Blog topic of the day: Madoff Watch
I bet everyone was wondering how long it was going to take before I had some sort of daily muse about Bernie Madoff!
What the man did was outrageous and he should be in jail instead of under house arrest in a posh Park Avenue condo. But, I read an article today that really annoyed me...it was about the author Alexandra Penney who has announced that she is one of his victims. Apparently, she lost everything to Madoff. The article said "everything".
The guy was scum for sure, and there was no way that his victims could have known what was going on unless they were investment advisors. But you should never have all of your money invested in one fund. Even among reputable investment houses, like Vanguard, you wouldn't want to have all of your money in one fund. It's not diversified and does not adequately protect you from risk. So, why would you invest every bit of your money in the same hedge fund? Why wouldn't you put a portion in the hedge fund and the rest of it in some other funds? And if you didn't understand what you were doing when you were investing, and you're as rich as you would have to be to invest in a hedge fund (let's face it - ordinary people don't have access to them), why wouldn't you pay someone for investment advice to help you determine which investments to select and what amounts to put in each investment?
Some people ask for their own misfortune, and unfortunately, Ms. Penney is one of them.
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