Quote for the Week
When I shifted my focus from beating gambling games to analyzing the stock market, I naively thought that I was leaving a world where cheating at cards was then problematic and entering an arena where regulation and the rule of law gave investors a fair playing field. Instead, I learned that bigger stakes attracted bigger thieves. Madoff’s Ponzi scheme was only the largest of the many that were exposed in 2008 and 2009, with others ranging from eight billion (a “bank”) through hundreds of millions (including several hedge funds), to multimillion dollar real estate, mortgage and annuity scams. I speculate that the size of swindles likely follows a simple mathematical “power law,” like the distribution of high incomes and top wealth discussed in previous columns, with their number increasing as their economic size decreases…
The flood of almost daily frauds, swindles and hoaxes reported in the financial press has continued during my entire investment career and I expect that when you read this months, years or decades later, you’ll find your own profusion of examples. Hoaxes, frauds, manias and other large scale financial irrationalities have been with us from the beginnings of the markets in the seventeenth century, long before the Internet. — Ed Thorp (source)
From the Archives
Last Call
- They Don’t Want You to Invest – TrendLabs
- The Winning Formula for Fund Investors – J. Ptak
- How to Get Rich in America – K. Scanlon
- Legacy Lessons from a Visit to the Biltmore Estate – Moving Worth Forward
- Why Scams Succeed and Cures Fail: Understanding Hype vs. Value – Clearer Thinking
- The Sucker’s Dilemma – Knowable
- Too Good to be True – Judgment Call
- The Situational Awareness Fund Blow-up: Collateral Damage from Investment Conviction – Musings on Markets
- Cure All Diseases – Works in Progress
- Nokia’s 14 Years of Mobile-Phone Supremacy Ended in an Afternoon – IEEE