Posted 6:53 AM by steve

FINALLY, an article that points out that the "true amount lost by investors may be between $10 billion and $17 billion and the larger estimates by Madoff include the false profits prosecutors say he generated with tens of thousands of bogus account statements cataloguing steady profits.

As I've said before, if you invest $1,000 in a stock, that is the most you can lose. It doesn't matter if the stock goes up to $100,000 before crashing to zero, the most you can lose is the amount you've actually ponied up.

Yes, you have also lost the opportunity to have made $99,000 by selling your stock before it crashed, but the loss of an opportunity is NOT the same as a real loss. By not buying Microsoft and Google and Intel and Apple when they first went public, I lost the opportunity to make millions and millions, but I didn't lose any money, my bank account had just as much money in it as before.

The ONLY exception is for entities that report earnings; to the extent they previously reported (and quite possible, paid taxes on those earnings) profits, they now have to recognize a loss equal to the amount of the investment they were carrying on their books. But this is still just a paper loss, even these investors are out no more than the amount of the checks they wrote to Madoff.

It's nice to see at least two reporters show that they get it. Kudos to Larry Neumeister and Tom Hay of the Associated Press for showing that not everybody in that organization is an idiot when it comes to understanding and reporting business news.