When we open up the financial section of the newspaper or watch any business channels on TV, we always hear about hedge funds. Especially recently, during hard economic times, we hear about hedge funds that are having trouble. However, we all listen without actually understanding how they work.
I found an amazing video on YouTube by Senior Editor of Marketplace Paddy Hirsch. It's a 10 minute video, but well worth your time. He explains everything in very simple everyday terms.
Please take 10 minutes and watch it.
Click on the link below to watch it.
A look inside hedge funds
Sunday, December 28, 2008
Sunday, December 14, 2008
$50 Billion Ponzi Scheme
Over the past few days, as you have probably noticed in the media, the largest fraud in history has been uncovered. It was started by Bernard Madoff of
Bernard L. Madoff Investment Securities LLC. In the last few years, when some of his investments went sour and he wasn't cutting a profit, he resorted to running a Ponzi Scheme.
A Ponzi Scheme works as follows. It is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business
Madoff was smart. He only offered 10% returns. His records were kept under lock and key and his auditors were nobodies.
However, investors should have known better. If you would have compared graphs of Madoff's returns against the markets, the markets show a rollercoaster, while Madoff's is a straight line going up. This is impossible. The bestinvestors, lawful investors in the world, must ride the market waves.
But what were his real motives? How could a man have absolutely no regard for other people's money? People have lost billions of dollars. Charities have had to shut down because of him. Companies have had all their assets frozen.
A few people saw it coming but nobody did anything. He was a pretty important figure in the world of finance, being the fomer chairperson of NASDAQ. He used his social standing to persuade people to invest with him. Rich people at his country club in Palm Beach. Unfortunately, their greed overcame them.
In conclusion, I know its extremely unlikely, but I hope all the unlucky investors will somehow be repayed.
Any Thoughts?
Bernard L. Madoff Investment Securities LLC. In the last few years, when some of his investments went sour and he wasn't cutting a profit, he resorted to running a Ponzi Scheme.
A Ponzi Scheme works as follows. It is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business
Madoff was smart. He only offered 10% returns. His records were kept under lock and key and his auditors were nobodies.
However, investors should have known better. If you would have compared graphs of Madoff's returns against the markets, the markets show a rollercoaster, while Madoff's is a straight line going up. This is impossible. The best
But what were his real motives? How could a man have absolutely no regard for other people's money? People have lost billions of dollars. Charities have had to shut down because of him. Companies have had all their assets frozen.
A few people saw it coming but nobody did anything. He was a pretty important figure in the world of finance, being the fomer chairperson of NASDAQ. He used his social standing to persuade people to invest with him. Rich people at his country club in Palm Beach. Unfortunately, their greed overcame them.
In conclusion, I know its extremely unlikely, but I hope all the unlucky investors will somehow be repayed.
Any Thoughts?
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