If you were to look at the list of people who have lost money with Madoff, it is awesome and stunning! Many of the victimes are the usual suspects – your banks who claim they can do a good job of managing your money, many big fund advisors, and a whole host of celelbrities!

Instead of getting into their names, let us see what helps guys like Madoff to sell their product.

1. Selling on a secretive basis – the index option model is too complicated for you to understand. Vow this works very well for a successful man – he is too proud to accept this line, so HE PUTS IN HIS MONEY!!

2. Believing in Santa Claus – anybody who chooses an active fund manager for a 30 year investing horizon is in this category.

3. I need excitement in life – term life insurance and index funds are boring.

4. Sebi (SEC, if you want) will protect me! This is so mythical (Santa Claus again). The zebra crossing, signal systems, cops, driving rules, licensing, are all there to REDUCE accidents. Frankly I do not think we believe that accidents will be zero. Similarly the regulator (who is corrupted by the people he regulates) is there for the government to look good, NOT TO PREVENT frauds.

5. Root cause of frauds is bad men: Again a myth – it is because of foolish victims. If you believe that a fund manager can give above index return and you invest in such schemes, who is to be blamed? I think the victim rather than the guy who created the fraud. It is time people learnt to be responsible – and stop blaming the regulator!

6. Salads, exercise, morning walks, term life insurance, index funds – are all boring but good for your health and wealth!