Trust Can Lead to Financial Ruin

Gut feelings — often used as a compass for gauging the reality of the market — can easily leave you sick to your stomach at the realization that everything you have worked your life for is gone. Bernard L. Madoff is the perpetrator of a $50 billion Ponzi scheme that masterfully manipulated the gut feelings, which oftentimes trump rational thought, of investors.

The trouble with Ponzi schemes is that they are so difficult for consumers to spot. Not only do most give dividends right away, but they are often positioned as sweetheart deals that may seem too good to be true. It is when the money touches your fingers that you are deceived to the point that you begin to believe the lie.

In the end, it's no matter how much you trust people. Money has the ability to weaken even the most rational senses. Eyes light up, pupils dilate, the mind is turned into a foggy haze, and one follows the smell of money like a zombie. There is no regard for others; perpetrators will exploit whomever is in their way. Once the trust is gained and the prize money obtained there is no consideration of the ruin left in their wake. In the case of Madoff, and other Wall Street executives who are just as guilty, there may never be a way to force them to live in the ruin that they have caused.

A word of caution: No matter how much someone has earned your trust by paying dividends on your hard-earned money, you should never become so comfortable and relaxed with your money managers as to truly convince yourself that they are invincible. You may consistently give them your earned trust, but always verify their rhetoric time and again against the realities of what you have actually gained or lost in your financial portfolio.