The following was posted to the comments section of the Buttonwood column in the January 7, 2012 issue of The Economicst.
The following story is from an article on hedge funds in the The Economist of November 16, 2006.
THERE is an old Wall Street story that can be adapted for the modern world of hedge funds. A young hedge-fund trainee is taken to the harbour. “Here”, says his boss, “are the partners’ yachts. And over there are the yachts of the bankers who lend to us.” The naive youth replies: “But where are the customers’ yachts?”
This story should probably be issued as a warning to anyone who trusts somebody else to look after their money.
(The author of this comment has a web log on economics at https://economics102.wordpress.com/)