Hustle is mentality, not a business plan! How did Madoff use his mentality?

Trusting a man like Madoff was a huge mistake people made. This man was responsible for masterminding the biggest con the world has seen, netted billion of dollars and ruined thousands of lives. Madoff convinced thousands of investors to hand over their savings, falsely promising profits in return. 

Chairman of NASDAQ market was gaining a lot of trust from different people and building up this huge scandal. The way Bernard Madoff played his game was clever, people parted with their money because he was exclusive. People put their trust and savings into Bernie Madoff and it all turned out to be one of the largest U.S. scams! Appalling right? Madoff used a so-called 'Ponzi Scheme', which lures investors in by guaranteeing unusually high returns. Ponzi schemes are run  by a central operator let's just say Madoff  in this case, who uses the money from new, incoming investors to pay off the promised returns to older ones. This makes the operation seem profitable and legitimate, even though no actual profit is being made. Meanwhile, Madoff pockets the extra money and to expand his scheming game? A big LIE! In Madoff's case, things began to deteriorate after clients requested a total of $7 billion back in returns. Unfortunately for Madoff, he only had $200 million to $300 million left to give.  

The number of victims from Bernard Madoff's alleged Ponzi scheme that was affected was immense. This man came across as an influential honest and caring man towards his clients. Although he did not promise high returns to his investors he still managed to win their hearts with his promise of steady returns. Showing low risk to his clients but how long can one lie before they get caught? Clearly not forever... How would you guys react if you were in the shoes of Madoff's investors? 

Bernard Madoff with his sons Mark (left) and Andrew (centre) in 2001 

Was Madoff in this scam alone? or did he have back office workers? With a large family and some of the members working for him I personally feel at least one of the family members had an insight on this large scam! Could we describe the Madoff scam as a double act? His brother Peter ran the office on a daily basis as well as his niece Shana, who was the compliance officer for the company? Did they have any clue? A year after disgraced financier Bernie Madoff pleaded guilty to a $65 billion Ponzi Scheme and was sentenced to 150 years in prison. Both sons of Madoff's Andrew & Mark ran the trading section, surely they could have picked up the red flags? hmm... In March 2014, five of Madoff's employees were found guilty for their part in the Ponzi Scheme. Most recently, Madoff's accountant and lawyer is also facing up to 30 years in prison for his role. 

As much as Madoff's investment sounded attractive would you really put all your eggs in one basket? Markowitz, 1959 theory suggests a good portfolio is a balanced whole, providing investors with protections and opportunities with respect to a wide range of contingencies. Can we say Madoff provided these points to its investors? Yes but with lies! Agree? Can we partially blame investors for not digging deeper? Investors should have a diversification strategy this way it will reduce risk.

I personally believe Madoff's investors should have done this instead of seeing Madoff as a pretty picture. What do you guys think? Investors should have looked into business and its growth. Therefore putting life savings into the hands of Madoff was clearly not a good idea.  Or maybe they did not measure the success of their portfolio instead they just wanted to see the return? I believe investors should have allocated different asset classes then diversify within each asset class. Investors gone wrong?

Eventually, the scam fell. Madoff's clients were panicking pleading for their own money back but all Madoff's plan was to reassure his clients hoping for the best. 

Andrew died in September, blaming his cancer relapse in 2012 on stress and shame he suffered from the colossal scam, while his older brother Mark hanged himself in 2010 on the two-year anniversary of his dads arrest. 

The real hustler?

It's a wrap!

RS.

Comment below with your views & questions!

I have added some interesting links below following up the Madoff hustle:
http://www.ft.com/cms/s/0/f724f0fc-36ab-11e5-bdbb-35e55cbae175.html#axzz3pVintmW6