Did I Predict Something Like the Madoff Scandal?
Last year, I wrote:
On the other hand, I also expected the scandal would involve somebody socially liberal who think he knows better than religious traditions. That turned out not to be the case.
By the way, do they know better than the market? There are reasons to be skeptical. As I've mentioned before, violations of the Efficient-Market Hypothesis tend to be temporary and may be no more reliable than the data-mining results that appeared to indicate astrological signs could be medically relevant. The fact that the hedge-fund people tend to be Democrats might be no more relevant than the political opinions of lottery winners.
We might have to brace ourselves for a scandal. If potential investors suddenly realize the hedge funds are simply a type of gambling, they will look around for people to blame. Since everybody knows “the rich” are on the right side of the political spectrum, they will blame the activities of these Democrats on free market capitalism. Could this be the next Enron?