Madoffs victims may deserve to lose their money, but not necessarily respect

I haven't posted for a while, mainly because nobody anywhere in the world has done anything stupid in the past month.  I guess people get smarter around the holidays.   Go figure.

The BBC has an article blasting rich people, mainly to the effect of "how much money does one person need?".  It's a good question, and I think one that deserves to be asked, but I take particular issue with their treatment of the Maddoff scandal.  Specifically, his clients:

But most of them had got their money the same way, by promising vast returns on money from other people who were trying to make money out of nothing.

Well, he didn't promise them vast returns.  What he promised was steady returns.  He promised (and claimed to have delivered in the past) 8-12% annual returns, each and every year.  That is pretty impressive, but it's the same returns your financial advisor will tell you the S&P 500 returns each year.  They're lying, but over a 30 year average it's true.  

So, with options, shouldn't you be able to establish a strategy which averages the stock market returns?  Well, maybe over a few years (LEAPS, long term equity options, last 3 years), but certainly not over 30 without establishing private contracts.  But hey, he's a hedge fund, maybe that's what he did.  It's not, it's not even what he claimed to do.  I've been looking around and I still can't find information on his alleged strategy, just that it was so complicated that nobody seemed to understand it.  

This is a sure sign that you shouldn't invest, but then, the people who invest in biotech of software startups don't necessarily know any chemistry or programming themselves.  The late investors just saw past results, and took it for granted that he couldn't just be making them up. Can't argue with results, right?  

Investors need to be aware of the risk of fraud, so I'm not saying they should be bailed out.  Or even deserve sympathy.  But that doesn't make them idiots.  Maddoff didn't promise vast returns, just steady ones.  In retrospect this seems just as outlandish, but the total returns after a few decades wouldn't be much different than the stock market.  So if his scheme is money for nothing, so is $15 trillion in assets of our economy.  

Error rating: 3.  I know it's fashionable to take joy in the pain of the rich, but really, they weren't being too greedy. Just too trusting.

-Enginerd

Saying you don't want somebody elected is a political statement

In a grand display proving that racism is still alive and well, at least in some parts of the US, ABC news reports that a man has hung an effigy of Barack Obama in his lawn from a noose, in the shape of a ghost. Paraphrasing the report, "In an off-camera interview, he said that he do it for political purposes, but because he doesn't want an African American to become president".

I don't want charity, but please give me a hundred thousand dollars. I'm not sexist, but women are inferior to men. I don't want to say anything controversial, so I'm going to preface a political statement by saying that it's not political.

Honestly, what exactly does constitute a "political purpose"? I'm not going to give a precise definition, but I would say any public comment about a candidate for president is political. I'm not saying that's such a bad thing, there's nothing wrong with criticizing a candidates policies, experience (or lack thereof), or statements. But the statement he was making (assuming you believe the ABC news report) was that black people shouldn't be able to be president. How much more political can you get?

Error rating: 10. "I'm not trying to make a statement, but here's my statement." Honestly. This is of course predicated on accurate reporting by ABC news.

-Enginerd

PS They didn't mention the fact that the effigy had a star of david on the top of its head.