Rich On Money

Bernie Madoff – A Con Man

This is one of the most important topics I will ever write about, and it happens all the time. When you need advice on anything, you always want the best, untainted, independent, best thought-out advice you can get. It really doesn’t matter what the subject matter is. Those are the standards and criteria by which you would like to obtain advice.

Through the decades I have spent on Wall Street I have seen everything, and nothing surprises me anymore. I was completely unfazed by the Madoff scandal because that situation was ripe for the happening. It was only a question of whose name was going to be pinned on the scandal. In the case of Madoff, the whole deal can be explained in a few sentences.

Madoff was offering returns of 10% plus for year after year with remarkable consistency. Big banks and others threw billions at him to manage because he did not charge a fee. Get it, no fees, he only charged a brokerage commission for doing the trades. This meant big banks and advisors could charge a fee to the investors and others, and not have to share it with Madoff. They kept the fees and Madoff kept the associated commissions.

It’s surprising Madoff didn’t manage $500 billion rather than just $50 billion under these circumstances. Once the banks saw that they could keep all the fees, they LOST ALL OBJECTIVITY, and gave billions to Madoff. It is always the same.

Follow the Money

During the Watergate affair in the early 1970’s, two Washington Post reporters, Woodward and Bernstein were attempting to nail Richard Nixon for criminal actions. They were having a very difficult time ultimately proving culpability. They had a secret high level source who ultimately proved to be a top guy in the FBI. His advice, “Follow the Money”.

I offer you the same advice today in all your business transactions, and in your world of money. You need to know where people are coming from. Is their advice tainted? Is there some way they get paid for telling me what they are telling me?

People love to tell me about the New York Times. They say “All the news that’s fit to print”. Well that’s a bunch of nonsense, and I’m not political. I learned from members of the Rockefeller family long ago, that you can figure out the slant of a newspaper by looking at who the advertisers are. If you know the slant of the advertisers, than you know the slant of the newspaper. If you know where they are coming from, you will know where they will hook me, and knowing that is everything.

I Seldom Get Taken In

Just prior to Bush’s invasion of Iraq, I was talking to a member of the international inspections unit who worked for the United Nations who told me that there are no weapons of mass destruction in Iraq, and that the United States will not find any. He said it with such certitude that I was taken aback by the strength of his beliefs. I can tell when I am being lied to, but that’s another blog. Sure enough the guy was right.

America was conned into spending a trillion dollars on an unnecessary war that only a bunch of old men in the White House wanted. If I had only one wish for the old men, it would have been that they would have sacrificed their arms and legs, in the same manner that they had our young men sacrifice theirs. But war as you know destroys the flower of a nation’s youth. Just look at England and World War I; the English never ever recovered. It was over for them after WW I, the history books simply did not reflect it until after WWII.

I know that if I really want to read the important news, I go to the Saturday edition of the New York Times, the least read edition of the week for the daily newspaper. Saturday is when every newspaper prints the stories that they have to print, but don’t want to print. Think about it; these are the stories that the paper is very reluctant to print, so they bury them in the least read edition of the week. This allows the newspaper to yell fairness. We wrote about that story. They just don’t mention that it was in the Saturday edition.

So always try to ferret out the truth. Figure out where people are coming from. Look at the body language, listen for the tonality. Be alert for the ambiguities in their language patterns. When a person says, I am not in it for the money; it is the money that they are precisely in it for. What is the person’s agenda that you are dealing with? Do they have a private agenda, or a secondary agenda? If you know their agenda, you can predict their behavior, their actions, and even their thought patterns. These are just a few of the things you should know about.