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9:00 AM EST, Wednesday, May 13, 2009. The worst investing mistake you can make is to pile good money after great money. An investment is doing great. So you put more money into it. Wrong. Take money out. Keep your allocation steady. What was last year's great investment will be this year's bust. I speak from bitter experience, having put much to much money into commercial real estate when times were wonderful.

Madoff's lesson for our own investing. Last night PBS ran an hour special on Madoff. The investor interviews were sad. Madoff was brilliant. He swore everyone to secrecy. If you questioned anything, he'd say, "If you don't like what we're doing, I'll send you your money back." That was enough to intimidate everyone into staying, and sending more.

The overwhelming message was that no one did any real due diligence on Madoff, especially the feeder funds that channeled billions into Madoff. They spent their time rounding up investors, and pocketing gigantic fees for their efforts. They did no due diligence. Some of the feeder funds were schlocky -- essentially Madoff creations -- but others were the creme de la creme of the European (especially Swiss ) investment world. Nobody did any due diligence. They lived for the fees.

Virtually all of of them never told their investors where they were putting their money, i.e. with Madoff. In fact, Madoff specifically told them "Don't put me in your prospectus."

In short, most of the investors didn't know what they were investing in. They trusted the funds. But the funds didn't know (or care). They were rolling in gigantic fees. And the SEC was looking the other way. Interestingly, if you're advising on investments and have 15 or more investors, you have to register with the SEC. Madoff had thousands, but never registered with the SEC. You'd think the Feds could have at least figured that one out.

The irony is that Madoff's Ponzi scheme could easily have continued for another 20 years -- had it not been for last fall and the flood of redemptions, which were not caused by Madoff but by other honest funds falling apart.

You can watch the entire Frontline Bernie Madoff program.

The downturn in global trade is frightening. Two stories today:

+ U.S. railroad freight traffic is running about a fifth lower than a year ago. It is one of several less-obvious indicators that all isn't well, despite the financial-market rally since early March. The slump in weekly rail traffic reflects sluggish industrial activity and consumption. Shipments of industrial products are down almost a third in the past year, while raw materials like coal, metals and crops also show steep drops. The pace of decline has picked up relative to the first quarter's 16% fall.-- The Wall Street Journal.

+ One of the largest fleets of ships ever gathered idles here just outside one of the world’s busiest ports, marooned by the receding tide of global trade. There may be tentative signs of economic recovery in spots around the globe, but few here.

Hundreds of cargo ships — some up to 300,000 tons, with many weighing more than the entire 130-ship Spanish Armada — seem to perch on top of the water rather than in it, their red rudders and bulbous noses, submerged when the vessels are loaded, sticking a dozen feet out of the water.

So many ships have congregated here — 735, according to AIS Live ship tracking service of Lloyd’s Register-Fairplay, a ship tracking service based in Redhill, Britain — that shipping lines are becoming concerned about near misses and collisions in one of the world’s most congested waterways, the straits that separate Malaysia and Singapore from Indonesia.

The root of the problem lies in an unusually steep slump in global trade, confirmed by trade statistics announced on Tuesday.

China said that its exports nose-dived 22.6 percent in April from a year earlier, while the Philippines said that its exports in March were down 30.9 percent from a year earlier. -- The New York Times.

Buying a new flat-screen TV? I love Samsung TVs. I saw their new LEDs last night. They're spectacular. They're just under two inches deep, perfect for the wall. But Samsung tells I should wait a few months. They have even more spectacular ones coming.

The Wall Street Journal for $99 a year. Reader Rick Wymore received a 52-week renewal to his Wall Street Journal subscription for $99, plus one dollar more for a year of SmartMoney. His "professional courtesy discount" showed that others were paying $759 for the same 52 weeks! (There are really dumb people in the world.) He emails me,

"I am not a teacher or student, just a struggling business owner. Professional courtesy my ass, it's just a way to keep subscription numbers up to bring in the high priced ads. Like you say, print is in big trouble."

Rick believes he got his discount because he is handsome.

Lesson - 1: Don't pay more than $99. Do not pay the $349 they offered as a renewal to me. Or the $759 that rich morons pay.

Lesson - 2: Professors and students (and lucky struggling business owners out west) pay only $99.

Lesson - 3: But free is the best. You really don't need a print subscription to the Wall Street Journal. You can read it all online and via the free emailed newsletters they send you.

How to get Word to open your last file. Right click on your Word shortcut. Left click on Properties. And add a space and the word /mFile1 after the target -- where you see WinWord.exe.

Where in the world are the Zhivagos now? God bless Google. Give it a few coordinates and it will find you in the middle of nowhere. Here is where my intrepid yachting friends are now. I find this whole thing so far out that it's become fascinating.

Meanwhile there's adventure out there. They broke a pole holding up a sail, which then fell partly overboard. But they got the sail back. Reports the email:

"The trick, as Philip said to me several times, was to not tear it - and not to fall overboard while trying to get the sail up..The tough part at the end was the hoop and its sail sock -- which were acting like a sea anchor. That's something you put in the water when you're in really heavy weather and you want to slow the boat down. The real sea anchor we have is more like a parachute, but there are bucket-like sea anchors. That's how the hoop and sock were behaving. There was a lot of pressure on the hoop and sock, and we didn't want to damage it as we brought it up. So we worked with the surges as the waves came under the boat, and got it on board.

"Things are getting pretty salty. There's a salt film on just about everything, so you end up using towels and tea towels on the cushions and chairs. Otherwise, the wind is continuing to hold, and we are making our way northwest or southwest, depending on the wind direction."

Anyone know where this is? Or is it Photoshop? Someone's fantasy? I want to play there.

Be grateful for where you live. My friend grew up in Zimbabwe, served in the army, bought property, bought materials to build his dream house. Then it all fell apart. He now lives in South Africa. We hadn't heard from him in eons. Then, an email:

I'm afraid that living in my part of the world means that stability and security are a not to be taken for granted. Zimbabwe is a sad tale of woe, but that's all I can say...MANY thousands have died at home, all at the hands of POL POT type militia set up by Mugabe's secert police and army and he has buckets of blood on his hands. He refuses to even acknowledge any of it and publicly refused to apologise for ordering it all originally.....and still he's allowed to travel to the UN. We don't even talk about it now....as he will continue to do all of this regardless. The western governments, let alone his fellow African leaders still will not censure him or curtail his movements...effectively.

Favorite recent New Yorker cartoons:

It's a beautiful day in New York. Now, if only we all didn't have hay fever.


This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.