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Three Investing Lessons from Bernie Madoff
Last week I caused a bit of a controversy on Fox News when I suggested that Bernie Madoff might do more good than harm in the long run – there are some good investing lessons for everyone to note.
Don’t get me wrong. Madoff himself is a despicable person. Over a twenty-year period, he created the world’s biggest Ponzi scheme worth an estimated $65 billion. Hundreds of individuals, retirees, and charities were hurt or destroyed by Madoff’s deception.
He deserved to get the maximum penalty (150 years).
Nevertheless, I look at all the positive side effects of the Madoff scandal. Here are the…
8Jul2009 | Investment U | 2 comments | ContinuedThe Wall Street Meltdown: What Should Investors Do Now?
First it was Countrywide. Then it was Bear Stearns. Then Freddie and Fannie. Now we learn that Lehman Brothers has filed for Chapter 11.
Bank of America bought the nation’s largest brokerage firm Merrill Lynch, in a rush sale.
One of the nation’s biggest insurers AIG is seeking a $40 billion bridge loan from the Federal Reserve and slumped 50% this morning. (After dropping over 30% on Friday.)
Predictably, the market is taking this news hard. As an investor in the midst of this Wall Street meltdown, what should you do now?
Well, you can panic and sell. (That hasn’t been terribly…
18Sep2008 | Investment U | Comments Off | ContinuedPosition Sizing: Why Not Using This Strategy Is The Best Way to Lose Everything
Back when I was still managing money 10 years ago, I had a client who transferred in a rather sizable account. There was only one problem. Over 90% of his net worth was tied up in a single stock, Ericsson. He refused to use a trailing stop or sell a share of it or even to use a position sizing strategy.
I warned him it was crazy to have his entire financial future riding on one stock, especially since he was retired. “That’s what everybody keeps telling me,” he said. “But the stock keeps going up. I’m glad I ignored them…
11Aug2008 | Investment U | Comments Off | Continued
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