So unless you have been under a rock or in a dark cave, hiding from the recession of course, you have heard about the Madoff scandal. Bernie Madoff has been orchestrating a “Ponzi Scheme” in which he was able to pay early investors non-existent “returns” with the funds brought in by new investors. He has told authorities that with this scheme he has lost about $50 billion in investor’s money.
Wait, what was that? Was that a B in front of that illion?

The first thing many people ask is “Who is this guy and how did he do it?” I’m sure most of us wish we had the skills to convince people to invest billions of dollars with us. I recently listened to a discussion on NPR trying to understand this. They discussed how he was able to generate an environment of exclusivity around him in which it became a status symbol for Madoff to handle your funds. He was able to get investors so worked up over abnormally consistent returns that they were quite literally begging to give him their money. People were joining one of the half-dozen country clubs he belonged to just for the opportunity to discuss finances with him. Didn’t anyone notice this guy was somehow making money when every else was losing it? Of course someone did – even though most just wanted to see him as a magical wizard from a far away land that was able to make money appear from thin air. As discussed in an article from CNN, it was brought to light that 8 years ago a rival financier wrote a letter to the SEC calling Madoff’s operation “the world’s largest Ponzi Scheme.”
So you’re telling me the government didn’t respond appropriately and an exorbitant amount of money was lost? Call 911, I think I just had a heart attack.

The second question someone may ask; and I think a little more importantly, is exactly how does “supposedly” one guy accumulate that much money from investors? How is one man able to “lose” about $50 Billion? As this story develops they are looking at who this scheme has affected and where all that money came from. More and more stories are popping up about couples losing all of their life savings, hedge funds crumbling, and non-profit organizations closing their doors. So that means that person/organization/company invested so much of their money with one source that they are now bankrupt. This is investment 101 people. A range of old adages comes to mind, “If it’s too good to be true…”, “Don’t put all of your eggs in one basket.” Even the most naïve 17 year old freshman understands the importance of diversifying your portfolio. These were knowledgeable, many professional, investors that placed 70-80-90% of their portfolio in his hands. They were so excited about the consistent 12-13% return he was able to provide that they ignored all the warning signs. He was able to generate so much money because people have become absolutely blind in the panic of the looming apocalyptic recession. People are doing anything and everything they can, including throwing their common sense out the window, in order to try to be as recession-proof as possible.

With no signs of the economy improving, companies and organizations need to be smarter about their financial decisions. People still believe in (another old adage if I may) “you need to have money to make money.” Well what about simply reducing your spending and saving money? Source One’s Strategic Sourcing Services help reduce your spend and the overall cost of acquisition through the application of proven sourcing and purchasing strategies. With their contingency based sourcing services, clients are able to realize true savings without the risks of upfront costs, consulting expenses, and resource time consumption. Wow, so you are able to save a lot of money without spending a lot.

So reduce your spending and save money as opposed to jamming as much of it as you can into investments that are too good to be true or simply won’t be around next week.

It’s said “You need to have money to make money,” well don’t forget you also need to have money to LOSE money! So I guess it works out for some of us who can’t lose the money we don’t have in the first place!
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Nick Haneiko

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