This article at Yahoo! News says that the supposed profits handed out by Madoff routinely amounted to 11 percent to 15 percent per year. And long-term investors, are worrying today.
Because they had got more from Madoff than what they had originally invested!
Look at this:
"Jonathan Levitt, a New Jersey attorney who represents several former Madoff clients, said more than half of the victims who called his office looking for help have turned out to be people whose long-term profits exceeded their principal investment.
"There are a lot of net winners," he said.
Asked for an example, Levitt said one caller, whom he declined to name, invested $1.8 million with Madoff more than a decade ago, then cashed out nearly $3 million worth of "profits" as the years went by."
I used to think 12% is a fair return on your investment. Now it looks even that is too high.
The problem with huge returns is that they are not sustainable in the long run- either someone is cheating, or someone is losing a lot. Things have to average out one day or the other. There is also the possibility that where the returns are obscene, obscene people want to get in- easy money pulls in nasty people and drives out honest people. I won't wonder if Real Estate and IT industry has a lot of politician-criminal nexus capital.
We have to do something about people getting money too easily- it looks good if you are likely to get some in your hands, but be warned, some day you will get burned.
The beauty of stopping the easy money flow is that it would put the professional politicians and the criminals out of business- they don't like to work hard for paltry returns.
