They Told Me That Madoff Never Lost Money (Ben Stein)

New York Times ^ | December 28, 2008 | BEN STEIN

[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.

[dfwgator]

Good think Madoff didn’t “Win Ben Stein’s Money”

[Travis McGee]

[xzins]

You may have a lot less money as this year ends than you did two years ago. But you are just as good or bad a person as you were then. It is a myth that money determines who you are, and if you have gotten over that myth by now, then 2008 will have been a very good year

It's all grace, Ben. Amazing Grace.

[Choose Ye This Day]

He thinks the Dow is going to 873????

The guy IS nuts.

[Enterprise]

"Dow = 1 oz of gold.. "

Gold is at $875 an ounce today. Now a Dow at 875 is scary!

[reformedliberal]

Or gold and the DJIA could both go to 2000.

[GOPJ]

We are more than the year-to-year or day-by-day changes in our net worth. We are what we do for charity. We are how we treat our family and friends. We are how we treat our dogs and cats. We are what we do for our community and our nation. If you had $100 million or $100,000 a year ago and now you have a lot less, you are still the same person. You are not a balance sheet, at least not one denominated in money, as was explained to me recently.

Losing and making money are not moral issues so long as you are being honest.

Ben Stein's a good and wise man. He adds needed perspective.

[Enterprise]

And THAT’S scary too! I did hear a prediction of DOW 4,000 recently, but I am just sitting here with my hands over my eyes.

[EVO X]

He thinks the Dow is going to 873????

I wasn't paying that close of attention, but I heard him say the dow to gold ratio..

[isom35]

they were kinda right, I’ll bet Madoff never lost HIS OWN money.

[ButThreeLeftsDo]

Endorsed him and gave money to his campaign......

[PrincessB]

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. I agree with you. As this mess has unfolded, there have been some people/groups that passed on the opportunity or advised clients not to invest with Madoff. The first one I heard of was the New York Community Trust. They passed and advised the foundations under their umbrella not to invest. It seems they had a list of basic questions that Madoff couldn't answer. One would think these questions would be in an investing primer or textbook.

[Hammerhead]

The best investment for my money right now is securing the matching funds from my company and dumping the rest into my Navy Federal Savings account at 3% interest.

NFCU is run by ELECTED ex Admirals and Captains. They are tight as hell in loaning out money and play it straight.

They even cancelled a $500 credit card on my for making two late payments in a year. (note: payments did not exceed 30 days.)

Tough crowd!

[the invisib1e hand]

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.

Puhleese. From about 45 seconds after the inception of the term, it was understood to be term of art. Nobody expected "hedge funds" to be perfectly hedged -- there'd be no point.

And, hey, why don't you name names? Who was the investment bank that fed you that line of crap? 'Cause they're accomplices. Nobody pitches something that hard unless there's plenty of chop.

[reformedliberal]

We are out of the market for the first time in over 30 years.
No growth is scary, but every day that I saw further erosion was scarier.

To tell the truth, I am just about beyond being frightened by it all. I am sort of numb. Whatever happens, happens.

[RichardW]

At least Stein is honest. And I can honestly also say that I have “inventive” ways to lose money in the stock market. Unfortunately that seems to be the way one learns to stop losing money. I dumped five losers the other day when I should have dumped them years ago. And they still are losing money. Cramer had some good suggestions today and you might still be able to catch his program where he discusses those 25 rules of investing.

[Elsie]

Financial geniuses are exceedingly rare...

This CAN'T be true, for I am one!

It's real simple, and I'll let you in on it for FREE!

(Don't get better than this; does it?)

Buy Low: Sell High

See how simple that is?!

---

What I really need, however, is a TIMING genius!

[Thumper1960]

Madoff tried to steal Ben Stein's money.

[Kozak]

Investment tip #2: If it sounds too good to be true, it is.

[Kozak]

Dow = 1 oz of gold.. Said it last night on CNBC..

So is the DOW going to 900, or is gold going to 9,000?