Money Movie: The Wizard of LiesJun 29, 2017
The Wizard of Lies tells the story of Bernie Madoff, the investment adviser who made headlines around the world in 2008, when he confessed to a $65 billion Ponzi scheme. The fraud had him paying existing investors who wanted to sell, with incoming funds from new investors…and taking a hefty cut for himself along the way. There were, in fact, no investments, despite what the punters thought.
His victims included Kevin Bacon, Steven Spielberg’s Wunderkinder Foundation, Elie Wiesel the holocaust survivor and winner of the Nobel Prize for Peace, as well as tens of thousands of others.
Since Louise and I watched the movie, we haven’t stopped talking about it. It stars Robert De Niro as Bernie Madoff and Michelle Pfeiffer as his wife, Ruth, and is ultimately a tale about relationships.
“While it appears to be a film about a massive financial fraud, potentially a dry and confusing subject relating to the machinations of Wall Street, it is really about the characters caught in this unique relationship.”
Source: The Australian
Watching the investors, is like a classic psychological case study of the fear of missing out. So many educated, wealthy people just wanted to be a part of what Bernie had on offer, and his promises of conceivably reasonable returns (albeit with huge minimum investment amounts).
And watching Bernie, is equally fascinating. You get to see what makes him tick. On one hand, he turns himself in, which teases you into thinking he may regret his actions. On the other, he ruins (and indirectly takes) the lives of so many, including his own family.
Ultimately, Madoff is sentenced to 150 years in jail, and loses his family in the process.
It got me thinking. Why did those people invest with him?
He had held very trustworthy positions. He was on the board of the Securities Industry Association and was at one point, the Chairman of the NASDAQ.
And there’s no doubt, he was obviously wealthy. So perhaps there was an element of, “I want what he’s having”.
But ultimately, he was a con artist and sociopath. He strangely believed he was protecting his family, by keeping them in the dark about what he was up to. And he blamed everyone else for his crimes -- the SEC (US Securities and Exchange Commission) for failing to detect the fraud, and his investors for their greed.
“Madoff dishes out a lot of blame, heaping little on himself. He reserves special contempt for feeder-fund managers who invested with him and bankers who handled their accounts: Their over-the-top greed, he suggests, blinded them to obvious signs of fraud–and, therefore, they deserved their fates.”
Yet while many people wanted in, others were suspicious. Kenneth Langone, the co-founder of Home Depot (think Bunnings meets Harvey Norman), turned down Bernie’s investment pitch just two weeks before Madoff’s arrest.
“After the meeting, Langone told CNBC, his qualms were reinforced when he later took a look at a monthly financial statement from Madoff's firm. ‘I couldn't make sense of it. It was the most convoluted thing I've ever seen,’ he said.”
And that’s the kicker. It’s not just the poor or uneducated that can be tempted by the promise of riches. If you don’t understand what you’re investing in, walk away. Using blind faith to put your hard earned in to an investment is nothing short of foolish.
Advice, it seems, some of our fellow Gongsters would have been wise to heed before they invested with Trio Capital.
• Robert De Niro
• Michelle Pfeiffer
• Hank Azaria (the voice of Moe, Apu and Chief Wiggum from The Simpsons)
• Fear of missing out (FOMO)
• Ponzi schemes
• Hedge funds
Madoff ruined people’s lives and he’s now serving 150 years for the privilege. But what I want to know is, where is all the money?