Bernie Madoff gets his sentence. Have we learned anything?

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Bernard Madoff got his sentence this morning. It’s 150 years in prison, which is a bit longer than your average 71-year-old can be expected to live. (Curious Capitalist Jr. was actually wondering about this yesterday—what if, he asked, Madoff got sentenced to 150 years but doctors discovered new life-extending techniques in coming years that enabled him to survive past the end of his sentence? When I told him Madoff was already in his 70s, though, he decided the chances were pretty slim.)

A business commentator feels compelled to comment on an occasion like the Madoff sentencing, but what is there left to say? Bob Lenzner interviewed me, mostly about my book, for one of his regular videos this morning. He asked about Madoff, and the best I could come up with in the context of the book was that the Madoff experience seemed to be a great argument for Harry Markowitz’s approach to portfolio diversification.

If Madoff’s clients had only put 5% or 10% of their assets in his Ponzi scheme, it just wouldn’t have been that big a deal. Instead we have for months been hearing story after story about individuals and families and even foundations that put all their money with the guy. These weren’t the kind of folks who spend much time reading Harry Markowitz or Burton Malkiel—instead, they didn’t want to have to think about their investments at all. They wanted to leave their money with somebody they trusted, and get on with their lives. Which is a pretty reasonable desire. But, it turns out, a dangerous one.

Of course, none of this explains Walter Noel or Ezra Merkin or any of the other professionals who steered money to Madoff. It doesn’t explain the SEC’s unwillingness to dig into Madoff’s affairs after Harry Markopolos (no relation to Harry Markowitz) tried to blow the whistle on him. It doesn’t explain Madoff’s wife and kids seemingly looking the other way for decades. It doesn’t explain my egregious failure two years ago, when moderating a now-YouTube-famous panel discussion featuring Madoff, to grab him by the lapels and yell, “Stop this Ponzi scheming, man!” Most of all, it doesn’t explain why Bernie Madoff did what he I did. I do wonder if, now that he’s got so much time on his hands, Bernie will decide to tell us.