There’s No Such Thing As A Free Lunch…

One of the recurring themes in personal finance is the search for the Holy Grail: the investment that delivers superb performance without putting your money at undue risk. Such a utopian vision of investing appeals to our innermost emotional needs:

  • We want to have long-term prosperity.MADOFF FAIL
  • We want to be able to sleep at night.

Having just finished Diana Henriques’ superb dissection of the largest so-far-discovered private (as opposed to State) Ponzi scheme in history I’m reminded that whatever anyone ever, ever, ever says, risk and reward go hand in hand.

You want that unbelievable performance? Go get it. But it always, always comes with totally believable risk. Otherwise it’s a fraud, plain and simple.

Mind you, Bernie’s doe eyed expression would have you believe butter wouldn’t melt; easy to see how he fooled those clever hedge fund managers who rolled over for him…

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