Classical Investing (Part 5)

In Dante’s Inferno, the deepest region of hell is reserved for those who betray their country, family, and friends. It’s a frozen gelatinous ooze, where the cold is so intense that the tears of the inmates freeze before they can even cry.

Surprisingly, those consigned to this level of hell are unrepentant. They see their betrayals as justified, or at least ennobling in some way.

But Dante was on to something when he described treason in such execrable terms. All betrayal is personal. This seems especially pertinent when we consider the recent Madoff scandal. This man garnered contributions from friends, family, and institutions, all the while knowing that the returns he was reporting were wholly fictitious. His smiling, baseball-capped portrait has become emblematic of the man’s audacious fraud.

Madoff isn’t stupid. He must know that all Ponzi schemes end badly–for everyone. But one of the characteristics of liars is that they especially lie to themselves. That’s true in Dante and it’s true today. Madoff’s monumental self-deception has consigned him to investment infamy–a traitor to his family, his friends, and his profession. Hell, indeed.

Douglas R. Tengdin, CFA
Chief Investment Officer
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