Alleged Ponzi co-accused vows to clear his name

[Cowboy89]

Originally Posted by Slava

I agree entirely with the second paragraph here and it reminds me of a good quote from Buffett: "You can't produce a baby in a month by getting nine women pregnant".

I don't want to derail this thread, but I don't agree with the risk/return frontier. I think that is a sham that has been readily embraced because it looks good on paper and is easy for people to understand.

Many things muddle up the risk/return tradeoff in practice: differing individual and soverign taxe rates, market inefficiency (bubbles, fear based markets), different borrowing rates, etc and without a doubt the relationship is anything but linear, but when someone's pitching on the extreme high end of the return one must wonder what is needed on their part to generate those returns and how sound is their business plan when they're going after small fish's money.

[Slava]

Originally Posted by Cowboy89

Many things muddle up the risk/return tradeoff in practice: differing individual and soverign taxe rates, market inefficiency (bubbles, fear based markets), different borrowing rates, etc and without a doubt the relationship is anything but linear, but when someone's pitching on the extreme high end of the return one must wonder what is needed on their part to generate those returns and how sound is their business plan when they're going after small fish's money.

For sure, and my dislike of the risk/return discussion is because it encourages people to think that they need to take more risk than they actually do. There are a number of cases where you can be less risky and not actually end up losing much if any return.

[macker]

Originally Posted by Cowboy89

What due diligence? If someone understands the risk-return frontier, (ie as average return goes up so does the risk) they'd understand that a claim of 25% per annum = far too risky for suitable investment for their entire life savings regardless of how snazzy the pitchman's dressed or how legit the letterhead of the company looks, or how many of their friends recommend it. The initial pitch language right away should kick the 'reject' side of the decision tree in gear before even finding out any more details.

But alas people are far too greedy and ignore life's enternal truth. Finance is like everything else in life from wieght loss, to achieving higher levels of education, to quitting smoking, to pretty much any accomplishment worth accomplishing: It takes discipline, time, and effort, and any attempt to speed up the process is wraught with potential failure.

Believe it or not the average investor has never heard of Harry Markowitz and I don't think the fraudsters are covering off the risk-return frontiers in their information sessions. Besides...."The upside of the Great Recession is that it could drive a stake through the heart of the academic nostrum known as the efficent-market hypothesis" Roger Lowenstein

[Cowboy89]

Originally Posted by macker

Believe it or not the average investor has never heard of Harry Markowitz and I don't think the fraudsters are covering off the risk-return frontiers in their information sessions. Besides...."The upside of the Great Recession is that it could drive a stake through the heart of the academic nostrum known as the efficent-market hypothesis" Roger Lowenstein

Maybe my original comment should have been reduced to: "If it's too good to be true . . . . . ."

[CaptainCrunch]

Originally Posted by Cowboy89

Maybe my original comment should have been reduced to: "If it's too good to be true . . . . . ."

. . . you should totally have sex with it?