Madoff's marvellous returns: We explore the investment returns behind the world's largest ever ponzi scheme

4/15/21 8:00PM

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.

Hyunsoo Rim

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JetBlue will reportedly hike its bag fees, as the cost of jet fuel continues to climb amid the war in Iran. It’s the latest example of carriers finding ways to push rising costs onto travelers.

Last week, United Airlines CEO Scott Kirby said that if fuel prices remain elevated, fares would need to rise another 20% for his airline to break even this year.

As CNBC reported, when one airline raises fees, others tend to follow.

Earlier this month, JetBlue hiked its first-quarter outlook for operating revenue per seat mile to between 5% and 7%, saying that strong Q1 demand helped “partially offset additional expenses realized from operational disruptions and rising fuel costs.” Now, the carrier appears to be making moves to further boost revenue to offset those costs.

Earlier on Monday, JetBlue rival Alaska Air lowered its Q1 profit forecast. The refining margins for the carrier’s cheapest fuel option — sourced from Singapore and representing about 20% of Alaska’s overall supply — have spiked 400% since February.

JetBlue did not immediately respond to a request for comment.