Posted on 12/30/2008 1:32:43 PM PST by nickcarraway
ABOUT two years ago, a little delegation from a major investment bank arrived at my home in Beverly Hills. These nice young people were from the bank’s “wealth management division.” I told them straight away that I didn’t have anywhere near enough wealth to make their trip worth their time, but they smilingly insisted that we could help each other.
They told me that if I invested a certain sum with them, they would make sure that a large chunk of it was managed by a money manager of stupendous acumen. This genius, so they said, never lost money. He did better in up markets than in down markets, but even in down markets he did well. They said he used a strategy of buying stocks and hedging with options.
I protested that a perfect hedge would not allow making any money, because money made on the one side would be lost on the other. They assured me that this genius had found a way to spot market inefficiencies and, indeed, to make money off a perfect hedge.
I thanked them for their time and promptly looked up Bernard Madoff online. Nothing I saw was even a bit convincing that he had made a breakthrough in financial theory. Besides, this large financial firm was going to charge me roughly 2 percent to put my money with Mr. Madoff’s firm. I could invest my few shekels with Warren Buffett for no management fee at all.
(Excerpt) Read more at nytimes.com ...
Financial geniuses are exceedingly rare, and by definition, proven to be so, usually in the past tense, when it doesn’t really matter any more.
A Random Walk Down Wall Street by Burton Malkiel should be a required read for anyone putting their faith in a single investment guru.
Funny, but Enron’s Skilling always bragged about their “perfect hedge” also. Perfect, because --- you see Enron had all these “smart people” running the “Risk Management Group”. And this RMG just never F&%^ed up!
Glad Ben’s still got it! After reading some of the comments to his articles, I was worried he’d gotten too rich and soft.
Ben doesn’t have it anymore. You should see his blathering about versus Peter Schiff. Peter had correctly called in 2006 the market turmoil we are now in the midst of.
http://www.thenewamerican.com/economy/commentary-mainmenu-43/524
The only problem I have with Peter’s ideas is that global investments are down 50% or more in most cases. There has been no “de-coupling” between the US economy and the rest of the worlds economies.
here are some videos to take a look at:
http://www.youtube.com/watch?v=2I0QN-FYkpw
had to say it....
I once had the majority share-holder/owner of a publicly traded company tell me to buy his stock, because certain, specific things would happen and it would go up.
The comments were made at a small, informal dinner of a mutual friend, who was quite close to this CEO. So, I decided to “invest” a few thousand bucks.
The stock proceeded to lose 50% of its value over the next 6 months. I dumped it and eventually the company fell on hard times and was bought by another company for pennies on the dollar.
The moral of the story? Don’t even trust “inside” information.
This is why it's hard to be sympathetic towards the Madoff victims. Even the most rudimentary kind of diligence would have informed these people that there is no financial magic bullet.
It's like betting on both Black and Red at Roulette. But in both cases you will lose money, because there is a fee for buying options, and there is a green 0 and 00 on the Roulette wheel.
I lost a lot of respect for Ben when he endorsed Al Franken. A lot.
Okay, he was right. Amazingly, accurately right. What is Schiff saying NOW?
Investment tip #1: Never get involved in any kind of transaction that begins with someone saying “Psssst!! Buddy!”.
Especially don't trust "inside" information - it's either illegal to trade on (because it's not public knowledge), deliberate fraud, or worthless because it's something the tipster is speculating on.
Dow = 1 oz of gold.. Said it last night on CNBC..
I only ever made money on one tip, and I thoroughly checked it out before investing, and I almost held it too long. I forgot to monitor it, until I heard on CNBC that the company was going to have a management succession problem. I looked into it again, and found that the price had gone up so much that it no longer fit my profile of a worthwhile investment. So I sold it, and it was at its peak at that moment. It went down right after I sold it.
Luck is where opportunity meets preparation.
A tip may be worthwhile, but investigate before investing.
I understand how you feel. That doesn't seem like a good reason to endorse someone like Al Franken.
I got some good inside info once. I bought a stock for ~$0.50 and rode it for a while and kept in touch with the shareholder services department. It shot up to $1.25. I sold and felt like a genius. I called the shareholder people and asked which of their other companies (the management company managed several penny stock companies.) I should invest the profit into. He told me (insisted?) I should be in the company I just sold. I couldn't justify buying back in at a price higher than I had just sold at and waited. Stock hit $4 and I finally bit the bullet. I quickly rode it to $13 and bailed. It peaked at ~$16. I could kick myself for not staying in the whole ride. Still made quite a few bucks.
I don't think the info was illegal. It was his job to attract investors. I do suspect he knew the info that was driving the stock so high.
I understand the Hollywood bond but Franken strikes me as such an arrogant, despicable being. I still can’t figure why Stein would do it...
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