High return, over a relatively short period of time, implies a high risk investment. A secret algorithm implies more risk and possible fraud.

I have heard that the investors were chided to invest by the mantra, not that were not making money on their investments, but that they were not making the highest returns.

The psychology of a consensus on this investment was a driver over those of skeptics’ warnings. While fraud is bad and needs too be punished, I somehow cannot bring forth much sympathy for the dumb asses with at least a million dollars to throw away that failed to do any due diligence.

Our Social Security and government health care systems have been referred to as Ponzi schemes, but here the evidence is there for all to see. But do people see or even want to see?

It’s only when the tide ebbs that you find out who’s swimming naked

[Indeed, says Madoff, the firm itself has received numerous buyout offers but has so far refused any
entreaties because he and the many members of his immediate and extended family who work there
continue to enjoy what they do and the independence it allows and have no desire to work for someone
else.]

Yeeeeeeeeessssss.

Skeptics who express a mixture of amazement, fascination and curiosity about the program wonder,
first, about the relative complete lack of volatility in the reported monthly returns…experts ask why no one has been able to duplicate similar returns using the strategy

[To] those who express astonishment at the firm’s ability in those areas, Madoff points to long experience, excellent technology that provides superb and low-cost execution capabilities, good proprietary stock and options pricing models, well-established infrastructure, market making ability and market intelligence derived from the massive amount of order flow it handles each day. The strategy and trading, he says, are done mostly by signals from a proprietary “black box” system that allows for human intervention to take into account the “gut feel” of the firm’s professionals.

Still, when the many expert skeptics were asked by MAR/Hedge to respond to the explanations about the funds, the strategy and the consistently low volatility returns, most continued to express bewilderment and indicated they were still grappling to understand how such results have been achieved for so long. Madoff, who believes that he deserves “some credibility as a trader for 40 years,” says: “The strategy is the strategy and the returns are the returns.” He suggests that those who believe there is something more to it and are seeking an answer beyond that are wasting their time.

As for the specifics of how the firm manages risk and limits the market impact of moving so much
capital in and out of positions, Madoff responds first by saying, “I’m not interested in educating the world on our strategy, and I won’t get into the nuances of how we manage risk.” He reiterates the undisputed strengths and advantages the firm’s operations provide that make it possible.

Now, the context.

Of course this is entirely off-topic, but I thought readers might find it interesting.

Sorry Kevin – wasn’t trying to besmirch the good name of VB programmers (that would include me, you see . Merely referring to the old “Shooting Yourself in the Foot” with various programming languages; the thing is that in VB you can shoot yourself in the foot repeatedly, but you’re having so much fun you don’t care…

I remember that some journals and TV shows in the U.S. used to give out coffee mugs for “tips”…

I always wondered who would display said cup after providing an anonymous tip regarding their workplace?

JimB