CM in MA

Where Is Madoff's $50 Billion?

The thrust of the article is spot-on. We may never know how much Madoff took in, what returns he was able to generate, or where the money went. However, if I'm correctly reading the scenario provided to prove these points, then the calculations are off a bit.

$2 billion compounded at 12% for 20 years is not $9.6 billion, but $19.3 billion. A calculator is unnecessary to realize $9.6 billion isn't in the ballpark. At 12% for 20 years, the starting figure will double more than 3 times, putting the result north of $16 billion.

The $40.4 figure is correct if it is assumed the funds were taken in at the beginning of each year. If they were not, that figure could be as much as 10% lower.

In sum, the given scenario provides for just shy of $60 billion, which would mean the phantom return rate would have to be lower than 12% if the $50 billion figure is accurate.

So again, the point of the article seems correct, even if the calculations aren't quite right.