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A Skeptic's advice on how to avoid falling prey to con artists
Editor's Note: This story was originally printed with the title "The Art of the Con"
This article was originally published with the title The Art of the Con.
Michael Shermer is publisher of Skeptic (www.skeptic.com) and author of The Mind of the Market.
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5 Comments
Add CommentMichael Shermer has relinquished all claim to call himself a skeptic. He swallows whole the media's story of Madoff as a Ponzi schemer, then launches a sermon against gullibility.
Reply | Report Abuse | Link to thisThere may be much more to the story of Madoff's hedge fund than we have been told. For example:
http://www.globalresearch.ca/index.php?context=va&aid=11488
A real skeptic does his homework.
What greed? The ordinary (and rich) people that invested with Madoff did so because of his reputation for reliability, that much is clear. He didn't offer spectacular returns, but fairly moderate ones. But he was consistent and for those who aren't into playing the market, that's very attractive. Maybe the big banks were, and certainly the financial advisers that rode his coat tails, but that was much later in time.
Reply | Report Abuse | Link to thisglobalresearch.ca, you can't do better then that? Talk about doing your homework, citing every wacko with a blog is not only not possible it's not reasonable to expect from a journalist. Besides, that is an opinion piece and a bit lite on facts.
Reply | Report Abuse | Link to thisIt strikes me that the weak (fatal?) point in the article is the hypothesis that Madoff pled guilty so that his investors could score big in recouping their "losses."
Reply | Report Abuse | Link to thisWe are asked to believe that a) Bernie is a well-meaning but incompetent goof whom everyone simply adored and wanted to invest billions of dollars with and, b) that when the toilet wouldn't flush anymore, his good heart compelled him to plead guilty to crimes that could get him a life sentence - just because of his over-developed sense of fair play.
Ok. That makes sense.
But there is also the very fine sieve that the author claims all deals like this are filtered through. You remember; it COULDN'T be a Ponzi because at least one of these entities would have seen through it. Maybe so, but if his thesis holds water, all their micro-fine analyses didn't spotlight investments that were at best unsound, and there were no annual follow-ups by any of these "professionals" to see how things were going. Who would invest billions in ANYTHING without an (at least) annual review to make certain it is not headed over a cliff? Probably the same guys and gals who would perform a half-assed due diligence in the first place. Is that circular?
The article claims that hedge funds are too complex or risky for ordinary investors. I find them to be a lot less risky than selling short, and I have profited from them in the recent financial meltdown. Far more risk is involved in the buy and hold forever ("hold and hope") strategy that is advocated by certain radio personalities who are schills for the mutual fund industry.
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