Topics

• The Limits of Trust. The Bernie Madoff scandal in 2008 cast new light on an age-old challenge for investors, financial professionals, and regulators. Too often, our psychological and procedural defenses are set up to detect threats from the outside—burglars, hackers, corporate espionage attacks, fraudulent robo-callers, strangers in our midst. But how do we defend ourselves from the trusted criminal—the admired and respected high-achiever who wins our trust, and then betrays us? A better understanding of how Madoff's fraud worked can inform a smarter approach to this hazard for all investors and for everyone trying to keep investors safe from such predators.
• The “Black Monday” Market of Today. The 1987 stock market crash, still the worst single day in Wall Street history, exposed the extraordinary changes that permanently reshaped the financial landscape in the early 1980s. These were a) the birth of financial derivatives in Chicago, b) the burgeoning size and herd-like instincts of pension funds and other new arrivals in the equity and derivative markets, c) the escalating use of high-speed computers to both deliver market orders and design market strategies, and d) the growing fragmentation of the formal market regulatory machinery. But despite the near-death experiences of Black Monday, when the Dow fell a paralyzing 22.6 percent in one day, little was learned and little was done to address those new elements of risk—as subsequent crises, including the 2008 meltdown, have shown. As a result, we are just as vulnerable today to the dangers we faced in 1987.
• The Criminal With a Thousand Faces. Ponzi schemes, which exploit our deeply human (and profoundly essential!) instinct to trust one another, are a perennial threat to investors. One data website estimates that, since 2002, a new Ponzi scheme has surfaced every five days! A review of the colorful history of this crime shows that much of what we think we know about Ponzi schemes is obsolete in the post-Madoff era. Diana cuts through the swashbuckling fables and movie-plot cultural baggage that surrounds these con men, and provide some practical ways to deter the Ponzi schemers in our midst.
• Why Financial History Matters. Even among fans of popular history, far too little attention is paid to the financial side of history. And yet there is no way to fully understand our political history without “following the money.” And “the money” was in the marketplace! As an amateur financial historian, she introduces general audiences to the colorful characters, hair-raising adventures, and eternal relevance of America's financial history. In doing so, she makes the case for making it a bigger part of our national conversation. This draws on research for all her books, including “Fidelity's World,” a history of the American mutual fund industry, and “The White Sharks of Wall Street,” an account of the “original corporate raiders” of the 1950s.