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the Bernie Madoff "victims"

January 18th, 2009 at 06:08 pm

I was watching the Suze Orman show last night and she had one of Bernie Madoff's victims on. While she has every right to be upset....they lost $5 million dollars!....I am finding it harder and harder to feel sorry for these people. This couple, like so many others had darn near everything invested with this guy, how dumb was that? I mean really. And as the conversation wore on, it turned out that her husband was still working and they made $300,000 a year, they live in a $2 million home that's paid for and they still have $200,000 in the bank. They are in no danger of hitting the skids. Of course the husband is 75, but even if he retired tomorrow, couldn't they sell the house, buy another great home for $1 million dollars and still have a mill left over? Sheesh......

14 Responses to “the Bernie Madoff "victims"”

  1. disneysteve Says:

    Investing everything with one planner isn't unusual at all. As long as the investments are well-diversified it isn't a problem. If I dealt with a financial advisor and he managed all of my accounts, the money wouldn't all be in one place, even though it was all managed by one person.

    Look at your 401k. It is all invested with the same management company and then diversified into various investments. If it turned out that the management company was running a scam, collecting your contributions but never actually investing the money, you'd find yourself in the same position as Madoff's victims.

  2. Broken Arrow Says:

    Well, I suppose the "problem" is that a lot of people who have money don't always want to self-manage their money. So, they simply give it to a professional to do so. This is fine and dandy until you run into a guy who turns out to be a fraud.

    I agree I too can not scrounge up much sympathies either. Perhaps they should have worked harder in guiding their own money to avoid this sort of thing, and either way, they're still going to be OK. However, it's tough sometimes, isn't it? For example, I really don't know too much about cars, and when I take it to a mechanic, I am assuming he isn't going to overcharge me either, but it could happen unless I learn to repair my own car....

  3. asmom Says:

    Steve, you can see the numbers; I pretty much have nothing but if I did I would never invest with one person or in one place. My 401(K) and my Roth aren't with the same company and they aren't going to be. I still think it was foolish to entrust everything to one advisor. That's probably because I am not a trusting person. The lady that was on Suze last night was better than some others. At least they own their own home and have $200K in cash. Some of the other victims have nothing left.

  4. asmom Says:

    BA, I like your analogy. As someone who knows nothing about cars and who must entrust the care of my car to someone else, the way you put it makes sense. Only, I do occasionally take my car to a different guy to make sure that I'm not getting ripped off because I don't believe in trusting one person.

  5. Amber Says:

    I saw that last night, the husband was worried about paying the kids college tuition I think. I agree with DS there maybe one manager but investments should be diversified. The problem that I have with the victims of the Madoff scam is the greed they all had. These people were getting money at a rate of return that was abnormal and never questioned anything because as they put it they were making money

  6. monkeymama Says:

    I think there is a fair amount of jealousy and people just can't relate. I thought the women's story was very touching, and an important one. They had saved a large amount of money and very quickly. Clearly they could afford their home, etc. Most of that $5 mil was savings; not the returns (had only invested a few years).

    BUT I see it all the time in my line of work. There are always people that are too trusting and just don't understand money on some level. I have had a couple of clients who jumped from one set of bad advice, one bad broker to the next, etc. This women was the same story. She said so herself, they had lost a lot of money and were looking for someone to trust, and thought they found someone in Madoff.

    Anyone who had $5 Million dollars STOLEN from them is a victim. No doubt about it.

    It's a good lesson not to keep all our eggs in one basket. But certainly a hard way to learn that lesson.

  7. Amber Says:

    I don't doubt that there were people who genuinely made bad choices and were very trusting and even possibly getting into investment for the first time and then there are those who based their choices on greed

  8. asmom Says:

    MM, you're right about not being able to relate although "jealousy" is certainly inaccurate. I said from the outset that she had every right to be upset after all $5 million is a lot of money to lose and it was essentially stolen from her. But "touching", no. Financially they are a lot better off than many, many people their age, well of any age and I think they're going to be okay thus my inability to feel too sorry for them. PLUS they did make a really bad decision to entrust so much of their money with one guy.

  9. asmom Says:

    And Amber I agree, there was some greed there. This guy was getting positive returns month after month, year after year, he never lost money and no one outside of the biz questioned that? Do you really have to have a knowledge of finance to know that's not right? Or do you not question it because you're making so much money? Hmmmm....

  10. disneysteve Says:

    asmom, I own a mutual fund that for quite a few years was having phenomenal returns, year after year after year. The best year it was up just over 70%. I made a bundle of money. Did I sit down and analyze everything that the fund manager was doing, buying and selling, to see how he was getting those great returns? Not a chance. I just enjoyed reading my statements and seeing my balance go up each month. I had no reason to suspect that anything illegal was being done. I was dealing with a firm with a very good reputation. And the returns with perfectly legitimate.

    You said that you think it is foolish to have everything with one advisor. I think you'd have a tough time finding anyone who invests with more than one advisor. I don't use an advisor, personally, but I know plenty of people who do and they all use just one person. It would be really difficult to use more than one advisor because he/she needs to know the big picture and manage your overall portfolio and asset allocation. If you had 2 or more advisors, each handling a portion of your money, there would be no coordination of your accounts. That could lead to all kinds of problems.

  11. Personal Finance Student Says:

    I agree with monkeymama. I felt for the woman. Will she be ok? Yes. Is she in a much better position than most people her age? Yes. However, that $5 million meant security to her and losing all security all at once is hard. I can relate to that and feel for her. I think that that was the message Suze Orman was trying to send. What would you do if all the security you thought you had was suddenly gone? I'm glad she'll be ok, but I feel bad for her and am glad that her husband has a good job to fall back on and that they should be able to recover.

  12. Valerie Says:

    As much as you all are having "a hard time having sympathy" for these people you need to understand that THESE PEOPLE LOST THEIR LIFE SAVINGS. Maybe not all, but alot of these people have worked hard and earned their money. Just because they have made more than you and me. . .doesnt mean we need to bash them in with the "Oh well" I do agree that they made the mistake of trusting just one investor and also being so greedy but in all honesty no one deserves to loose THEIR HARD EARNED MONEY. Wheather it is hundreds, thousands, or millions.

  13. disneysteve Says:

    Thank you, Valerie. I hate seeing the victims blamed here. Yes it was a Ponzi scheme, but this wasn't your typical Nigerian e-mail scam. Bernie Madoff wasn't some sleazy crook in a cheap suit operating out of some basement office somewhere. This guy had a sterling reputation on Wall Street. He had been in the business for years. He was the former chairman of the NASDAQ stock exchange. He managed over $50 BILLION dollars in assets for clients including Hollywood celebrities, major international charities and captains of industry. There was no reason not to trust that his business was legitimate.

    I don't care if someone lost $100 or $100 million. Either way, they are a victim and should be treated as such.

  14. My savings is safely in a shoe box under my bed! Says:

    Asmom, I don't feel sorry for these people.. People that invested big millions with him in hopes of turning it into hunrderds of millions, I don't feel for them. Greed. What profit percentage was he promising them? He caught them hook, line and sinker!His bait was Greed! They lost their life savings but that is the chance you take when you try to double your life savings in a year! Fair and Square... he wanted their money so he showed that he could double a small amount quickly, which is what they wanted, an edge over the market.. like he was some goddamn genie in a lamp! They were greedy and they deserved it! And it isn't like EVERYONE lost, the ones that got in early and got out early without putting their life savings in, made millions, so he did make some people very, very wealthy.. just not the stupid ones!

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