Ted Siedle: The Greatest Retirement Crisis In The History Of The World
“We are on the precipice of the greatest retirement crisis in the history of the world. And that makes perfect sense because, first of all, we have the largest elderly population in the history of the world.
Just focusing on the United States: our elderly are woefully unprepared to retire. And in the decades to come we will witness millions of elderly American's, Baby Boomers and others, slipping into poverty. 'Too frail to work, too poor to retire' will become the new normal for many elderly Americans.”
So warns pension fraud whistleblower Ted Siedle.
Siedle's firm, Benchmark Financial Services, Inc. has pioneered over $1 trillion in forensic investigations of the money management industry. He's nationally recognized as an authority on pensions and investment management matters, having testified before the Senate Banking Committee regarding fund scandals and is an expert in various Madoff-related and other litigations.
In 2017, he secured the largest SEC whistleblower award in history of $48 million, and in 2018, the largest CFTC award in history at $30 million.
Siedel rings a loud warning bell regarding the solvency of today's public pension system. Specifically, his investigations show that most of them:
- Are much too under-funded to meet their future payout obligations (e.g., Kentucky's state pension plan is only 12% funded)
- Are experiencing annual returns far below the required 7% average the plans assume in their forecasts
- Have oversight boards making portfolio allocation decisions that are staffed by individuals with zero experience managing financial securities (e.g., policemen, kindergarten teachers)
- Have little transparency. Many are rarely audited. And many have moved their capital off-shore without accounting for where it's been moved to.
- Are heavily influenced by politics when making portfolio allocations. Pet projects, such as sports stadiums, get funded to disastrous results while making local politically-connected 'friends of the pension board' rich
- Are paying much higher fees to Wall Street than they used to, whose advisors are putting them into riskier and poorer-performing vehicles (e.g. hedge funds) in a desperate reach for yield
Siedel's Top 10 Reasons Why Stealing From State And Local Public Pensions Is The Perfect Crime is reading certain to give nightmares to anyone depending on a public pension, or worried about being forced to bail out failed funds by paying higher taxes in the future:
I think there will be bailouts. The alternative is chaos, disaster, Armageddon. I mean, it's like when people say we should cut Social Security benefits. Well, the majority of people that get Social Security live on nothing but Social Security. If you cut Social Security benefits people will die. People will get sick. People will not be able to get healthcare. Elderly people will be thrown out of their homes, their apartments, whateverWall Street will say “We've got a solution!” They'll offer pension obligation bonds, whatever. The solution Wall Street offers always is: Pay us more fees. Pay us to underwrite bonds. There will be many “solutions” offered. Taxing property owners is always popular as well.
Click the play button below to listen to Chris' interview with Ted Siedle (58m:11s).
Listen to the AudioRead the Full Transcript!
Ted Siedle: The Greatest Retirement Crisis In The History Of The World
The following is a transcript of recorded content. Please note, these transcripts are not always perfect and may contain typos. If you notice any major mistakes, please feel free to report them by opening a Technical Support ticket under the Help menu at the top of the screen.
Chris Martenson: Welcome, everyone, to this featured voices podcast. I am your host, Chris Martenson. And it is April 3rd, 2019.
Pensions. We've discussed them here at Peak Prosperity over the years, pointing out that they are kind of a mathematical nightmare for everyone involved.
But, as bad as the pension nightmare seems on the surface, it's even worse below the covers. I recently had the chance to hear a true pension expert talk about how America's pension system is ripe for fraud and abuse and mismanagement.
Sure, pensions routinely overpromise, but it's actually worse than that. They also routinely under deliver because the people on the pension boards are often underqualified, outgunned, our maneuvered by slick operators from sometimes predatory operations that simply cannot resist the honey pot of money tied up in pensions.
Our expert today is Ted Siedle. He's been called the Sam Spade of money management, the Financial watchdog and even the pension detective. Born Edward Ahmed Hamilton Siedle, he grew up in Trinidad, in Venezuela, Panama, Peru, England, Uganda, Egypt and the US. Certainly a very well-traveled, well rounded individual.
He's a former SEC attorney and former legal counsel and director of compliance to Putnam Investments. For over 20 years he has owned security trading and investment banking firms.
His firm, Benchmark Financial Services, Inc. has pioneered over one trillion in forensic investigations of the money management industry. He's nationally recognized as an authority on pensions and investment management matters, having testified before the Senate Banking Committee regarding the mutual fund scandals and is an expert in various Madoff and other litigations.
In 2017, he secured the largest SEC whistleblower award in history of $48 million, and in 2018, the largest CFTC award in history at $30 million. Welcome, Ted.
Ted Siedle:: Thank you very much for inviting me on your podcast.
Chris Martenson: Very excited to have you here.
Let's start here. By way of background, Ted, I discovered that you too are a graduate of Simon's Rock College. I got out of there with an associate's back in 1982. It gave me a start that was otherwise unavailable. I just had to point that out because I haven't ever interviewed another graduate of Simon's Rock.
Ted Siedle:: Well, not only did I go to Simon's Rock, I am being awarded an honorary degree by Simon's Rock at commencement a month from now.
Chris Martenson: Really!
Ted Siedle: So, like you, I did not graduate with a Bachelor of Arts, so they are awarding me the honorary Bachelor of Arts degree, the first one they’ve awarded in 35 years. I believe the last one was awarded to Isaac Asimov. He was a very noted writer and scientist.
Chris Martenson: Well, congratulations. And what are they awarding this for?
Ted Siedle:: I gather for my lifetime work investigating forensically Wall Street abuses, and really looking at – working as an expert for the public to decode what Wall Street and it's legion of experts have been foisting on the American public.
I've written about, on Forbes, that we are on the precipice of the greatest retirement crisis in the history of the world. And that makes perfect sense because, first of all, we have the largest elderly population in the history of the world, and our elderly in this country and in other parts of the world, as well.
But let's just focus on the United States. Our elderly are woefully unprepared to retire and risk in the decades to come, we will witness millions of elderly Americans, Baby Boomers and others, slipping into poverty, too frail to work, too poor to retire, will become the new normal for many elderly Americans.
So, our demographics suggest that pensions, and the lack thereof, lack of retirement security, is a major national issue. And I am one of top experts who's speaking on behalf of the public on that issue.
Chris Martenson: So let's divide this into its two pieces. First, I opened with the idea that there's a little bit of mismanagement, maybe some fraud, maybe some abuse going on in there.
And you're talking about something that maybe is something that's on the other side too, which is the math problem that exists here which is rooted in demographics and maybe simple miscalculations of promises versus returns.
So let's separate those two out. Let's go to the math problem to start. Pensions, everybody's heard the headlines: possibly three trillion, four trillion underfunded. Let's take people through the math of this a little bit. What does that mean when a pension fund is underfunded?
Ted Siedle:: Well, when a pension fund is underfunded, it means it does not have enough money in the bank to pay all it has promised to pensioners or retirees. So, it means that there is a gap between what's been promised and what's in the bank.
Chris Martenson: And that gap is measuring in the trillions now. Is that a correct assessment?
Ted Siedle:: Yes. Many public pension funds in the country, like in the state of Kentucky, is only 12% funded. Others are – Saipan, which is a U S territory, is the first public pension to seek bankruptcy protection about five years ago. Illinois is in terrible shape.
So around the country, there are many pension funds that are funded only in the teens, and the end is near. It is clear that with the limited amount of money they have on hand, the benefits that they're paying and what had been promised, that they will run out money. That big issue is the under funding of pensions.
Chris Martenson: So in my own human terms, if I had a child I knew was going to go to a college that was going to cost $200 thousand, 12% funding would mean I have $24,000 set aside for that $200 thousand liability that's upcoming.
Ted Siedle:: That's right.
Chris Martenson: And so, how does somebody like Kentucky – first, how are they going to potentially close that gap? What are the mechanisms that are available here?
Ted Siedle:: Well, the simplest way to understand pensions and the health of pensions is that there are three components. The three components of pension health are how much money goes into the pension. The second component is how is the money that is in the pension managed over, let's say, a 30 year period of time, a worker's lifetime, say 30 years. And then, the third component is how much money is paid out of the pension.
So the three components are how much money goes in, how the money is managed over 30 years, and then, finally, how much money is paid out.
If not enough money goes in, that's a problem. The pension will be unhealthy. If the pension is mismanaged over time, there's a problem because no matter how much water you pour into a leaky bucket, the bucket will never be full. The third issue is if too much money is paid out, then the pension will obviously run out of money over time. So, if more money is paid out than is going in and is being generated on the investments, then you have a problem.
So those are the three main issues. The fix is found in those three components. If you want to fix the problem you either, A, put more money in; B, manage the money more efficiently; or C, you take less money out.
Now, option A and C, or 1 and 3, putting more money in is politically suicide. Final. Taxpayers do not want to hear that state pensions are running out of money, or municipal pensions are running out of money, and more money needs to be put in.
Cutting benefits is potentially legally not on the table. May not be legal under state law. And, of course, state workers are not going to be at all happy. So that's political suicide, too.
So then, the question is what do you do? The one element that is least discussed is the investments. Are the investments being managed efficiently? And almost universally they're not. And the reasons for that, which we can go into, but the investment of the money is the issue that is discussed the least and is an issue which the public is really pretty much unaware of.
Chris Martenson: So, Ted, this is the part I really want to get to because the money in, money out is fairly easy to track, and a lot of people are already up the curve on that. You really opened my eyes when you started to discuss that second bucket, the management of that money.
We all are assuming, even though there's a several trillion dollar shortfall, there's also trillions of dollars stuffed in these things. It's a big pile of money. And I guess I had the assumption that money was being managed not only efficiently but as well as possible.
So let's go into that for a second. First, what we're really talking about here is public pensions. Is there a difference between a public pension and say one that's managed by a company? And then I want to get into this management. Who is it that's actually doing the management of these public pensions?
First, what's the difference? Second, let's get into who's doing the managing.
Ted Siedle:: Well, public pensions are very different from private pensions because public pensions are not subject to any comprehensive federal law, particularly ERISA is the comprehensive federal law that governs and protects private corporate pensions.
I've written an article in Forbes called The Top Ten Reasons Why Stealing from State and Local Pensions is the Perfect Crime. Stealing from public pensions is the perfect crime for the same – basically because these pensions are not run professionally and are not regulated.
So let me rattle off the top ten. First, reason number one is with over $4.0 trillion in assets in these funds they have a boatload of money. So a few million or a few billion stolen is rarely missed. It's reason number one, lot's on money.
Reason number two is public pensions have boards. They're overseen by boards of trustees which are composed of laymen that utterly lack any knowledge or expertise in investment or fiduciary matters. Few state or local statutes require public pension board members to meet any minimal standards related to pensions. So you have police, fire fighters, sanitation workers, kindergarten teachers; these are who are on these boards.
So time and again, when Wall Street comes calling on public pensions, Wall Street professionals are very adept at pulling the wool over these laymen's eyes.
The third reason is that these public pensions are subject to politicization. So the composition of the board, of these boards, and the decision that these boards make regarding pension investments are generally tainted by political considerations. So you will find a pension investing in a convention center or a football stadium. And you ask yourself, these are typically terrible investments.
How did this investment get there? Politics. The political climate was such that politicians said the city pension should fund the building of a football stadium. It may not make any sense, but those are situations where you very clearly see politics involved. So, politicization of investments is reason number three, why stealing from public pensions is a perfect crime.
Reason number four is that while these state and local pensions are generally subject to public records laws that mandate transparency, these funds are so defensive about decisions they make and skilled at thwarting public disclosure requirements, that scams rarely get exposed.
And I would encourage you listeners to, wherever you sit, there is a city, county, or state pension fund that is subject to Freedom of Information laws, your state access to public records laws. I encourage you to use those laws to write and get information about the public fund that is of greatest interest to you.
And most of these funds today have websites, and there's a tremendous amount of information that are on these websites. So, I would encourage you to seek transparency, request information, and continue to push for it because, while they are subject to public records law, they are reluctant to comply. So the more members of the public that agitate for transparency, the better.
Reason number five, why stealing from public pensions is the perfect crime is what I eluded to initially, that they are not subject to ERISA, which is the federal law that establishes minimum standards for private pensions. ERISA was enacted to protect the interest of employee benefit plan participants by requiring disclosure of information and establishing standards of conducts and providing appropriate remedies in federal courts. ERISA does not apply to public pensions. So they would not need to be concerned about any of ERISAs protection if they go stealing from public pensions.
Reason number six, and I'm racing through these, is we're still – not only are public pensions not subject to any comprehensive federal law, they are regulated by a thin patchwork quilt of state and local laws. And most of the issues that relate to managing pensions are unanswered by state and local statute.
So, for example, if your city, the city of Amherst, Massachusetts, pension wanted to invest in bitcoin, is it illegal? There's probably not an answer. So that's under state law or city law. So there's lack of federal regulations, lack of state regulation. And there's lack of federal and state law enforcement policing these plans. And most of these plans are not annually audited by independent certified accountants.
Chris Martenson: No?
Ted Siedle:: Now, I did an investigation of the hundred billion dollar State of North Carolina pension. And the first observation I had was that the pension had never been audited-
Chris Martenson: Wow.
Ted Siedle:: -in its history. It's the only pool of money in the state – the Housing Authority and all the other pools of money in the state, had been audited, just not the pension.
Chris Martenson: Wow.
Ted Siedle:: And in response to my observation, the Treasurer of the State, who was a young woman who had no investment experience, she said that the cost of an audit wasn't worth the benefit that it would provide. Well, the cost of an audit would have been maybe $100,000. The reason why the Treasurer would not want to pay $100,000 to audit a hundred billion dollar fund is because she knows what the audit would find.
So those are some of the big issues. The final two reasons why stealing from public pensions is a perfect crime is that – number nine is that ever growing percentages of the money in these plans are being swept into offshore accounts with illiquid hard to value assets where nobody's even checking to see if the money is there.
So significant amounts of money from let's say, CalPERS or any of the largest pension funds, are actually supposedly in the Cayman Islands. So somebody has made a decision that it is prudent to invest state workers money in the Cayman Islands, which lacks any of the protections we have, federal, state securities and other banking laws that we have here in the United States. But nobody even knows if the money is actually there.
Chris Martenson: That's astonishing.
Ted Siedle:: Yeah, I mean, I have worked on cases where, when we look, we find the money is not there and hasn't ever been there.
And so the final reason that stealing from public pensions is the perfect crime is because as long as taxpayer rage is focused on the amount of money going into these plans, and the supposedly rich benefits they pay out to state workers and retirees, then no one is focusing on investment scamming in the portfolio, which is where I'm focused. And so that's the piece that's missing.
And I'd like your listeners to think about – we talked a lot about money going into these plans and the supposedly rich benefits they pay out. Let's focus for a while on who's scamming the investments.
Chris Martenson: Ted, fantastic summary. I'm literally agog that this could be this bad. The idea that you have hundreds of billions of dollars that are never audited. My summary is poorly regulated, unaudited, staffed with people who are unqualified in many respects with a giant pot of money. What could go wrong?
Ted Siedle:: Exactly. And increasingly, investing in opaque offshore illiquid assets and increasingly thwarting the state public records laws. CalPERS and every pension in the United States that has invested in hedge funds, private equity funds and other what we call alternative investments, i.e. not stocks and bonds, have interpreted state public records laws to read that these investments may be kept secret.
So we, for the first time in the history of this country, 30% or so of the assets of all of the nation's public pension funds, 30% of $4.0 trillion, let's say, is in secrecy accounts, which means that has been deemed not subject to public scrutiny, not subject to disclosure under public records law. That's never happened in the history of the country, and that's where we're at now. And that is, to me, the most – that's what makes this the most dangerous time for state pensions in the history of this country.
Chris Martenson: So we have $1.3 trillion, if I'm doing my 30% of $4.0 trillion properly in my head, we have about $1.3 trillion that's in secret. We don’t know where it went, but trust us, it's being managed properly and it's going to deliver a tasty return. Again, what could go wrong?
So Ted, take us through, real quickly, because I really what to burrow into this. But first, we used a term – help people understand what forensic accounting means. I want to give people some clues what they might look for if they decided to, I don't know, unbutton their own local fireman pension fund where would they start looking?
But let's back up. What is forensic accounting? What does that mean?
Ted Siedel: Well, I'm not a forensic accountant. I'm a forensic lawyer. But I straddle both worlds in that my specialty is in investment matters. I look at both the investments and the law.
But forensics simply means, denotes, of a quality that would be acceptable in court. So when you're doing a forensic analysis, I often tell people that the work I do is similar to the show CSI Miami. And in the show, the investigators go into a room here there's a dead body, and they ask did the body die of natural causes or was there foul play?
In my work, I go into a dead or dying investment or pension and I ask is the pension dead or dying because of natural, unforeseen forces like, simply, the stock market went down, or was there foul play? And foul play is defined as conflict of interest, hidden or excessive fees, and violation of laws. Those are the things that I look for in my forensic protocol that I've developed.
So forensic means that you're doing an investigation which will produce a quality report that can be submitted in a court of law, and it will be used in a legal context.
The thing that I look for, and I would encourage your members to look for, are those three things: conflict of interest, hidden and excessive fees, and violations of law.
These pensions universally underreport the fees they're paying. That is a big issue because they are paying higher fees to Wall Street, exponentially higher, 10 times higher today than they were 10 years ago. And so that is something I would encourage your listeners to look at because I don’t know a single pension in this country that properly reports the fees they're paying, i.e., they're all underreporting the ever growing fees they're paying.
And, of course, your listeners should be savvy enough to know that fees, the fees you pay, are tremendously significant to the intelligent investor because the only thing we can control as investors are the fees we pay. We can't control the outcome, but if we keep our cost low, we increase our chances of having superior net performance, that is gross performance minus the costs of fees, net performance.
If these funds are paying out 2.0%, 3.0%, 4.0%, 5.0%, 6.0% a year in fees, and the market is only making 5.0% 6.0%, 7.0% a year, then the net performance – well the majority of the net gains are going to Wall Street, not to the public, not to the participants in the fund. So that's why it's so critical to look at fees in investing, and particularly when you're investing in high risk, high cost opaque investments like hedge funds, private equity funds, pension funds, real estate funds. All those fees are of paramount concerns because the fees are far greater than investing in, let's say, an index fund.
Chris Martenson: So let's take this all the way through. Hey, we walked in the room, we can't find the body but there's a lot of blood. We're looking for the body in this investigation. Let's go back to point number three you said about how public pensions are ripe for being stolen from. Politicization of things, you said stadium, real estate, they might invest in kind of hokey local projects that don’t return.
Real estate has been just a slam dunk, really strong return asset for portfolios for many decades now. How have public pensions fared in that arena if we're looking for clues that might say politicization happened here?
Ted Siedle:: Well, let's backtrack for a bit there. You said what could your listeners be looking into? One of things we always look at is when you see a local pension investing in a local deal, whether it's real estate or a brewery or venture capital, that's always suspect because that typically means this was not an arm's length transaction where they scoured the universe to find the best investment for the pension. But there's a high risk that the local entrepreneur, promoter, used political connections to walk this deal into the pension.
One of the things that I would look for is if you're in a city and you notice that the city pension has a big real estate holding in its portfolio, look at how it's done. Has that investment done well for the pension or badly for the pension? If it's done great, then maybe you don’t have to look any further. If it's done terribly and it's a for profit helicopter landing port, you might say, well, how the hell did the city decide this was a smart thing to do, and who was behind it, and the performance seems to be terrible.
But in investigations that I've done, like on I did in the state of Rhode Island, the state actually did horribly in real estate investment. I don’t have the number off the top of my head, but over a 40 year period, the state's investment in real estate had produced I think a negative 3.0% or something like that.
Chris Martenson: That's hard to do.
Ted Siedle:: Yeah. It's pretty hard to own real estate for 40 years and lose 3.0%. In fact, short of having a nuclear bomb leave radioactive waste on the property, I would think it would be pretty hard to lose over a 40 year period.
So what we do see is that real estate is a strong investment and is actually the first alternative investment pensions invested in, alternatives to publicly traded stocks and bonds.
Real estate has been in pension portfolios for decades. But in many cases, you see that the real estate has done very poorly.
Chris Martenson: A lot of explanation for that poor return has to lie in the bucket two mismanagement. This has been – or not efficiently managed, as you said. But there's certainly clues there to suggest if you're doing that poorly in real estate, it's almost impossible to be that bad randomly. So there's probably something there to look at.
Ted Siedle:: Yeah. And real estate investments in public pensions are packaged by Wall Street in ways that are very different from what your typical direct real estate investor would be involved with. They can be fund-to-fund where you're investing in a partnership that invests in other partnership that invests in REITs. And you're paying two, three, four levels of fess.
So the real estate investments that you will find in pension portfolios may be very different from what a local real estate investor would invest in and may perform very differently. and most certainly would have layers of fees attached that a direct investor of real estate would not experience.
Chris Martenson: So, Ted, I'm really curious about something. Roughly ten years ago, when I was first looking into pensions, because I've been curious about this for a long time, and this would be before the great financial crisis, roughly speaking. Pensions were managed conserve actively, if you would look at it that way, with a 60/40 split, bonds to stocks. So 60% bonds, 40% stocks.
Today, the data I have shows that that's being entirely reversed, 60% in stocks, 40% in bonds, a lot less conservatively managed. Obviously, the great financial repression that the Federal Reserve did driving interest rates down pushed pensions towards needing higher returns. I'd love to hear your take on their assumed rate of returns next.
But first, given this massive increase in equity exposure and the big, huge rebound in equity prices, courtesy of easy Central Bank policies, pensions should be in far better shape than they were ten years ago. Are they?
Ted Siedle:: They're not in better shape. And one of the problems you have today when you look at pension asset allocation is many of the allocations are being mischaracterized. So they're not 60/40 or even 70/30. The structure of the investment, the composition of portfolios, is more confused and obscure than ever today.
So whatever you see – in virtually every pension I've ever looked at, if you look at their investment holdings, you will see that some of the funds and the product that they're invested in are mischaracterized. And they're mischaracterized to appear far less risky than they really are. That's something you really need to take in account.
They’ve actually gotten into far riskier investments. And the killer is they're paying ten times the fees they used to pay. So they're not performing better. They should be, they could be, but they're not. They're paying more to Wall Street than ever, and they're performing terribly for the most part.
Chris Martenson: And these higher fees, I assume this is because pensions know they're behind the eight ball, they're been sold a bill of goods which is oh, gosh, you going to have to work extra hard to make up some lost ground, so they swinging for the fence, possibly. Of course, they want to underreport the amount of risk they're taking. I understand the drive for that.
But really, honestly, if we want to go to the headwaters of the Nile, a lot of this has to be laid at the feet of the Federal Reserve seeking financial repression, driving interest rates to a place that's so low that investors, not just pensions, were yield starved, have had to do some really crazy things to just try and survive given their financial parameters and all of that.
Has not the environment itself been also conductive to really forcing these pensions to do some crazy stuff?
Ted Siedle:: The environment has, clearly, with interest rates remaining absurdly low. That has made it more difficult than ever to achieve their assumed rate of return. I think today most pensions assume that they're going to get a rate of return on their investment of let's say 7.25%. That is the stated return. Their actuaries have signed off on this.
I don’t know about you, but I would love to get 7.50% return, or 7.0% return, or even 6.5%. I will pledge to you today, I will invest $10 million in a guaranteed 6.5%, 7.0% investment. If you've got one that is ironclad, guaranteed, give me 7.0%, I will give you $10 million of my money to manage.
And so, the pensions, almost universally, claim that they will make 7.0% a year. Warren Buffet himself has said that is an unrealistic return. He discussed this extensively in his Berkshire Hathaway Annual Report a few years ago. So, they have assumed rate of return on 7.0%.
And Wall Street's solution to every problem is, the solution to your problem is to pay us more money. Wall Street says if you need to get 7.0%, then you got to pay us 3.0%. Instead of paying us a half percent, or one tenth of percent, as you would pay in an index fund, you need to pay us 3.0% to be in a hedge fund. Wall Street's solution to every investor problem is always, and will always be, pay us more fees.
And that, as Warren Buffet with tell you – and that's what they’ve done. They’ve paid greater fees to be in ever riskier rolls of the dice. And the net result has been the higher fees and the greater gambling has resulted, predictably, in worse performance. That's where we're at today.
Chris Martenson: I'm reminded of the Peanuts comic strip with Lucy yanking the football way. I'm not sure how many more examples we need to understand that Wall Street operates in its own best interest, and they play fast and lose whenever possible. You watch things like The Big Short or any of the other of the exposes that come out and guess what? When there's a lot money involved, people will do anything they possibly can within the letter of the law. And many of the coyotes at the edge of that will do whatever they can sort of outside the boundaries of the letter of the law. And some of them will just commit overt fraud.
And I was shocked. I mentioned in the intro. I found out that you had been an expert in the Madoff litigations. And just to look at what Markopolos had done – for those who aren't familiar – Markopolos was a private individual who was looking at the returns of the Madoff funds, which were publicly disclosed and said, "These are impossible."
First off, he would have to have been basically consuming more than were the options that were actually available for the entire universe of SBX index funds. But anyway, he just looked at the stuff, clearly impossible, hands it to the SEC on a silver platter. Here you go, here's the data, totally impossible. And I think it ran – I'm sure you know more than me – but I think it ran for many years, maybe ten years, after the first disclosure.
So these things are there. They're rampant. They should be expected. And still, I think somehow things like the Madoff scam will go away, and people assume that we took care of the bad stuff and now we're back to reasonably fair and open operations.
It just feels to me, like Lucy yanking the football away, that people should go in with the understanding that fleecing is what you should expect. It's not the exception, it's the rule. And therefore, you need – please, go ahead, if that's enough to–
– Peak Prosperity –
NOTE: Comments from the old website are still being migrated, but feel free to add new ones. Please be patient while we complete this process. Thanks!