The real money is in managing O.P.M.'s? Into the high hundreds of millions. Now I know old Bernie was scammer but he was only boasting 12% per annum. How did he manage to attract billions $$ with those kind of returns? I'll give him this...he must have been one hell of a marketer. Which leads to another question....Is it that hard to make 12% per annum investing in stocks? Must be or else he would have simply done that instead of scamming right?
Because 12% annually with little or no drawdown is phenomenal investing. If you can do it then you can get all the money you want... Don't make the mistake of thinking that a 20% return is far better than a 10% return etc. Plus, always remember this. Many rich investors, families and asset allocators aren't really interested in top returns, they've got enough money. What they like is consistency with little risk, ie defending their cash plus a small return (and anyway, 12% is not a small annual return).
1) From the early-1980's until 2002/2008, there was a persistent bull market in stocks. It's easier to attract money in that type of environment. 2) Madoff had a lot of prestige in and around New York City because of his company ownership and his position in the securities industry. It's easier to attract money when you have "prominence". 3) Wealthier people want preservation of principle over capital gains. Steady and "predictable" returns are comforting. 4) Regulation tends to diminish during sustained bull markets. Madoff stated that the fraud could have been exposed as early as ~2003 if the authorities had been more diligent. :eek:
Madoff, before the downfall, was a pretty prestigious name. He was once chairman of Nasdaq. Ran a very reputable firm. As to how he was able to garner so much assets. Feeder funds. He had an entire network of other people working to get him money. Akin to Amway sellers and their pyramid network of associates.
All they had to do is ask Madoff who he cleared his trades with, go to whoever that was and asked for trade confirmations to match his statements. It is not rocket science, its a basic question I suspect the SEC chose not to do so.
12% is the figure I heard too. If your assured of a 12% return, you can borrow 10 mil at 6% and make a hell of a lot on the difference.
it was defintiely 12%. One Hedge fund analyst asked how he could consistently hit 12% or 1% per month (which was his U.S.P.) so consistenlty? He said he bought at the low and sold at the high... OH said the Hedge Fund. Here's another $1billion to manage then. So much for superior intelligence and D.D.