Old Wine Old Bottle

Madoff, the hedge fund guy, has done a great job of the $50Bn and the good part is the time for this thing to hit the market....when it rains it really pours. But the interesting piece is the scheme, it has been repeated so often in every part of the world that it really beats me how people can still pull it off? It needs colossal incompetence from the regulators and really smart investors (yeah it was a hedge fund, the big money club) for anyone to play this game.

India also has a similar concept called a Chit Fund (most of the times they run the same scam) in which a company/individual takes in deposits from a number of investors promising above average market returns and then from the new deposits pays off the deposits and interest of earlier investors. Sooner or later the thing collapses and the most recent set of investors loose all their money.

Two learning's from this:
One is that the early bird makes a killing in such schemes because they earn the extraordinary returns and also get their money back (assuming they are smart enough to get out when they can) so that's the route to take the next time you see a similar thing going around and
Two there is no end to human greed which just blinds our better judgement and makes us fall prey time after time to all schemes promising easy money.

Guys there are no free lunches and no extraordinary returns atleast not for long