The Madoff Scandal: No Tears for Hedge Funds
In a year when average investors have seen their stock portfolios and retirement plans derail, perhaps it's no surprise that readers aren't shedding tears over the wealthy hedge fund investors who lost money in Bernard Madoff's alleged $50 billion Ponzi scheme ("The Humbling of Hedge Funds," News, Dec. 29). Some rejoiced at the thought that hedge fund managers may not be able to make outsize profits in the future. —Matthew Goldstein
Is it need or greed that is driving people to investments that promise [huge] returns every month? If it is greed, then we shouldn't be too worried about the people who get burned.
Screen name: JamRock Man
What thinking person would invest in something that charges a fee to invest in a fund of hedge funds that also charge a fee?
Screen name: xenonmstr
So hedge funds are going away. As an individual investor, I say good riddance. I am not enamored of the extra dose of volatility and irrationality they bring to the market. Plus I would like them to sell off, so I can pick up their assets cheap.
It's time for people to exercise a little self-reliance in the managing of their money.
Screen name: MichiganChet
Those poor hedge funds. Maybe they deserve a bailout, too? I say good riddance to bad rubbish. Anyone who invested in them was a fool.
Screen name: PJL
Does this really mean the death of hedge funds? If true, that would be wonderful news. [Madoff] should be considered a folk hero!
Screen name: Hail Madoff
It's just sensationalistic journalism to suggest another [double-digit] market decline, based on an assumption that hedge funds will fold. I'm tired of journalists telling us that the world is ending.
Screen name: Robert M
Whom Can You Trust? Look for Transparency
It's mind-boggling that only 13% of people polled by BusinessWeek felt that their financial advisers' advice in 2008 was harmful (Investment Outlook, Dec. 29).
Most of us lost large amounts of money last year because the so-called experts we were paying could not foresee the biggest stock market crash in 50 years. The warning signs were there. This is an industry of emperors with no clothes!
"Finding Somebody to Trust" (Investing Strategies, Dec. 29) offers important things to consider when shopping for an adviser.
However, the key recommendation—to request five redacted portfolio statements to review—is troubling in a few respects.
First, a presentation of example portfolios could be construed as advertising for those specific investments. Also, on a number of occasions, I have seen "redacted" documents that still contain identifying personal information. Finally, there is no way of knowing how closely the sample clients' situations match yours—or whether the adviser just cherry-picked the best-looking portfolios.
A simple system of checks and balances can help avoid bad situations—for example, using a quality custodian (a bank or brokerage firm) unaffiliated with the adviser. The more transparency that's built into the program, the fewer problems you should have—but in the end, it's all about trust.
Stellar Capital Management
Shareholders Already Have a Say on CEO Pay
Regarding Maria Bartiromo's interview with House Financial Services Committee Chairman Barney Frank (FaceTime, Dec. 22): The Massachusetts Democrat's bill to force a shareholder referendum on executive pay is ridiculous. CEO compensation is set by a company's board of directors, who are elected by the shareholders. Why would shareholders override board decisions? Representative Frank would do American business a better favor by determining how shareholders can make boards more accountable for pay decisions.