What if Vanguard is just a giant ponzi scheme?

Might not be a bad idea to split Funds assets between Fido and VG.
 
clifp said:
The other potential ponzi scheme I'm thinking about is Berkshire Hathaway. The stock never pays a dividend and the primary business is insurance. The performance isn't as consistent as Madoff, but the result are in theory even more impressive.

Sure Geico and General Re pays the occasional claim, and Buffett is folksy as hell.
Everyone says the stock will tank when Warren dies, but maybe it is less because of his investing prowess and more because when they audit the books, they'll find it is a giant 100+ billion ponzi scheme.

"Just because you are paranoid doesn't mean they aren't out to get you."
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Uh, you are aware that insurance companies are heavily regulated, right?
 
soupcxan said:
The latest scandal has made me think...how do I know Vanguard really exists? What if it's just a PO Box in a strip mall in Valley Forge? Sure, they send me nice statements every quarter, but it's not that hard to generate nice looking letterhead. They're audited, but so was Madoff. Vanguard has, at times, refused to take my money (closed funds) just like Madoff did to help build credibility. John Bogle is a very persuasive guy, just like Madoff was. And so far, Vanguard has always honored requests to transfer money out, but maybe one day they wake up and their $1T is gone.
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I used to work in Valley Forge for another company. I wnet to school with many Vanguard employees, and by the fact that they told me that working for Vanguard sucks eggs pretty much told that they weren't actors hired by Vanguard.
 
BunsGettingFirm said:
I used to work in Valley Forge for another company. I wnet to school with many Vanguard employees, and by the fact that they told me that working for Vanguard sucks eggs pretty much told that they weren't actors hired by Vanguard.
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How do we know who you are? This is exactly the type of info Vanguard would give out to back up their complicated lie.

How do I know that this whole board isn't just a big Vanguard Potemkin Village run by a special staff. Gee--and in this time of tight budgets, Vanguard would be trying to reduce their costs in running this big deception--any coincidence that the Soapbox is going away and non-financial posts are to be discouraged! Less work for them, downsizing of the deception staff, no doubt! It's all falling into place now.

Hey, there's someone at my door. If I don't come back---they've gotten me just like they got CFB!

"Ahh, but the strawberries that's, that's where I had them. They laughed at me and made jokes but I proved beyond the shadow of a doubt and with ... geometric logic ... "
 
CD's baby....cd's. Of course as soon as I get everything converted over, the gov't will go belly up.
img_761519_0_63a18a1c7f3248ff7f22ad65f253b77c.gif
 
BunsGettingFirm said:
I used to work in Valley Forge for another company. I wnet to school with many Vanguard employees, and by the fact that they told me that working for Vanguard sucks eggs pretty much told that they weren't actors hired by Vanguard.
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Plus no ponzi scheme would ever give such crappy service to its dupes.
 
brewer12345 said:
Uh, you are aware that insurance companies are heavily regulated, right?
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Yup. For instance AIG was heavily regulated and they only lost 100 billion, ok admittedly on one of there less regulated units.

Berkshire being a Ponzi scheme is a joke that is the point of the :). But there are some similarities.... both Berkshire and Medoff were held in high regard and deliver extraordinary returns over long periods of time with large sums of money.

I think what is unnerving is if you asked me (or even somebody more knowledgeable about Wall St. like yourself) could the former head of the NASDAQ stock exchange run a 50 billion Ponzi scheme, we both would have laughed and called for the tin foil hats.

I have believed that American capitalist system while far from perfect is basically a fair system. I have laughed at people who rant that the system is really rigged and run by cabal, moving around the world in Black Helicopters and called them nut cases. (albeit politely)

I'll I can say is that recent events have shaken my opinion that I am right and they are wrong. More importantly if somebody like myself who is a natural skeptic about conspiracy is seeing there faith in the system shaken, what does that say about the vast majority of folks who lack our financial sophistication?
 
clifp said:
Yup. For instance AIG was heavily regulated and they only lost 100 billion, ok admittedly on one of there less regulated units.

Berkshire being a Ponzi scheme is a joke that is the point of the :). But there are some similarities.... both Berkshire and Medoff were held in high regard and deliver extraordinary returns over long periods of time with large sums of money.
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Actually, Berkshire is an even better Ponzi scheme than Madoff's... Think about it, Madoff paid some money out. Berkshire never ever pays anything out no dividends nothin!
 
ejman said:
Actually, Berkshire is an even better Ponzi scheme than Madoff's... Think about it, Madoff paid some money out. Berkshire never ever pays anything out no dividends nothin!
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Yup that exact thought has crossed my mind more than once :) Now I am going to work on my post explaining why recently Ziggy who bought Berkshire at $2500 made a great investment.

I think I need a handle for my dark side thoughts, maybe pfilc. >:D:angel::confused:
 
I'll I can say is ....

clifp said:
Yup. For instance AIG was heavily regulated and they only lost 100 billion, ok admittedly on one of there less regulated units.

Berkshire being a Ponzi scheme is a joke that is the point of the :). But there are some similarities.... both Berkshire and Medoff were held in high regard and deliver extraordinary returns over long periods of time with large sums of money.

I think what is unnerving is if you asked me (or even somebody more knowledgeable about Wall St. like yourself) could the former head of the NASDAQ stock exchange run a 50 billion Ponzi scheme, we both would have laughed and called for the tin foil hats.

I have believed that American capitalist system while far from perfect is basically a fair system. I have laughed at people who rant that the system is really rigged and run by cabal, moving around the world in Black Helicopters and called them nut cases. (albeit politely)

I'll I can say is that recent events have shaken my opinion that I am right and they are wrong. More importantly if somebody like myself who is a natural skeptic about conspiracy is seeing there faith in the system shaken, what does that say about the vast majority of folks who lack our financial sophistication?
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It is curious that "bailouts" and "stimulus packages" are happening all over the world. The "financial markets" all need infusions of extraordinary volumes of cash. Somehow, "they" are getting it.

Bloomberg.com: News

Taxpayers are forced to buy bad investments from banks "so that they will be able to lend - to free up financial markets".

All of this is because a housekeeper in Jamaica Plains, NY making $22,000 per year bought a $500,000 house.

Meanwhile the shell game goes on.

The money is under the mortgage default shell. No, it's under the CDO shell. No, it's under the CDS shell.

There is some good news though. The aluminum for your new hat is getting cheaper every day!
 
A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?
 
donheff said:
A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?
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I think that's the beauty of leverage. Too much horsepower can kill you.
 
donheff said:
A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?
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I figure he just lost money one year but thought - keep up appearances, pay nice dividnds, and more investors will come in and we'll do better in the market next year. Only made 9% that year, but paid out 12% to keep the money coming in. etc. How many years of returning 12% does it take to return an investor's original investment? Think many of the investors got their money back in dividends in 7-8 years. See that some here who have been in the market for decades are back to their original investment amount of 15 or more years ago (Audrey1?). So doesn't that mean an investment with Bernie was smarter? Don't see that Bernie lived any more extravagantly than other CEO/wall street movers & shakers.
 
donheff said:
A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns).
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I'd like to try! 25 billion would allow me to get a LOT done. A billion for me, the rest towards public hospitals and clinics, and for rebuilding and beautifying New Orleans. And with that first billion for me, what a shopping spree! :2funny:
 
donheff said:
A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?
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I'm sure he skimmed quite a bit for himself and friends but probably most of it went out as payout to investors to keep the scheme going. Those 10 to 12 % regular annual returns were just new investors money being distributed to the old investors. To get the money back just go to the oldest investors and ask them to fork up on a progressive scale oldest to newest :D Good luck!
 
ejman said:
I'm sure he skimmed quite a bit for himself and friends but probably most of it went out as payout to investors to keep the scheme going. Those 10 to 12 % regular annual returns were just new investors money being distributed to the old investors. To get the money back just go to the oldest investors and ask them to fork up on a progressive scale oldest to newest :D Good luck!
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That's probably pretty close. If he has $25 billion under "management," if he gets another $5 billion he could take (maybe ) $3 billion and pay it out to the existing account holders, they think they're getting a good positive return even in a horrible market (which *should* have been a glaring red flag), where Madoff and his pals skim the rest as pure profit.

Classic Ponzi scheme.
 
ejman said:
I'm sure he skimmed quite a bit for himself and friends but probably most of it went out as payout to investors to keep the scheme going. Those 10 to 12 % regular annual returns were just new investors money being distributed to the old investors. To get the money back just go to the oldest investors and ask them to fork up on a progressive scale oldest to newest :D Good luck!
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Yep. Some of the $50 billion got paid out to people who got a very good return on their "investments" with him. I haven't seen any stories about them.

Some of it never existed. The people who say "I lost $30 million with Madoff" could have given him $10 million 10 years ago and let it "grow" without any withdrawals. Their last statements showed account balances of $30 million, but there was never more than $10 million in cash for Madoff or other "investors".
 
NW-Bound said:
Heck, I am going to convert all my assets to "experiental pleasures", something that I will keep and cherish in my memory later, when I will be lying in the street gutter.
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If you can remember your experiential pleasures then you aren't doing it right...

Now, [-]regaining consciousness[/-] waking up and [-]starting a hangover[/-] thinking "Where the heck did THAT come from?!?"... that's probably closer to the right approach.

brewer12345 said:
Uh, you are aware that insurance companies are heavily regulated, right?
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Good thing, too, because I hear that the SEC is going to start regulating the stock markets...
 
Madoff needs a tiny bit of the cash for the $152K annual property taxes on his Florida house (and do you think he has more than one house, just maybe?). And perhaps he was planning to use some to purchase a Senate seat--I hear at least one empty seat is for sale.
 
donheff said:
A bit of a digression but my question is, what did Madoff do with all that money? You can't just spend $50B (or $25B, if the 50 is with expected returns). Heck, if he just stored it in a MM most of it would still exist. How badly would he have to invest it for the whole shebang to evaporate?
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I'm waiting patiently for some reasonable investigation. As I know it, Madoff himself claimed it was $50B...we know he's reliable, right? Two thirds is probably paper loss. A lot of the investment has been returned, so there's no honey pot to distribute. The story just would not sound so spectacular if it's a measly $20B. I have not heard reports that he lived an ultra-lavish lifestyle....OTOH maybe its all offshore someplace. No way he's a lone wolf.
 
Nords said:
If you can remember your experiential pleasures then you aren't doing it right...

Now, [-]regaining consciousness[/-] waking up and [-]starting a hangover[/-] thinking "Where the heck did THAT come from?!?"... that's probably closer to the right approach.
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I've been that drunk only once in my life, at 16 yr of age.

Call me a romantic geek, but I am thinking more of a genteel experience, like wandering the streets of Montmartre, with the song "La Boheme" by Charles Aznavour stuck in my head.

YouTube - Charles Aznavour - La boheme (English Subtitles)

I am sitting here, in the deserted cold atrium of the Mayan Palace where there is WiFi, waking up early, not wanting to turn on the TV and to wake up my wife. It's lower than 60 deg F in here, probably near 50. I am dying for a shot of cognac, whisky, gin, anything...
 
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