Bernie Madoff

…and is discouraged to find out that, according to Bernie Madoff and other felons interviewed, it’s essentially impossible to make money without committing fraud. Read more »

Bernard Madoff once had billions of dollars, but now he makes $40 a month doing menial prison labor. “I used to work as a clerk in the commissary, and now they have me taking care of the telephone and the computer systems,” said Madoff, speaking by phone from a federal prison in North Carolina. His prison phone account didn’t have any money in it, so he had to call CNNMoney collect. As far as the computers and phones go, Madoff said he has to “make sure they’re working and they’re kept clean,” but he emphasizes that this requires no technical skill whatsoever. [CNNMoney]

Unfortunately, the book says that it cannot be thrown at the SEC when the SEC is operating—or not operating, for that matter—in an investigative capacity. Read more »

  • 18 Jan 2013 at 6:14 PM

Bernie Madoff Was A Toni Braxton Fan

Unfortunately the Ponzi schemer and TB had to part ways when the government seized his assets but now you have a chance to enjoy all the ballads that would get him through late nights at the office, plus his favorite numbers from Chicago, the best of Barbara Streisand, and every other item in Berns’ prized CD collection, available today for the extremely reasonable price of $100. Act now! [eBay via Complex]

The bits of wisdom Florian Homm picked up during his stay in Colombia, where he was getting some “me time” and not trying to distance himself from angry investors whose money he’d lost, can be found in the book he wrote about living underground (“Kopf Geld Jagd”), which he hopes will be a “hard-core wake-up call” readers who are “trying to get a second Mercedes and a bigger boat.” For those who can’t wait for the English version, from an interview with the Times we learn: Read more »


  • 25 Jun 2012 at 12:56 PM

Mutual Fund Managers Have The Wrong Skills

We’ve talked a bit before about how there’s a booming academic business in papers finding that investment managers do or do not add value versus non-managed alternatives like passive indexing or keeping your money under your pillow and just burning a constant percentage of it every month. Part of why that’s a thing is that the data can be prodded, smooshed, or cherry-picked to say many different things, and so they are. I enjoyed this paper about mutual funds by Stanford GSB profs Jonathan Berk and Jules Van Binsbergen (NBER today here, SSRN in April here) in part for its discussion of data problems, which starts with the fact that they used the industry-standard (in the academic-papers-about-mutual-funds industry) CRSP database and compared it to Morningstar data because “even a casual perusal of the returns on CRSP is enough to reveal that some of the reported returns are suspect.” Suspect like:

We then compared the returns reported on CRSP to what was reported on Morningstar. Somewhat surprisingly, 3.3% of return observations di ffered. Even if we restrict attention to returns that di ffer by more than 10 b.p., 1.3% of the data is inconsistent. An example of this is when a 10% return is accidentally reported as “10.0” instead of “0.10”.

That is one way to get alpha. Anyway they look at the data using a (strangely) unusual metric of dollar value added, which is roughly alpha (gross excess return over some investable benchmark, in this case a Vanguard index fund) and multiplying it by assets under management, the intuition being that making 1% excess return on a $10bn portfolio is more impressive than doubling your $10 bet at the craps table. And they find that mutual fund managers are better than controlled money burning by the thinnest of margins: Read more »

  • 14 Jun 2012 at 1:28 PM

Bernie Madoff Is Still The King

Though it looked like Sir Allen Stanford might dethrone him with a recommended sentence of 230 years… Read more »