Too good to be true - again

It is possible to have some – but only a little – sympathy for the victims of the Ponzi scheme operated by Bernard Madoff. His pitch was that he offered really good, although not spectacular, returns regardless of market conditions. There was at least some level of plausibility since hedge funds – big losers this year – used to make the same claims.

On the other hand, there is much evidence to show that consistently beating the market for any extended period of time is rare. Those who doubt this last statement should ask Bill Miller, an honest and skillful mutual fund manager, from Legg Mason www.leggmason.com who, amazingly, beat the market for some fifteen years but whose formerly stellar reputation is now much diminished..

The real lesson, endlessly repeated and endlessly ignored, is that when something looks too good to be true, it probably is. Even if it is true, for a while, there is often a painful ending.

The delicious irony in this case is that Mr. Madoff’s name is pronounced “Made Off” as in ‘he made off with their money’.