. Not sure if this is smart folks thinking they are smarter then others which leads to some investing advantage or just brainwashed by the industry.

Good luck.
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Re: Madoff Recommends Index Funds

Postby matjen » Sat Jun 08, 2013 11:52 am

Well this may be the second dumbest thing I have done on this board (The first being writing say la vie rather than c'est la vie on a smartphone thread). My wife walks up to me with her tablet yesterday evening to tell me that her college roommate had recently interviewed Madoff and had some additional thoughts that she shared via Facebook. Turns out that I I even went to Sital's wedding last summer. She is the author of the original piece I referred to and I did not realize it. :oops:

I'll post the additional thoughts when I can get access to them.
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Re: Madoff Recommends Index Funds

Postby abrahampayton » Thu Jun 13, 2013 12:06 am

Fallible wrote:
abrahampayton wrote:Somebody should really ask him this.... 8-)

Fallible wrote:I wonder what John Bogle might think about one of the world's biggest financial fraudsters recommending index funds.


I wouldn't be surprised if CNBC hasn't already put a call in to him.


Fair point, fair point. You're probably right.
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Re: Madoff Recommends Index Funds

Postby normaldude » Thu Jun 13, 2013 12:36 am

mickeyd wrote:I wouldn't be surprised if some "Don Draper"-type on Madison Ave. is now thinking about how this could fit into a catchy advertisement right this very moment.


Potential Merrill Lynch TV Commercial: "Index funds are a scam. Even legendary ponzi schemer Bernie Madoff is recommending index funds. Do you really want to follow Bernie Madoff's advice? Of course not. Go with someone you trust. Contact your local Merrill Lynch representative, and let us help you reach your financial goals.."
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Re: Madoff Recommends Index Funds

Postby nedsaid » Thu Jun 13, 2013 12:39 am

As Bill Cosby would say, "Right!!!."

Didn't Merrill Lynch get bailed out and purchased by Bank of America? They ran into lots of trouble running their own business. Their credibility is a bit strained I would say.
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Re: Madoff Recommends Index Funds

Postby baw703916 » Thu Jun 13, 2013 9:49 pm

There's an article on Bloomberg that references the story, and links to this thread (and quotes matjen).

The Madoff advice definitely falls into the "do as I say, not as I do" category. :)
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Re: Madoff Recommends Index Funds

Postby matjen » Thu Jun 13, 2013 10:38 pm

baw703916 wrote:There's an article on Bloomberg that references the story, and links to this thread (and quotes matjen).


Thanks for linking to this baw703916. I have now made the WSJ and Bloomberg in the past couple of months. Watch out Ferri and Swedroe and Bogle...on my way to becoming a full fledged pundit!!!! :shock:
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Re: Madoff Recommends Index Funds

Postby baw703916 » Thu Jun 13, 2013 10:47 pm

matjen wrote:
baw703916 wrote:There's an article on Bloomberg that references the story, and links to this thread (and quotes matjen).


Thanks for linking to this baw703916. I have now made the WSJ and Bloomberg in the past couple of months. Watch out Ferri and Swedroe and Bogle...on my way to becoming a full fledged pundit!!!! :shock:


Congratulations!
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Re: Madoff Recommends Index Funds

Postby michaelsieg » Fri Jun 14, 2013 12:09 am

normaldude wrote
Potential Merrill Lynch TV Commercial: "Index funds are a scam. Even legendary ponzi schemer Bernie Madoff is recommending index funds. Do you really want to follow Bernie Madoff's advice? Of course not. Go with someone you trust. Contact your local Merrill Lynch representative, and let us help you reach your financial goals.."

Great line, but shouldn't it say "Contact your local Merrill Lynch representative and let us help you reach our financial goals?" :happy
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