Thoughts in a Haystack

From Felix Salmon at Condé Nast's Portfolio.com, about a claim by Ben Stein that he turned down an offer by "a little delegation from a major investment bank" to invest his money with Bernie Madoff:

For one thing, "major investment banks" are conspicuous by their absence when it comes to the roster of Madoff's victims. ...

[F]aced with some suits offering to manage his money for an annual fee of 2%, Stein didn't simply say no; he invited them into his home, took their offer seriously, and then roped three of his friends into looking into the offer and trying to replicate Madoff's returns.

Why would Stein spend so much time listening to and second-guessing the claims of private bankers promising improbable returns? After all, he knows full well (or says he does) that such claims never pan out ...

Clearly Stein isn't giving us the whole story here -- if he was, he would have named the bank in question. But he's not the only person telling "I said no to Bernie Madoff" stories. He should be treated like anybody else with such a story: pay very little attention. People turn down investment opportunities, both good and bad, every day. And the main thing we learn from Stein's story is not how smart he was to say no to Madoff, but rather how much he wanted to believe: when he thought it was too good to be true, he still went to three different friends in the hope that they could change his mind.

Then again, it's public knowledge that Stein believes in fairy tales like Intelligent Design. So none of this should be much of a surprise.

I'd say that Stein's venture into ... um ... science policy had cost him his reputation in financial circles ... but I doubt he had much to lose in that department to begin with.
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