Monday, June 29, 2009

There's No Magic in Money

Today Madoff was sentenced to the maximum term of 150 years and his investor victims got their chance to have their say. The stories are tragic. One of the investors Burt Ross, a former mayor of Fort Lee New Jersey, reported to the press outside of court that his loss of money was tragic, but his greatest tragedy was his loss of trust. He went on to draw an analogy between Dante and "The Divine Comdey" theme and the sentence and future. The depths of hell, according to Dante, plagues those who have betrayed trust.

The loss of trust is far more painful than the loss of money, according to Ross and Dante. Ross says that he and other victims he has met share a loss of trust that is pervasive in affecting love and relationships which depend on trust to flourish. So, yes, they have lost money, but they have lost much more.

It occured to me that what Ross didn't say is that he has lost trust in himself--trust that he knows what is right for him. What barometer will he and other victims use to trust again? How will they protect themselves and make themselves feel safe?

Unfortunately, I have known and know many other people who have been dramatically plagued by this loss of self-confidence and inability to trust again. They now manage their own money or they hire managers who have no incentive or conflict of interest in managing their money.

To trust again--themselves and others--they have to acknowledge and forgive their own liabilities and contributions for their financial and emotional loss. Reasons may have included excessive greed, unreasonableness and lack of personal responsibility in doing adequate research. The important lesson is to recognize how powerful these personal dynamics are in motivating us to make inappropriate, and often times, dangerous decisions.

There is no magic here. There is no crystal ball which will enable a wizard to do the impossible; i.e. guarantee big or regular returns. If we fall for that promise, we have bought into a fantasy and self-deceptive ploy. When we give up our involvement, our sense of reasonablenness; we give up ourselves. We then become victims of others and of our own human emotions. Fear and greed are well-known culprits in playing havoc with sound money management.

I believe wholeheartedly in following the "3-R Rule" which has helped me and many others I have counseled and met. The 3 R's: Reasonable, Rewarding and Realistic are trust-worthy and reliable guide-posts for making sound and suitable decisions.

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