What if Vanguard is just a giant ponzi scheme?

jazz4cash said:
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.
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I would be willing to bet he squirreled away some "rainy day" billions in a Swiss bank............:p
 
The fact is: If someone perpetrates internal fraud, made stupid mistakes, or takes an unsanctioned risk... and it results in losses on a large scale; it is all over except the crying.

We often take it for granted that employees cannot do something because the basic rules say they can't or the charter indicates the fund will only invest in certain securities, etc... But that all hinges on the company not letting it happen (prevention) and early detection if it does happen. One of the most common prevention methods is not letting a single person have the power completely execute certain activities. This reduces the chances unless there is collusion. But that even has to be backed up with regular reviews/audits to detect if someone got around the prevention mechanism.

Thinking that it cannot happen at a venerable company is naive. Remember Barings. http://en.wikipedia.org/wiki/Barings_Bank


After seeing the Madoff fraud. I think it is a prudent to consider splitting ones assets across 2 or 3 large reputable (and conservative) firms to mitigate the risk.

Apparently Massachusetts Mutual Life Insurance bought Tremont (hedge fund Advisor). Tremont Capital Management has an asset management division (Rye) that used Madoff as a subadvisor to run $3.1B in assets.

http://www.forbes.com/markets/2008/...ponzi-markets-equity-cx_ra_1216markets31.html


Almost all mutual funds use subadvisors to run money. Hopefully they are doing their due diligence. Remember... you cannot hold one entity responsible if a second entity perpetrates a crime. Investors may try to make Tremont and MassMutual cover the losses... but they will probably have a difficult time of it... they will have to prove negligence. If they do recover, it will only be because the holding group is very large and actually owns the assets so they can pay up. Having to pay up $3.1B would break many companies.
 
chinaco said:
they will have to prove negligence.
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This will be interesting. Someone who pays an investment manager is expecting at least some level of analysis. The plaintiffs are going to claim that Madoff's operation was so opaque that their advisers weren't doing anything other than collecting fees. The advisers are going to claim that Madoff was simply following standard practice in the hedge fund world, so "nearly nothing" is the standard.

Here's one that claimed
It said that it would independently calculate the value of the funds it invested at Mr. Madoff’s firm at least once a week. It promised to reconcile statements from individual trades with Mr. Madoff’s custodial records.
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I can't imagine that the investors can get more than a few pennies on the dollar by suing their advisers, but I also expect they would like to bankrupt the advisers if they can.

http://www.nytimes.com/2008/12/22/business/22fairfield.html?pagewanted=1&_r=1&hp
 
samclem said:
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 ... "
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Hmm...if I were a Vanguard employee, would I tell you to go sober up first and then come back here to post? Oh, man, I strayed off my VG manual on what to say in the company e-village. There goes my bonus.
 
LOL but as with anything..DIVERSIFY.. Not just into different Funds in teh same family, but into Different Fund Co.'s.. Example? VFITX & the other 50% in FIBIX, VUSTX and FLBIX... VWINX & OAKBX, PRPFX, GLRBX,BERIX.

and don't be a Pennywise and a Dollar Foolish either.. even @ .05% per $1 million difference is only $500 yr cost.. Chump change and a tax dedution or cost you about $3-400 after taxes.

Has worked for me and I sleep & play alot better.. and FYI? You don't really think all those Rich People gave him ALL their $ do you? Eg: Mort Suckerman even said " about 10% of my Charitable trust , which is about 2% of my total assets"...

And if J. B and Vangaurd ever fold up overnite? It will be our Countries Armageddon and Won't mean much anyway..They all will Fold , like it did in 32..' and during the Bank Collaspped in the 80's... Keep a few Months bills of Gold Coins in your safe at home..underneath your handgun.. :0)
 
FYI - Try looking up "100 Vanguard blvd, Malvern, PA" on Google Maps. All the buildings you see are Vanguard's.

I've been there and it's very nice, especially the statue of Bogle.

- Alec
 
Ah, one of the classic problems of philosophy, that of epistemology, or how we know the things we know (or think we know). The truth (if there is such a thing) is that we may not really know the things we know. Depends on your point of view perhaps.

Vanguard may not be real, but it seems the most real of any investment company out there, so I think I'll stick with them for now. Plus they have low expenses, right? :)
 
We pillage, we plunder, we rifle and loot.
Drink up me 'earties, Yo Ho!
We kidnap and ravage and don't give a hoot.
Drink up me 'earties, Yo Ho!

Yo Ho, Yo Ho! A pirate's life for me.
 
FUEGO said:
Ah, one of the classic problems of philosophy, that of epistemology, or how we know the things we know (or think we know). The truth (if there is such a thing) is that we may not really know the things we know. Depends on your point of view perhaps.
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"...as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know." - Donald Rumsfeld
 
REWahoo said:
"...as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns -- the ones we don't know we don't know." - Donald Rumsfeld
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I know. Only George W could have said it more bester than that. (not trying to soapbox this, but tis the truth!)
 
If Vanguard turns out to be a Madoff style scam, I'm going to need a BIG "Kick Me" sign for my back.
 
I better get that sign for me also. My DH has been saying that he could have invested a lot better buying classic cars. He is a car nut and definitely not into stocks at all. I am beginning to think that he is right.
 
Target Retirement 2015 = 100% retirement portfolio. Heading toward 16th yr.

Sold my few shares of Alcan Drip Plan a few years back -But I do have Reynolds Wrap heavy duty somewhere in the kitchen.

So - I Google up instructions on tin foil hat making? Or what??

:D :D :rolleyes: :angel:

heh heh heh - Saint's lost in the Superdome. Next year just you wait - you'll see - plus I have a few individual stocks - on the side. :D
 
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