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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (33037)	12/14/2008 3:06:01 AM
From: Madharry	2 Recommendations Read Replies (1) \| Respond to of 78764

I read the article in the ny times and several points struck me; 1. Complacency - they produced decent consistent results for decades. after awhile customers accepted the black box approach and didnt care that the financial were audited by some unknown firm. See lehman bear stearn, aig, maybe gm too. 2. What happened to diversification? how does a charitable organization have all their funds in one place? 3. The hired gun approach. is the hired gun responsible? Many of the investors who were burned had no idea they were investing with Madoff they entrusted their money to a manager who in turn invested in a madoff fund. This is similar in my view to those foolish cfo-s who took their companys short term cash and put it to work in auction rate securities at a rate marginally better than t bills and are now stuck with it for multiple years. I expect we will see lots of lawsuits and a withdrawals from funds of funds after this fiasco. The lessons that are here for the taking are: its foolish to believe that because some name has invested in a ________________ thats it ok because they have vetted it. investors have to do their own due diligence. If we dont understand the way they make or lose money and the risks that are being taken, the investment should not be big no matter how well the company or shares have performed in the past. I guess for me that means listening to the conference calls and reading the sec reports more carefully than I have been.

To: Paul Senior who wrote (33037)	12/14/2008 8:45:08 AM
From: vireya	Read Replies (1) \| Respond to of 78764

Paul, how about a rich folk living down the street from me who lost EVERYthing cept 1 bank CD, and the furnishings in the home. Referred by a trusted associate who was Madoff's referrer to many SOOO sad

To: Paul Senior who wrote (33037)	12/15/2008 12:33:12 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78764

re Maddoff - it is quite apparent that all the investors in his ventures were assuming that somebody else has done his research. My fear of a bllowup out of the blue is the reason I would have a hard time to invest in those alternative investments or hedge funds. Just too much incentive for the folks running these things to bet it all on red. the most likely outcome of this mishap is that those unregulated assets will have even higher outflows. I do not think that such a thing could happen with mutual funds where auditing is much more regulated and the incentive to do such a thing just isn't there for the manager. FWIW LSBRX is still heading down as well as the junk bond funds that I am following. The persistent decline of the bond market (sans treasuries) is one of the reasons why I am fairly skeptical about the near term outlook for stocks.