Vincent Safuto’s Weblog

Notes and observations

Total commitment can end in total destitution

There’s a scene in the film “Glengarry Glen Ross” in which real estate salesman Sheldon “The Machine” Levine is describing how he got his “marks” to spend everything for several plots of land in Florida.

Levine was played by Jack Lemmon, and he’s telling his protégé, Ricky Roma (played by Al Pacino) how the deal went down. The buyers, Bruce and Harriet Nyborg, undergo the full treatment, with Levine wearing them down with endless psychobabble, and then “they slumped.” And Levine, for the last time in his life, got them “to sign on the line which is dotted.”

He tells Roma that the Nyborgs have their money in “government bonds,” and it’s kind of implied that he took them for everything they had because he had declared to the couple, “I will accept nothing less than full commitment.”

As it turns out, they actually have nothing and the sale is invalid, as Levine learns to his dismay from John Williamson, the office manager, who has been eager to see Levine go down in flames.

I was thinking about the film as I watched “60 Minutes” on the night of March 1. A chilling video from 2007 shows Bernard “The Prisoner of Park Avenue” Madoff telling the eager socialites of a nonprofit how he pretty much has the SEC in his back pocket, and how it’s impossible to cheat them.

That nonprofit trusted Madoff with everything, and now is pretty much dead.

I felt sympathy for others interviewed on the program, as they pondered the giant mistake they made when they trusted Madoff with their entire financial holdings, keeping little or nothing back “just in case” and are now experiencing a life of economic ruination and destitution.

I just wanted to know, Why did you invest everything with Madoff? Why didn’t you spread your investments and risk around, mixing in some safe but low-returning investments, and keeping some of your fortune in ready cash?

There was a story in a newspaper about one man in his late 80s who gave a seven-figure fortune, the fruits of a lifetime of work, to Madoff; then he sold a house, pocketed $400,000, and gave that to Madoff, too. All gone now.

People of every education level and economic status have been lured into investing everything into one speculative foray, and it’s horrifying to watch the results.

It’s even sadder to hear the lamentations, as the victims recite a scammer’s long list of social and charitable deeds, donations given, boards sat upon and investments made.

The accused usually discovers a hitherto neglected religious faith, which he or she hopes will gain some points in the sentence mitigation phase, a sort of “I was good before I went bad” recitation. Most judges aren’t buying it anymore, it seems.

I sometimes wonder, though, why people seem to fear that if they don’t go “all the way” with an investment adviser, they are somehow being disrespectful.

Could it have an origin in the Bible? I’m not religious at all, but check this out.

In Acts, Chapter 5, (King James Version), there is this:

1: But a certain man named Ananias, with Sapphira his wife, sold a possession,
2: And kept back part of the price, his wife also being privy to it, and brought a certain part, and laid it at the apostles’ feet.
3: But Peter said, Ananias, why hath Satan filled thine heart to lie to the Holy Ghost, and to keep back part of the price of the land?
4: Whiles it remained, was it not thine own? and after it was sold, was it not in thine own power? why hast thou conceived this thing in thine heart? thou hast not lied unto men, but unto God.
5: And Ananias hearing these words fell down, and gave up the ghost: and great fear came on all them that heard these things.
6: And the young men arose, wound him up, and carried him out, and buried him.
7: And it was about the space of three hours after, when his wife, not knowing what was done, came in.
8: And Peter answered unto her, Tell me whether ye sold the land for so much? And she said, Yea, for so much.
9: Then Peter said unto her, How is it that ye have agreed together to tempt the Spirit of the Lord? behold, the feet of them which have buried thy husband are at the door, and shall carry thee out.
10: Then fell she down straightway at his feet, and yielded up the ghost: and the young men came in, and found her dead, and, carrying her forth, buried her by her husband.
11: And great fear came upon all the church, and upon as many as heard these things.

So are people worried that they’ll be struck dead if they hold anything back from a financial adviser? Probably not, but it makes you wonder.

The real reason may be that people see that if they put everything into one investment, they will get a pretty good return without having to keep records for numerous individual investments. I guess dealing with all that money coming in and all those forms may be a hassle, but compared to destitution it’s a pleasure.

And if friends are looking askance because you’re not “all in,” then maybe you have the wrong friends.

It’s prudent to hold something back, and it’s something every legitimate financial adviser recommends. For many, the lesson is way too late.

For me, I am going to play it safe.

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March 2, 2009 - Posted by | Living in the modern age | , , , , , , , , , ,

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