4 ms·
I'm not in the industry, but I wonder: did people have the same kind of reverence for Madoff?
by RandomBacon 7y ago
I'm not in the industry, but I wonder: did people have the same kind of reverence for Madoff?
- ivalm 7y agoMadoff was a ponzi scheme that relied on new investment (since it was simple pyramid). Medallion fund limits outside investment (so there is no outside source of money) and has operated for many decades (ie more money was withdrawn from it than put in).
- esmi 7y agoI know nothing of Medallion, but I'm curious if only private insiders can invest, how do you know they're not just lying about how much they return?
- ivalm 7y agoIt allows family and former employees, so it is actually A LOT of people. Kind of hard to keep a conspiracy with 100+ people for 30+ years. Why would all these people lie?
- rwmurrayVT 7y agoAll the family, employees, and former employees have a maximum investment. Every year they withdraw funds so that the principle never exceeds a certain threshold.
- tcbawo 7y agoSuch returns would not be possible if they grew to a certain size. By closing the fund, they can keep it small enough to limit scaling issues.
- imtringued 7y agoThat's illogical because people don't get paid in ROI. They get paid in absolute dollars. Earning a 30% ROI on 200 billion dollars is better than earning a 30% ROI on 100 billion dollars.
- tcbawo 7y agoMy point is that once a fund grows to a certain size, ROI at that scale becomes impossible. I wouldn't be surprised to learn that some of their funds have investment restrictions and mandatory distributions.
- ivalm 7y agoBut they do have other funds. It's simply they want to keep their money in higher return fund and other people's money in the bigger, lower return fund.