Pondering Pnzi

In light of the Madoff scandal, many people want to know, “Could it happen to me?” While no two scams are exactly alike, here are some questions to ask:
1. Does the strategy make sense? It’s been said that if you can’t describe an investment plan on a napkin in crayon, it’s probably too complex. Many investors walked away from Madoff because his approach wasn’t tenable on a large scale as he claimed.
2. Does the investment firm revolve around one central personality? “Success has many fathers,” goes the old saying. A reputable firm will separate investments, accounting, and operations. Even small shops will hire outsiders to handle their custody or bookkeeping duties. Madoff did most everything himself.
3. Are the returns realistic? When shysters offer to double your money in six months, most of us know to steer clear. But Madoff’s deception was more subtle: the consistency of his returns was the warning light. When returns appear overly smooth it’s not a sign of reduced risk, but of hidden risk.
If you think one or more of these factors applies, check it out. Because if ignorance is bliss, bliss can be very expensive.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

Follow me on Twitter @GlobalMarketUpd

direct: 603-252-6509
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www.chartertrust.com • www.moneybasicsradio.com • www.globalmarketupdate.net
By |2017-07-17T12:35:24+00:00December 31st, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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