Newspaper article St Louis Post-Dispatch (MO)

Good Advice from Bernie Madoff

Newspaper article St Louis Post-Dispatch (MO)

Good Advice from Bernie Madoff

Article excerpt

Let's give Bernie Madoff his due. He's a really sharp guy.

He's not much of an investor, of course. Had he been one, he wouldn't have had to steal.

But he was really brilliant at exploiting weaknesses in the regulation of Wall Street and in human nature.

That's the talent of a con man. It is how he kept the world's greatest Ponzi scheme running for roughly 15 years, living like royalty while fleecing his victims of $50 billion.

We should be skeptical when listening to a liar. Still, there's insight in what Madoff, who is now serving a 150-year sentence in federal prison, said in an interview last month with the Wall Street Journal's MarketWatch website. His advice for avoiding fraudsters is actually pretty good.

How should the little-guy investor stay safe from a predator like Madoff? Realize that you're a babe in the woods, and the woods have wolves. "The individual investor is the last person that has any information," Madoff told MarketWatch.

That means learning about investments and asking lots of questions, rather than brainlessly following a financial adviser.

Knowledge helps you spot a scammer. For a good, all-encompassing personal finance book, I like "Making the Most of Your Money Now" by Jane Bryant Quinn.

Next, know that Wall Street's cops are largely head-scratching rookies. Chances are that they won't nab the crook until your money is long gone.

"The SEC needs more resources to protect investors," says the man who fooled them for decades. "It's grossly undercapitalized and it doesn't have the right people. Basically, it's a training ground. By the time people are qualified, they leave for other firms."

Congress controls the Securities and Exchange Commission's budget, and congressmen are always begging money from Wall Street. That's a formula for keeping the watchdogs underfed and on a short leash. We investors would be safer if the SEC was better funded. …

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