In an earlier life, I invested in a hedge fund. My plan was that
diversity and expertise would outperform the general economy. The
investment was successful enough but, as time went by, really no better
than an index fund. It is very hard to believe that investing success is
immune to intelligence, expertise, experience and some degree of
familiarity with the investment world's inner workings--but it is. That
experience has soured me generally on the predictive wisdom of experts
in all fields.
One element in that investment history was an investment with the Ponzi schemer Bernie Madoff. I was disturbed the fund did so and thought it exposed a casualness that such a fund might develop over time, just the thing I hoped expertise would avoid. The fund managers claim otherwise. They were as surprised as I was. They claim they invested with a currency manager whose regular independent audit showed they were invested in Treasury Bills. When it was revealed that the currency manager had invested in Madoff, my fund sued--not the investor, but the auditor. They recently won their case.
The real lesson here is worse than Madoff. My fund hired auditors to review the investments they held and confirm their veracity. The auditors lied. Lied! Lied as much as Madoff. Just as the government auditors did not pick up on Madoff's obvious scam, the private auditors did not even look at the currency investor's books to see where the investments were.
Sending money to any of such people is a truly hazardous act.
One element in that investment history was an investment with the Ponzi schemer Bernie Madoff. I was disturbed the fund did so and thought it exposed a casualness that such a fund might develop over time, just the thing I hoped expertise would avoid. The fund managers claim otherwise. They were as surprised as I was. They claim they invested with a currency manager whose regular independent audit showed they were invested in Treasury Bills. When it was revealed that the currency manager had invested in Madoff, my fund sued--not the investor, but the auditor. They recently won their case.
The real lesson here is worse than Madoff. My fund hired auditors to review the investments they held and confirm their veracity. The auditors lied. Lied! Lied as much as Madoff. Just as the government auditors did not pick up on Madoff's obvious scam, the private auditors did not even look at the currency investor's books to see where the investments were.
Sending money to any of such people is a truly hazardous act.
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