Mark Cuban: Why Madoff Was Better Than A Mutual Fund


Mark Cuban, still facing insider trading charges from the SEC, continues his obsession with Bernie Madoff, arguing that for many investors, The Ponz was a better investment than a typical mutual fund. This dovetails with another one of his obsessions, arguing that traditional retail investment strategies are a total sham.

His logic:

The mutual fund investor bought their Dow Jones Fund when the market was 9550 in Feb of 1999. That  $125k investment has shrunk to about $95k. They bought the Nasdaq Fund when the index  was at 2342.  Today that $125k  would be worth about $ 77k.  Their $250k nest egg of February 1999 is now worth $172,000 . Thats bad , but not as bad as Madoff’s sucker, right ?

Maybe not. Because the Madoff investor had less than $500k invested, there is a good chance that they could be protected by the SIPC, who is already sending out claim forms. So when its all said and done, the Madoff investor could not only get all their $250k back, but they are also elgible for a share of any funds recovered.

Clever. Of course, this only applies to a narrow set of Madoff investors (the ones with $500k) and a specific set of mutual fund investors, the ones who started investing in 1999, about a year before the market peak. No doubt though, there are a lot of underwater investors from the past decade wishing they could either get a bailout (cause they played by the rules) or some SIPC money.