Ben Stein Watch: December 28, 2008 56 comments
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Ben Stein is some kind of seer:
About two years ago, a little delegation from a major investment bank arrived at my home in Beverly Hills. These nice young people were from the bank's "wealth management division."...
They told me that if I invested a certain sum with them, they would make sure that a large chunk of it was managed by a money manager of stupendous acumen...
I thanked them for their time and promptly looked up Bernard Madoff online. Nothing I saw was even a bit convincing that he had made a breakthrough in financial theory. Besides, this large financial firm was going to charge me roughly 2 percent to put my money with Mr. Madoff's firm...I checked with my investment gurus, Phil DeMuth, Raymond J. Lucia and Kevin Hanley. None of us could see how Mr. Madoff could do what his friends said he could do. I politely passed...
This whole story is very odd. Ben Stein has spent many years trying to make a name for himself as an investment guru, going on the television and writing columns and books on the subject, and acting as a prominent booster for index funds generally and for Dimensional's funds in particular.
The delegation from the wealth management division of the major investment bank surely knew all this -- and yet they went to Stein's home and pitched him on the idea that he should just sit back and leave his money with them?
What's more, Stein says that even before he gave them a penny, these private bankers were extolling the virtues of Bernie Madoff as a money manager. Now that's even weirder. For one thing, "major investment banks" are conspicuous by their absence when it comes to the roster of Madoff's victims. Look at the banks on the list -- Banco Santander, Bank Medici, Fortis, UBS, HSBC, Natixis, and so on. There are lots of them, but none of them can really be considered investment banks. Some of them have investment-banking arms, but those arms don't, to my knowledge, have their own wealth-management divisions.
In any event, faced with some suits offering to manage his money for an annual fee of 2%, Stein didn't simply say no; he invited them into his home, took their offer seriously, and then roped three of his friends into looking into the offer and trying to replicate Madoff's returns.
Why would Stein spend so much time listening to and second-guessing the claims of private bankers promising improbable returns? After all, he knows full well (or says he does) that such claims never pan out:
I belong to a number of country and town clubs. In all of my years at them, I have never gotten an investing tip that made money. In fact, as far as I can recall, I have never gotten a tip from any source that made me money, except for my former agent's wife mentioning Berkshire Hathaway (BRK.A), Mr. Buffett's company, 30 years ago.
Does Stein really think that the wealth management division of a bank is any more likely to have discovered a great investing tip than anybody else? After all, he tells us that even hedge fund managers -- who are paid vastly more money than private bankers -- generally fail:
One great advantage of being 64 is that I can remember the early hedge funds of the 1960s. They, too, were supposed to turn water into wine, but they fell hard in the stock market meltdown that also laid low the Nifty Fifty -- another 1960s' idea that 50 carefully selected stocks could long beat the indexes.
I can still recall visiting an early hedge fund pioneer. He had a small stereo playing rock music in his office as he tried to make millions. That's how cool he was. I don't know where he is now and I don't want to know.
Clearly Stein isn't giving us the whole story here -- if he was, he would have named the bank in question. But he's not the only person telling "I said no to Bernie Madoff" stories. He should be treated like anybody else with such a story: pay very little attention. People turn down investment opportunities, both good and bad, every day. And the main thing we learn from Stein's story is not how smart he was to say no to Madoff, but rather how much he wanted to believe: when he thought it was too good to be true, he still went to three different friends in the hope that they could change his mind.
Then again, it's public knowledge that Stein believes in fairy tales like Intelligent Design. So none of this should be much of a surprise.
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This article has 56 comments:
Ben Stein has a big mouth, but no brain.
Writing a whole "financial" column debunking him is just.....well......bun...
Perched from your lofty little platform at SeekingAlpha, you attempt to scratch Ben but fail again as you fail to do real research. You growl and spit like a kitten and behave like the Cowardly Lion from Oz. You don't back your suppositions with evidence just your opinion. Sorry Felix, go find your kitty litter box elsewhere.
Real Research
Ben Stein is a product of what has become our financial system over the past two decades:
A place where zero accountability reigns.
Ben Stein is as guilty as the next guy for providing useless, and often wrong commentary and suggestions on stocks, bonds, etc.
However, Ben Stein has atleast taken the right steps by publicly apologizing for many of his wrong suggestions.
Almost every other pundit, either outright denies making wrong statements, or worse, has the nerve to lie about what they said in the first place. Even worse than that (yes there can be even worse) those very same pundits, who helped people lose 40% or more of their money, will eventually be right when things do get better, and yell from the tree tops how they were right all along.
Those are the pundits who truly have no integrity and big brass balls to boot. I can think of many off the top of my head, but why waste any more of your time by listing them here.
...and RealResearch, just because something is published here does not mean that it is written for this audience -- SA is an aggregator, most authors don't have anything to do with SA beyond giving permission to re-publish stories here.
It seems many of you are unfamiliar with Stein's record - I'd advise you to search Felix' archives at Portfolio to get a better idea of this idiot. It's astounding how stupid Stein thinks everyone but himself is.
Having discussed the financial situation with a number of astute investors and analaysts, I doubt there are any folks out there who have a firm grasp of what the future will bring. So, I won't be taking investment advice from anyone, to include Ben Stein.
As for why we're in the mess we are, my darts go to such luminaries as Senator Schumer whose public pronouncement that Lehman Bros was insolvent led to a "run on the bank", a sell-off of its shares, and its sudden collapse -- setting off the falling of the dominos like Bear Stearns et al. Then again, we have Barney Frank who was taking his campaign contributions from Freddie Mac and Fannie Mae to prevent Treasury from exacting any oversight; he succeeded in helping them fail, with the subsequent collapse of the financial market -- which is an intricate system of smoke and mirrors and the ultimate con game now. A collapse in confidence there is akin to pulling the curtain on the Wizard of Oz..
We now have the Goldman Sachs team of Paulson and his understudy running Treasury, passing hundreds of billions of dollars to the financial community so they can buy each other out rather than lending to businesses which need the credit to continue operating. The Democrats are pushing for a bail-out of the car industry -- highlighted last week by a furlough of the workers for 45 days at nearly full pay. Now there's an incentive!
Getting back to Ben; leave him alone. Probability is that he did invest with Madoff; so did a lot of supposedly smart people. Then again, a majority of supposedly smart folks cast their vote for a complete unknown for President of the United States who is about to re-enact the FDR Socialist Manifesto which has burdened this country with countless welfare programs and unproductive taxes.
First Obama order of the day is to attack the transportation infrastructure with a convoluted tiered usage tax on companies, individuals, etc for a fair distribution of the cost [quick translation: massive bureaucracy], rather than simply tacking on 50 cents to the federal gasoline user tax -- which would raise $500 billion per year..
Hold on to your wallet;
Ben was smart enough not to invest without researching. He listened to their sales pitch, asked questions and then went to the guys he trusted (from experience with them) to discuss it.
Finally, he decided that he needed more information, so he went to some other folks he met and discussed with them whether it's replicable. Madoff's pitch was really a technical anomoly and so it should be able to be replicated.
If it could be, then why share 2% with the 'bankers'. If it couldn't, then it was obviously a scam.
Kudo's to Ben to at least do the type of research and brain trust discussions before blindly investing his money.
An addendum..Ben Stein weighed in on TV today and said those of us opposed to a bailout are un-American..This from a would be conservative who gave Al Franken money for his senate campaign (now that's really un-American), whose father was an economist but he can not even understand supply side economics. I kid you not. With every financial crisis, or crisis of any sort, he advocates raising taxes, buying into the Democratic insanity that money can be extracted from the economy without any effect. Earth to Ben: The life blood of an economy is capital...raising taxes is no different than bleeding a sick patient. Every economy in every part of the world proved this. It is not only that he is wrong, but he is arrogant and has now slandered those of us who disagree.
Still, not sure why the author felt it germane to the article to take a behind-the-back potshot at religeon (with the 'intelligent design = fairy tale' comment). Must be searching...
For the record, I like Mr. Stein's talent giving a human dimension to the economic crisis de jour.
Perhaps he takes to much literary license from time to time, or conducts too much research into claims that he should have recognized as phony from the get-go, but that's all part of his charm.
His critic, Felix Salmon, is a half-empty-glass guy who will find persuasive fault with the Gettysburg Address.
(Yes, that is the title of the movie, which in of itself say a lot.)
Not that I'm a fan of a "pick on Ben Stein" fest, but your reading is fine analysis, which could go a step further: say Ben Stein earned lawyer wages (he's a Harvard Law grad, I believe) - for a senior attorney, that'd be $500/hour. Say the "visit" took three hours. Say he paid financial advisors for their time (normal people do).
Total cost to evaluate the offer? About $2500 paid to evaluate an offer to lose millions more. Ouch.
I bought and read one of Stein and Demuth's books on retirement strategies, which was ok if not especially insightful. Having said that, when I saw the intellectually dishonest film Ben Stein did promoting "intelligent design", I gave up taking him seriously about anything.
On Dec 29 07:57 AM CLH wrote:
> If you have nothing to say except a personal put down, its best if
> you write nothing.
Ben spouts the conventional wisdom along with most others.
For example;-
"Higher risk in investment is rewarded with higher returns" Not so.
If this statement were true even on average, there is no risk.
"Risk is minimised over a long holding period" Not unless you're lucky
Look at the last 5,10,12 years.
"You can expect 11% over the long haul". Not so.
Same answer as #2
The correct advise , if you earned your money he hard way ,is keep it in guaranteed deposits or aaa bonds and trust no one.
I took on a pro advisor when I retired in 1999 and have filled every bubble since.
The danger in the Ben Stein pundits of the investing world (and there are many, in every discipline, e.g. Dr. Phil - psychology) is that their folksy stories are seen as actual information sources by those who lack the time or attention span to read an actual economics, accounting, or finance textbook or those who distrust those traditional sources of knowledge in favor of bloggers and tips from friends, as if these were more reliable.
If you don't have a solid interest in learning about business, accounting, or finance, you should probably only invest in bank CD's rather than getting tips from some entertainer on the internet OR entrusting your life savings to a "helper" who skims 3% off the top. In that last decade, such a strategy would have beat most of the performance-chasing web columnists or investment bankers out there! Just don't try to write a column about it.
Now Ben Stein has opinions about biology? The hubris is almost as breathtaking as the fact that some people even care.
On Dec 29 11:06 AM rcs wrote:
> A fairy tale is a frog being turned into a man with the wave of a
> magic wand. Evolutionist claim, give a frog 300 million years and
> it will turn into a man - well, a fairy tale is still a fairy tale,
> frogs do not turn (evolve) into men. Sony said Cher was so stupid
> she thought Mount Rushmore was a natural rock formation (that is
> caused by time and chance). Evolutionist think man was caused by
> time and chance - I guess they are not as"smart" as Cher
The problem with debating a ID advocate about evolution is that those who argue against it are the ones who know the least about it. No where in evolution does it claim that a frog can turn into a human.
Next you'll probably break out the weary "It's only a theory" and "If we came from monkeys, why are they still here" arguments.
Feel free to join the rest of us in the 21st century at any time.
At sixty four you may want to rethink your position or at least keep your mouth shut so God doesn't hear you disrespecting Him and His faithful on his birthday.
I guess if you make money your God for 64 years you get a little nervous.
Not to wory Felix, I hear they have a Mensa chapter in Hell.
Perhaps a few too many single-malts celebrating the Winter Solstice?
2. Ben Stein's beliefs in intelligent design has no place in this forum or article.
3. What is the author of this article trying to say regarding financial news...does he not have anything substantial to talk about? The topic of this article was how disdainful Ben Stein was to Felix Salmon and does nothing to better the portfolio's of the public.
money.cnn.com/gallerie...
And I really don't care for the arrogant tone of his message.
On Dec 29 11:06 AM rcs wrote:
> A fairy tale is a frog being turned into a man with the wave of a
> magic wand. Evolutionist claim, give a frog 300 million years and
> it will turn into a man - well, a fairy tale is still a fairy tale,
> frogs do not turn (evolve) into men. Sony said Cher was so stupid
> she thought Mount Rushmore was a natural rock formation (that is
> caused by time and chance). Evolutionist think man was caused by
> time and chance - I guess they are not as"smart" as Cher
Then he proves that he's an idiot by bashing intelligent design - again showing that he refuses to take time out and learn the facts before making outlandish accusations about things! He probably knows nothing about science, intelligent design or creation, but feels like he can make a silly comment just because he has an audience.
Hey Salmon: Why don't you go back and do some real research, and then write articles that actually help the public to invest? If not, at least have the guts to go to those who you bash and debate them publicly (not just hide behind your articles here).
Much ado about nothing...
The teacher said it was physically impossible for a whale to swallow a human because she had heard on the science channel that even though it was a very large mammal its throat was very small and there was no place for a human to live for three days.
The little girl stated that Jonah was definitely swallowed by a whale because her Sunday-school teacher had informed her that marine biologists had discovered a whale with a large throat and a chamber high on its back that holds oxygen and is large enough for a human to live in.
Irritated, the teacher reiterated that she was going with the science channel and that the little girl could go with her Sunday-school teacher if she wanted to.
The little girl said, "That's fine with me. When I get to heaven I'll be sure to ask Jonah."
The teacher asked, "What if Jonah went to hell?"
The little girl replied, "Well then, you can ask him."
THis is truly a great message that readers should take to heart at this time of year! This week, while everyone is thinking of their New Years Resolutions, I believe they should be related to this article and take the shape of learning from mistakes and being a better person, rather than making more money than last year.
Stein also states in the article, "We are more than our investments. We are more than the year-to-year or day-to-day changes in our net worth. We are what we do for charity. We are how we treat our family and friends. We are how we treat our dogs and cats. We are what we do for our community and our nation. If you had $100 million or $100,000 a year ago and now have a lot less, you are still the same person."
Again, anyone who needs a little boost in confidence should definitely look up and read the full article. Kudos to Ben Stein for being able to step back and write such a timely article.
How can a male understand pregnancy unless he actually has been so. And how can Felix understand a higher power unless he has experienced such.
And since Felix probably hasn't experienced a HIGHER POWER [and probably never will] it is then foolishness for Fexis to belittle Ben's Belief.
Felix if you would check the Doctorine of Election, you would probably find that have not been "chosen" and you should conclude that it probably will not happen. However, there is always a chance eh?
Ben's belief in a HIGHER POWER (God) should be considered by anyone of some intelligence as an experience. If, Felix, you haven't experienced something, what possible rationale could you use for saying it didn't happen? If, Felix, you haven't experienced pregnancy, how could you say it isn't real? Is it because you cannot see God that it makes Him a fairy tale?
Since, Felix, since you haven't seen a headache, does it mean it doesn't exist and it a psychosomatic symptom? (Not real but perceived as so)
Felix - if you do not believe in God that is your privilege. However, accusing someone (Ben) who has experienced God as believing in fairy tales basically shows your lack of basic logic and places you in the group of fools.
www.youtube.com/watch?.... copy and paste to your web browser , or click on my website
But then I learned of his rejection of evolution and acceptance of intelligent design, which is not accepted by the vast majority of scientists. This tells me that Mr. Stein is willing to express and support opinions in areas where he has no competence. Which makes all of his positions suspect.
So I no longer read Ben Stein.
On Dec 29 11:59 AM Lexxy wrote:
> Let's settle this once and for all. Read this column published in
> Aug 2007. Stein basically pooh poohs the whole sub-prime mortgage
> crisis saying that losses amounted to only 37B and was basically
> a minor speedbump for the market. Had no idea that mortgages were
> packaged and sold as CDOs and way overleveraged. Furthermore, he
> was calling for the average investor to go long near the very peak
> of the market, and if you had following his pollyannish advice, you
> would be down >35%.
>
> money.cnn.com/gallerie...
>
>
> And I really don't care for the arrogant tone of his message.
On Dec 29 11:59 AM Lexxy wrote:
> Let's settle this once and for all. Read this column published in
> Aug 2007. Stein basically pooh poohs the whole sub-prime mortgage
> crisis saying that losses amounted to only 37B and was basically
> a minor speedbump for the market. Had no idea that mortgages were
> packaged and sold as CDOs and way overleveraged. Furthermore, he
> was calling for the average investor to go long near the very peak
> of the market, and if you had following his pollyannish advice, you
> would be down >35%.
>
> money.cnn.com/gallerie...
>
>
> And I really don't care for the arrogant tone of his message.
On Dec 29 12:41 PM Futuremillionaire wrote:
> "They Told Me He Never Lost Money" by Ben Stein was a fantastic article
> and it was written at a great time. The underlying theme of the article
> was to tell the readers to learn from their mistakes, as well as
> money does not make or break a person. Felix Salmon and Chris B.
> pointed out all of the wrong parts of this article! Stein even says
> "My point is not that I was so smart. I am not and I was not. Mistakes
> are a big part of my life. My point is that, as humans, we seem unable
> to learn from our mistakes very well."
>
> THis is truly a great message that readers should take to heart at
> this time of year! This week, while everyone is thinking of their
> New Years Resolutions, I believe they should be related to this article
> and take the shape of learning from mistakes and being a better person,
> rather than making more money than last year.
>
> Stein also states in the article, "We are more than our investments.
> We are more than the year-to-year or day-to-day changes in our net
> worth. We are what we do for charity. We are how we treat our family
> and friends. We are how we treat our dogs and cats. We are what we
> do for our community and our nation. If you had $100 million or $100,000
> a year ago and now have a lot less, you are still the same person."
>
>
> Again, anyone who needs a little boost in confidence should definitely
> look up and read the full article. Kudos to Ben Stein for being able
> to step back and write such a timely article.
Who says most scientist disagree? Could you give us a tally which you must have of who is for and who is against? Since when does a man's religious beliefs disqualify him.
On Dec 29 09:08 PM RCharles wrote:
> For a while I enjoyed reading Ben St?ein columns and sometimes agreed
> with his view/analysis.
>
> But then I learned of his rejection of evolution and acceptance of
> intelligent design, which is not accepted by the vast majority of
> scientists. This tells me that Mr. Stein is willing to express and
> support opinions in areas where he has no competence. Which makes
> all of his positions suspect.
>
> So I no longer read Ben Stein.
As I read the article, I kept wondering, "What's the point?" When I had finished,
and finished reading the comments, I wondered, "Does this guy Salmon get PAID for writing pointless drivel like this? And if so, who is stupid enough to pay him?"
Whether one agrees or disagrees with either Salmon or Stein, or both, or neither, Salmon can't come close to Stein as an interesting and literate writer on economics and money.
In addition, and pleasingly, the literacy level of the comments was in general a lot higher than that of the usual comments on Seeking Alpha posts.
And right or wrong,
Felix. Let it go. You are angry and alone in the cosmos. Practice the tolerance you and your ilk hold so highly. Your issues are your own. It's not Ben. See Ya.
On Dec 29 07:57 AM CLH wrote:
> If you have nothing to say except a personal put down, its best if
> you write nothing.
Same opinion here - he is just another very random commentator, with a very famous father - otherwise, he would be a COMPLETE nobody - but the Wall Street hype and BS machine loves people like Stein - he keeps the audience confused, engaged, and trading, so that more money can be sucked out of their accounts by the Lamperts, er, excuse me, lampreys.
Now here's a good one - Jimmy Johnson, former coach of the Dallas Cowboys (and he was a really good coach, no doubt about that) is now hawking himself as an investment guy on TV ads in Dallas!!
I guess if ex-baseball players, hack actors, former bribe-pocketing Congressmen, and now ex-football coaches can give investment advice, what's next - Suzanne Somers?
At first, I gave him the benefit of the doubt, but I quickly found him to be a good contrarian indicator. Whatever he suggests happened or will happen, you can probably bet the opposite was or will be the truth.
Same with this story. Ben tries to frame it as a, "see how smart I was" but the author is completely correct in interpreting it otherwise.
Ben Stein's mind is a hall of mirrors.
As I said in my previous post, Ben is a good contrarian indicator.
The author's comment regarding Intelligent Design is also highly pertinent: Intelligent Design was itself designed to deceitfully get around laws against injecting Creationism into the public schools (such attempts run afoul of the First Amendment).
In other words, Ben Stein is just exactly the kind of person who manages to be both clueless (right at the peak!) and essentially deceitful. His support of I.D. is consistent with this.
The author's argument being thus supported, the comment was pertinent.