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Bernie Madoff, disgraced financier and architect of one of the most elaborate frauds in corporate history, has died in prison this week aged 82.
Mr. Madoff's marvellous returns
Thanks to an in-depth academic study of Fairfield Sentry, one of Madoff's investment vehicles, we've been able to dig out the monthly investment returns for Madoff from 1990 to 2008, with 215 months of returns data. The numbers show a remarkable (fake) track record. According to the data, Madoff's worst month out of all 215 was a -0.64% return, with 198 months reporting a positive return for investors.
From this data we estimate that a $100 investment with Bernie in the Fairfield Sentry fund in 1990 would have turned into almost $600 by 2008 — a nice return that would have been seemingly achieved with an incredible amount of consistency and very little volatility.
In hindsight it's easy to say that Madoff's returns looked "too good to be true", >90% of months in the green does sound a bit absurd, but at the time it wasn't easy to spot. Madoff made bold claims about his, now infamous, split-strike conversion strategy which consists of "a long equity position plus a long put and a short call". If that confuses you, don't worry it is supposed to, and it explains why so many people — including celebrities and some sophisticated investors — had no idea they were investing in the world's largest ponzi scheme.
There was some good news for the US economy yesterday as weekly unemployment claims fell to their lowest level since the pandemic started. All told some 576,000 people filed for unemployment claims last week, which is less than one-tenth the number from almost exactly one year ago, when a record-breaking 6.15 million people filed.
It's possible that the vaccination drive, coupled with loosening restrictions, is leading to more business confidence in hiring — and maintaining — employees. Having said that, even 576,000 claims is an amount that would have looked huge had it come during pre-pandemic times. In 2019 the biggest week for unemployment claims was just 238,000, with weekly variations so minimal that they are barely even visible on this chart.
Elsewhere in the US economy, retail sales data revealed a jump of almost 10% — the largest rise in retail spending since May of last year. Things are going in the right direction, but we're still a long way from "normal".
Jeff Bezos has written his final shareholder letter as CEO of Amazon, the e-commerce company he started in 1995. Although he discusses the business, a significant focus of the letter is Amazon's employee base, which has been in the headlines a lot this year.
First the company denied that delivery drivers and other employees occasionally had to pee in bottles while at work in order to meet busy schedules, and then there was the battle to unionize in Alabama, which Amazon won.
It's perhaps no surprise that things with your employees sometimes go wrong when you have a workforce of 1.3 million people and a population the equivalent of the entire city of Atlanta (~500,000) joined your company last year alone. It's hard to make 13 employees 100% happy, let alone 1.3 million.
Nevertheless, this is really the Amazon founder's first admission that things could be improved for employees, with Bezos writing that "I think we need to do a better job for our employees". It doesn't get much more direct than that, perhaps Bezos 2.0 will change his customer-obsession into an employee-obsession.
1) Google Earth has released a time-lapse feature which lets users revisit satellite images from the past 37 years, some of which reveal the significant impacts of climate change and the growth of major cities.
2) 277 attendees of Fyre Festival, the ill-fated supposedly "luxury" music festival in The Bahamas, are set to receive $7,220 in compensation.
3)Investment banks had a bumper quarter as the economic recovery, a trading frenzy and the SPAC-boom all helped the Wall Street elite print record numbers.
4) US traffic fatalities look set to rise in 2020 despite 13% fewer miles being driven. Interesting insight and analysis from The Economist.
5) Recently Masterworks sold their first Banksy work for a 32% return for investors. Explore Masterworks and skip the 8,500 person waitlist today.**
6) Scientists in the US have developed a paint that is "whiter than the whitest paint currently available", reportedly reflecting more than 98% of all sunlight. Good for a car in a hot country.
**This is a sponsored snack.
