I really don’t like this time of year. The end of the year is annoying to me. I don’t like seeing, reading or listening to all the year-end stories in the media. I find it silly when people over the age of 10 say “See you next year” – when they’re going to see me tomorrow and I don’t enjoy the thought of gathering all the data I need to put together to file my tax return.
All in all, however, what I really don’t like is that people seem to use year-end as an excuse not to get anything done. These excuses seem silly to me. Yet everyone, including me, seems to use them. Maybe it’s just because we’re all being lazy or maybe it’s just because we all sort of give up after the 20th or so of December.
I will say that I am glad that 2008 is over, although I don’t seem much change coming in 2009 – it’s just a short 48 or so hours away. It is not like a wind is going come and whisk us all away. Nothing is going to change. The economy is still going to be the toilet, the recession is still going to be in full swing and market will be full of volatility.
I have three rules for you to follow throughout 2009 and beyond:
• Remember that no matter what happens, the sun's going set this afternoon and rise tomorrow and the same can be said for many days to come.
• If you made a mistake yesterday – forget about it. Learn from it and move on. Dwelling on an error will not make it go away or make it better.
• Don’t be afraid to ask questions and demand answers. This is not just in regards to investment advice, guidance and support – it is a rule to be used in all aspects of life. It is your life – demand answers and make sure you understand what you are being told.
One more thing: Are you all as sick and tired as I am of hearing that all these so-called “sophisticated” investors didn’t know what Madoff was doing with their money? It is really making me sick. Every day, another group, institution or fund of funds seems to be coming out with a statement of ignorance. Don’t believe it for one second.
Do they really believe that we are going to believe them? Come on, we aren’t that gullible, are we? I am not saying that they all knew this man was operating a Ponzi scheme but I am saying some of them must have known something was not right with the returns.
My final comment of the year is the one that I continue to make day in and day out: Make sure you know who is managing your money, where it is being held in custody and how you can access it. Don’t get caught in a Ponzi scheme. Demand answers to these simple questions – it may just save you from heartache, pain and unnecessary suffering. Don't ever forget that it is your money and you have a right to understand what's happening to it at all times.
Have a Happy, Safe, Prosperous and Peaceful New Year – so stay alert, stay focused and stay on top of it.
Monday, December 29, 2008
Monday, December 22, 2008
Time should be spent well...
The end of the year is near and while this isn’t my final blog post, I will tell you right now that I am happy 2008 is coming to a close. It has been tough. No matter how you look at it, 2008 is one for the ages and I am glad it’s going to be over soon.
It’s shocking how much stuff one can fit into a year. In college, I worked at the student newspaper – the office was too small – so a few of us got together with the school’s head of physical plant to see what could be done to improve the space. Unfortunately, there wasn’t much because -- to quote the head of physical plant directly – “You can only fit five pounds of shit into a five-pound bag.”
I think it’s clear that Wall Street alone, not to mention other events, proved this theory wrong when it came to 2008.
The headlines are many and the list quite long – I won’t bore you with any of them. Still, I do suggest checking out some of the recaps to make sure you don’t lose sight of what happened in the eighth year of the new millennium.
Since the Madoff crisis, I have had received many calls and emails questioning the impact of his actions on the industry. Unfortunately, I don’t have the answer, but I do believe that more regulation is coming. The industry will clearly change in other ways, too, but just how is still up in the air. I do, however, hope that somebody in Washington finally realizes that that the industry needs standardized reporting and that this regulation is at last put into place.
As the Madoff scandal continues to unfold, stories come out day after day of people and families who have lost much, if not all, of their wealth. One of them is the father of a friend. Last Monday, my friend called to discuss his family’s situation, which thankfully is not a total loss. The family and its advisors had only allocated a portion of their assets to Madoff, but it is a loss nonetheless. My friend said that his father’s reaction to the loss was that of shock, disbelief and sorrow. He was devastated not only because he was conned but because he had planned on the leaving the money Madoff was managing to his heirs. It was to be his legacy.
I was troubled by this comment. I told my friend so and then added: “Your father’s legacy is not defined by money distributed at his death. It is defined by the time he spent with you while he is alive. This is what he will be remembered for by you and your family.”
It is important that those of you who know people who were touched by the Madoff situation talk to them to let them know that while they probably aren’t going to get the Madoff money back, the greatest commodity of all is still available to them – time. And they should use their time wisely, because time well spent creates the memories that define one’s legacy.
It’s shocking how much stuff one can fit into a year. In college, I worked at the student newspaper – the office was too small – so a few of us got together with the school’s head of physical plant to see what could be done to improve the space. Unfortunately, there wasn’t much because -- to quote the head of physical plant directly – “You can only fit five pounds of shit into a five-pound bag.”
I think it’s clear that Wall Street alone, not to mention other events, proved this theory wrong when it came to 2008.
The headlines are many and the list quite long – I won’t bore you with any of them. Still, I do suggest checking out some of the recaps to make sure you don’t lose sight of what happened in the eighth year of the new millennium.
Since the Madoff crisis, I have had received many calls and emails questioning the impact of his actions on the industry. Unfortunately, I don’t have the answer, but I do believe that more regulation is coming. The industry will clearly change in other ways, too, but just how is still up in the air. I do, however, hope that somebody in Washington finally realizes that that the industry needs standardized reporting and that this regulation is at last put into place.
As the Madoff scandal continues to unfold, stories come out day after day of people and families who have lost much, if not all, of their wealth. One of them is the father of a friend. Last Monday, my friend called to discuss his family’s situation, which thankfully is not a total loss. The family and its advisors had only allocated a portion of their assets to Madoff, but it is a loss nonetheless. My friend said that his father’s reaction to the loss was that of shock, disbelief and sorrow. He was devastated not only because he was conned but because he had planned on the leaving the money Madoff was managing to his heirs. It was to be his legacy.
I was troubled by this comment. I told my friend so and then added: “Your father’s legacy is not defined by money distributed at his death. It is defined by the time he spent with you while he is alive. This is what he will be remembered for by you and your family.”
It is important that those of you who know people who were touched by the Madoff situation talk to them to let them know that while they probably aren’t going to get the Madoff money back, the greatest commodity of all is still available to them – time. And they should use their time wisely, because time well spent creates the memories that define one’s legacy.
Sunday, December 14, 2008
No Monday Morning Quarterbacking...
They say if you live long enough you’ll see almost everything. Well, I’ve only lived 37 years and a few months and can say not only that I don’t like what I’ve seen this year, but that the events of the past week have made me scared even to open my eyes.
Why am I scared?
Because I’m not sure that I could have avoided investing with Bernard Madoff or not have been willing to buy what Marc Dreier was selling. No Monday morning quarterbacking here. I’m not going to tell you that I’m that smart. And frankly, my advice to you is don’t believe anyone who tells you they could have avoided these two charlatans.
What will save you going forward (and me too, I hope) are two simple words: due diligence. Many of you are gagging already and thinking, “Here he goes again.” Well, you’re right. I am going to spout off on due diligence because you, me and everybody else needs to hear it.
It’s your money, stupid. That’s why you must take an active role in how it’s being managed. I don’t understand how people can just go on blind faith. I don’t understand how people can simply assume that because Mr. XYZ is using Manager A (as they say in Illinois), A must be good. It’s easy to say that when something seems too good to be true it probably is, but the issue is acting on it. People need to ask questions and get answers.
I never had the pleasure of meeting Mr. Madoff. All I ever heard was that he knows how to make money. I made a few inquiries a number of years ago for an interview and never heard back. I never really pursued it. I figured that like a number of other managers, he did not have time for a fledgling author. I was duped by his bravado.
Now he’s under arrest and charges of fraud have left me shocked, saddened, disgusted, displeased and frankly disheartened. This news puts vinegar icing on 2008’s cake of ashes. Many of my heroes have fallen over the last 11 months and 15 days. It turns my stomach to see that that so much wealth has evaporated, so many people are out of work and that prospects of change are slim to none. Wall Street is in total disarray and there seems to be no chance of a reversal of fortune in the near future.
I’m tired of learning about hedge funds that aren’t performing in these volatile markets. It makes me sick and I’m not going to take it anymore. I want you all to remember the following rule when it comes to making investments: Ask questions and demand answers.
It’s time to take stock in the future and have a clear view of how your money is being managed. It’s your job. Pay attention. Do your homework. Take responsibility. Stand up and make sure you’re counted, make sure you’re heard. Most important, make sure you understand what is going on with your money and know who is pulling the trigger when you make an allocation to a manager or fund. If no one will tell you, get demanding.
One of my closest friends in the hedge fund business called me late Friday to talk about the news of the day. His conclusion: “It is the end of the hedge fund industry as we know it.” Unfortunately, I believe he’s right.
The reason is simple – lack of knowledge. Investors are too lazy to ask questions, don’t want to take or make the time to demand comprehensible answers and so expect the government to step in to save them from themselves.
Whether it’s a mutual fund, individual stock, separate account, hedge fund or anything else, you need to get on the phone today and start asking questions and demanding answers. You need to understand where your money is, how it’s being managed, what the expectations are, whether the expectations have been met, and if they not, demand to know why not. And until people start asking questions and getting answers that make sense, there will be one fraud after another and one loss after another.
It’s okay to lose money - you can't always win - however you need to understand how your money’s been lost. It’s not okay to lose money because you’re naïve and unwilling to ask questions and demand answers.
In recent days I’ve read a lot of newspaper articles about Madoff’s actions that have left me shocked, saddened and disgusted. But I was also fascinated that someone so successful seems to be nothing more then a con artist who preyed on those blinded by his power and fame as well as by their own greed.
Gordon Gekko was wrong. In this situation, greed turned out to be no good at all.
Why am I scared?
Because I’m not sure that I could have avoided investing with Bernard Madoff or not have been willing to buy what Marc Dreier was selling. No Monday morning quarterbacking here. I’m not going to tell you that I’m that smart. And frankly, my advice to you is don’t believe anyone who tells you they could have avoided these two charlatans.
What will save you going forward (and me too, I hope) are two simple words: due diligence. Many of you are gagging already and thinking, “Here he goes again.” Well, you’re right. I am going to spout off on due diligence because you, me and everybody else needs to hear it.
It’s your money, stupid. That’s why you must take an active role in how it’s being managed. I don’t understand how people can just go on blind faith. I don’t understand how people can simply assume that because Mr. XYZ is using Manager A (as they say in Illinois), A must be good. It’s easy to say that when something seems too good to be true it probably is, but the issue is acting on it. People need to ask questions and get answers.
I never had the pleasure of meeting Mr. Madoff. All I ever heard was that he knows how to make money. I made a few inquiries a number of years ago for an interview and never heard back. I never really pursued it. I figured that like a number of other managers, he did not have time for a fledgling author. I was duped by his bravado.
Now he’s under arrest and charges of fraud have left me shocked, saddened, disgusted, displeased and frankly disheartened. This news puts vinegar icing on 2008’s cake of ashes. Many of my heroes have fallen over the last 11 months and 15 days. It turns my stomach to see that that so much wealth has evaporated, so many people are out of work and that prospects of change are slim to none. Wall Street is in total disarray and there seems to be no chance of a reversal of fortune in the near future.
I’m tired of learning about hedge funds that aren’t performing in these volatile markets. It makes me sick and I’m not going to take it anymore. I want you all to remember the following rule when it comes to making investments: Ask questions and demand answers.
It’s time to take stock in the future and have a clear view of how your money is being managed. It’s your job. Pay attention. Do your homework. Take responsibility. Stand up and make sure you’re counted, make sure you’re heard. Most important, make sure you understand what is going on with your money and know who is pulling the trigger when you make an allocation to a manager or fund. If no one will tell you, get demanding.
One of my closest friends in the hedge fund business called me late Friday to talk about the news of the day. His conclusion: “It is the end of the hedge fund industry as we know it.” Unfortunately, I believe he’s right.
The reason is simple – lack of knowledge. Investors are too lazy to ask questions, don’t want to take or make the time to demand comprehensible answers and so expect the government to step in to save them from themselves.
Whether it’s a mutual fund, individual stock, separate account, hedge fund or anything else, you need to get on the phone today and start asking questions and demanding answers. You need to understand where your money is, how it’s being managed, what the expectations are, whether the expectations have been met, and if they not, demand to know why not. And until people start asking questions and getting answers that make sense, there will be one fraud after another and one loss after another.
It’s okay to lose money - you can't always win - however you need to understand how your money’s been lost. It’s not okay to lose money because you’re naïve and unwilling to ask questions and demand answers.
In recent days I’ve read a lot of newspaper articles about Madoff’s actions that have left me shocked, saddened and disgusted. But I was also fascinated that someone so successful seems to be nothing more then a con artist who preyed on those blinded by his power and fame as well as by their own greed.
Gordon Gekko was wrong. In this situation, greed turned out to be no good at all.
Monday, December 8, 2008
The real mea culpa that Wall Street -- and Washington -- needs
Recently someone who fancies herself one of the founding mothers of the hedge fund industry offered her thoughts on what has recently befallen her industry. The upshot? It was someone else's fault.
Specifically, she said, that managers are taking advantage of investors by using gates and side pockets, and by suspending redemptions. All of that victimizes hedge fund investors. Blame the managers, it’s their fault
Come on people. We’re better than this.
To be fair, I don’t really know this person. I think I've only spoken with her once or twice in the last ten years. Her reputation, however, was impeccable in my book until she put out this missive about what's wrong with the industry.
She's wrong. It's not the managers' fault. It's the investors’. Investors need to take responsibility for the investments they make. Period. End of sentence.
Here's the real problem, though, dear reader: No one wants to take responsibility. Everyone wants to pass the buck. The markets fall and a fund posts losses? Oh, the managers screwed up. The markets rise and a fund posts gains? Oh, the investor was a genius for investing in the fund.
It gets worse. The problem with this country is that we don’t make anything of value, we don’t buy anything that we need, and we all have gotten fat, drunk and happy on the fact that we can buy it now, pay for it later.
"Gee, thanks, Dan," I can hear most of you saying. "I think we already knew that, genius." But before you click away from this page, read on, because I have a solution.
It's actually quite simple: Stop blaming other people for your problems and take responsibility for your actions. I, for one, am sick and tired of the blame game, and you should be as well. It is total lunacy. It needs to stop and it needs to stop now.
I am not just talking about making investment decisions; I am talking about all aspects of society. People need to take responsibility for their actions and stop relying on other people to bail them out.
Looking to the government for solutions is not the answer. We’ve got to stop letting the government take responsibility for the inability of people to build businesses or do things correctly.
I believe it’s going to get worse before it gets better. It's not that President-elect Obama is a bad guy, or that he's a Democrat. The real issue is that the precedent has been set. Bailouts are now a way of life in Washington.
It’s really too bad that only a few seem to be questioning the actions of our leaders as they spend trillions of dollars of our money bailing out one company after another. We're somehow expected to trust these people.
But we really have no reason to. The American people need to get up and scream that they are “mad as hell and that they are not going to take it anymore,” because that’s the only way our leaders are going to hear us.
Leadership isn’t running to the government for money every time there’s a problem. It's not writing blank checks. Leadership is developing sound financial and fiscal programs to save money, to rebuild infrastructure, to create jobs and to put the American economy -- and in turn its people -- back to work.
As for the hedge fund industry -- and for that matter all investments -- remember it is your money. You are doing managers favors by making the investment. Make sure they realize that and if they don’t find someone else to manage your money. Everyone is replaceable – hedge fund managers included. Don’t ever forget it.
Specifically, she said, that managers are taking advantage of investors by using gates and side pockets, and by suspending redemptions. All of that victimizes hedge fund investors. Blame the managers, it’s their fault
Come on people. We’re better than this.
To be fair, I don’t really know this person. I think I've only spoken with her once or twice in the last ten years. Her reputation, however, was impeccable in my book until she put out this missive about what's wrong with the industry.
She's wrong. It's not the managers' fault. It's the investors’. Investors need to take responsibility for the investments they make. Period. End of sentence.
Here's the real problem, though, dear reader: No one wants to take responsibility. Everyone wants to pass the buck. The markets fall and a fund posts losses? Oh, the managers screwed up. The markets rise and a fund posts gains? Oh, the investor was a genius for investing in the fund.
It gets worse. The problem with this country is that we don’t make anything of value, we don’t buy anything that we need, and we all have gotten fat, drunk and happy on the fact that we can buy it now, pay for it later.
"Gee, thanks, Dan," I can hear most of you saying. "I think we already knew that, genius." But before you click away from this page, read on, because I have a solution.
It's actually quite simple: Stop blaming other people for your problems and take responsibility for your actions. I, for one, am sick and tired of the blame game, and you should be as well. It is total lunacy. It needs to stop and it needs to stop now.
I am not just talking about making investment decisions; I am talking about all aspects of society. People need to take responsibility for their actions and stop relying on other people to bail them out.
Looking to the government for solutions is not the answer. We’ve got to stop letting the government take responsibility for the inability of people to build businesses or do things correctly.
I believe it’s going to get worse before it gets better. It's not that President-elect Obama is a bad guy, or that he's a Democrat. The real issue is that the precedent has been set. Bailouts are now a way of life in Washington.
It’s really too bad that only a few seem to be questioning the actions of our leaders as they spend trillions of dollars of our money bailing out one company after another. We're somehow expected to trust these people.
But we really have no reason to. The American people need to get up and scream that they are “mad as hell and that they are not going to take it anymore,” because that’s the only way our leaders are going to hear us.
Leadership isn’t running to the government for money every time there’s a problem. It's not writing blank checks. Leadership is developing sound financial and fiscal programs to save money, to rebuild infrastructure, to create jobs and to put the American economy -- and in turn its people -- back to work.
As for the hedge fund industry -- and for that matter all investments -- remember it is your money. You are doing managers favors by making the investment. Make sure they realize that and if they don’t find someone else to manage your money. Everyone is replaceable – hedge fund managers included. Don’t ever forget it.
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