Adam LeBor: The Believers and Tower of Basel
Trader's Library #87 · Market history, crises and scandals. How thousands of people believed in the biggest Ponzi scheme in history.
Author: Adam LeBor · Original: The Believers: How America Fell for Bernard Madoff's $65 Billion Investment Scam; Tower of Basel · Year: 2009 · Usefulness for traders: ★★★☆☆
What it's about
“The Believers” is the story of Bernard Madoff's Ponzi scheme, which collapsed in 2008, and of the people who believed in it for years. “Tower of Basel” is the history of the Bank for International Settlements, the “central bank of central banks”.
What it gives a trader
“The Believers” is a study of how trust, exclusivity and steady returns lull vigilance. Madoff's returns were too smooth for a real market, and the warning signs (e.g. Harry Markopolos's analyses) were ignored.
Lessons for traders
- results that are too smooth are a warning sign, not a virtue
- exclusivity and referrals from friends switch off critical thinking (conformity, Atlas of biases #33)
- regulators don't always see what the data shows
What to watch out for
“Tower of Basel” is an institutional history, less useful for a trader.
Discussion
The discussion takes place in Hetman Capital Club (in Polish). Join the discussion in the Club →
Navigation
← #086 Michael Lewis: Moneyball, Boomerang, The New New Thing, The Premonition · Library index · #088 Robert Shiller: Animal Spirits and Phishing for Phools →
Educational content, not investment advice. The book description is my own summary and assessment, not quotations. Edition details were checked in catalogues and bookshops, and where there was doubt I said so plainly.