If Bernie Madoff had invested in Berkshire Hathaway, would the ponzi actually have succeeded?
I could be wrong, but I doubt that Bernie started out with any intention of defrauding anyone, really.  I suspect it began the first time he hit a quarter when his returns were lower than everyone else's, or at least not as high as he'd promised his investors they'd be, so he fudged the numbers and lied to get past the moment, thinking he'd just make up for it the next quarter.  Only that never happened, and so the lie carried forward and maybe grew as things didn't improve as he expected. It only turned into a ponzi because he wasn't as successful at investing as he was telling his investors he was, and telling the truth would have meant the probability that he would have lost most of his clients as they went elsewhere.  Bernie couldn't admit the truth, so he had to keep up the fiction by actually paying out returns that didn't exist, which required constantly finding new money to cover what he was paying out.  The source of that money turned out to be new investors who were lured in by people already investing with Bernie who told them how great he was as a financial wizard, and they had the checks to prove it. I think this got so far out of hand, and it gradually dragged more and more people in because such things turn into black holes, swallowing up everything that gets close. Had the 2008 financial crisis not hit then Bernie might still be at it.  The rapid downturns in the markets hit many of Bernie's investors with margin calls in other investments they held, so they requested redemptions from him to cover their calls, expecting that all of the money he'd convinced to leave with him really existed.  When he realized he couldn't meet the flood of redemptions, that was when he 'fessed up and the bubble burst. Could he have succeeded by simple investing in Berkshire?  Probably.  But then how many people say that in hindsight about them or Amazon or Google, or any number of other stocks that turned out similarly? (grin)  Taking people's money and parking it all in one stock doesn't make you a genius, and that's how Bernie wanted to be viewed.  To accomplish that, he needed to find the opportunities nobody else saw and be the one to get there first.  Unfortunately his personal crystal ball was wrong, and rather than taking his lumps by admitting it to his investors, his pride and ego led him down a path of deception that I'm sure he had every intention of making right if he could.  The problem was, that moment never came. Keep in mind one thing:  The $64 billion figure everyone cites isn't money that really existed in the first place.  That number is what Bernie claimed his fund was worth, and it is not the amount he actually defrauded people out of.  His actual cash intake was probably somewhere in the $20 billion range over that time.  Everything else beyond that was nothing more than the fictionalized returns he was claiming to get for his clients.  It's what they thought they had in the bank with him, rather than what was really there.
Successful people run into bad situations all the time.  Instead of giving up, they work around it and find a way to succeed anyway. You don't see how many failures a successful person actually had before succeeding, which is why you are attributing it to luck.  As an example, the South park guys were rejected 10 times before finally getting accepted. "All the ""money"" you might receive from a pyramid scheme is ""ill-gotten gains"". Even if you didn't know it was a pyramid scheme. If through deliberate planning or dumb luck, you manage to get more money out of a pyramid scheme than you put in, the government can sue you for any ""profit"" you made.  For example, in the Bernie Madoff scandal, more than 1,000 people, funds and institutions were sued for the excess money they made above their initial investment. Suffice to say, if you make enough ""profit"" from a pyramid scheme to materially change your life, it's only going to last until the scheme collapses and the government comes after you for the excess." "Even though this is really a psychology question, I'll try to give you an answer. You do nothing but stay away.  What's going on is too small to matter. Bernie Madoff took investor's money and scammed them for $15B. That's B, billion, 9 zeros (Yes, I realize the UK Billion has 12, these are US Billion). Harry Markopolos was on to him, and presented his evidence to the government, but ""No one would listen."" In quotes because that's the title of the book he published on his experience. Even Barron's had an article suggesting that Madoff's returns were impossible. Eventually, it came to light. In my own experience, there was a mortgage acceleration product called ""Money Merge Account."" It claimed to help you pay off your mortgage in a fraction of the time ""with no change to your budget."" For two years or so, I was obsessed with exposing this scam, and wrote articles, nearly every week discussing every aspect of this product. Funny how even though mortgages are math that's pretty easy to explain, few sellers wanted to talk about the math. Using the same logic that you don't need to understand how a car works as long as you know how to drive. There were some people that would write to tell me I saved them the $3500 cost of that product, but mostly I argued with sellers who dismissed every word I wrote as if the math were incomprehensible to anyone but the software guys who wrote it. In the end, I had compiled a PDF with over 60 pages of my writing on the topic, and decided to call it quits. The product was recycled and now is sold as ""Worth Unlimited,"" but the software is the same.  This is all a tangent to your problem. It simply offers the fact that the big scam, Bernie, continued for a long time, and people who were otherwise intelligent, fell for his promises, and didn't want to believe otherwise. The mortgage software had many bloggers writing. Searching on the web found a lot of discussion, very easy to find.  People will believe what they wish. Tell an Atheist that God exists, or a believer that He doesn't, and your words will fall on deaf ears. Unfortunately, this is no different." /u/Dexter0_0 - Additionally, nominal dollars should be adjusted for inflation using the [core PCE price deflator](https://fred.stlouisfed.org/series/DPCCRG3A086NBEA). For instance, $5,000 in 1944 (when Mr. Buffett was 14), would feel like $48,000.  /u/jaasx - the trailing off in the later years is more likely do to the difficulty of earning high rates of returns on large piles of money (i.e. diminishing marginal returns). [Here are Mr. Buffett's own words](https://valuebin.wordpress.com/2011/01/27/warren-buffett-on-investing-small-sums-of-money/), and can be seen in the stock price of Berkshire Hathaway (appreciating more slowly in recent decades than in the '70s &amp; '80s). &gt;Warren Buffet (although his son seems to be very competent and grounded, to some degree).   Warren buffet is not being succeeded as CEO by his son. One son is a sheriff in Illinois and the other is an artist. Jain or Abel at Berkshire are most likely to take over when he passes the torch. Based on several of the comments, I can foresee a situation in which an activist investor kicks in a lot of his own money, which, along with funds from kickstarter and possibly some of the investor's buddies, are enough to purchase a major share in a large bank, and by persuading other sympathetic shareholders, they are able to make headway in changing the industry. While improbable, it would at least be plausible. "If AIG wasn't bailed out by the US Government, Warren Buffet would be the greatest **RICHES** to **RAGS** story ever.  I can see why he promotes paying more taxes and is so willing to ""betray"" his own ""class"" on behalf of the USGov.  It's because he's in the crony capitalist class post AIG bailout and tax dollars are the only reason he isn't greeting people at WalMart." "I am strongly skeptical of this.  In fact, after reading your question, I did the following: I wrote a little program in python that ""simulates"" a stock by flipping a coin. Each time the coin comes up heads, the stock's value grows by 1. Each time the coin comes up tails, the stock's value drops by 1.  I then group, say, 50 of these steps into a ""day"", and for each day I look at opening, closing, maximum and minimum. This is then graphed in a candlestick chart.  Funny enough, those things look exactly like the charts analysts look at. Here are a few examples:    If you want to be a troll, show these to a technical analyst and ask them which of these stocks you should sell short and which of them you should buy. You can try this at home, I posted the code here and it only needs Python with a few extra packages (Numpy and Pylab, should both be in the SciPy package). In reply to a comment from JoeTaxpayer, let me add some more theory to this. My code actually performs a one-dimensional random walk. Now Joe in the comments says that an infinite number of flips should approach the zero line, but that is not exactly correct. In fact, there is a high chance to end up far from the zero line, because the expected distance from the start for a random walk with N steps is sqrt(N).  What does indeed approach the zero line is if you took a bunch of these random walks and then performed the average over those. There is, however, one important aspect in which this random walk differs from the stock market: The random walk can go down as far as it likes, whereas a stock has a bottom below which it cannot fall. Reaching this bottom means the company is bankrupt and gets removed from the market. This means that the total stock market, which we might interpret as a sum of random walks, does indeed have a bias towards upwards movement, since I'm only averaging over those random walks that don't go below a certain threshold. But you can really only benefit from this effect by being broadly diversified."