My mother’s father, who died long before I was born, reared seven children as a desperately poor widower who had been crippled by polio as a child. As mom tells it, he hobbled door to door on crutches, selling razor blades, pencils, sewing thread—anything that everyone needed but could be carried in a small case. She said he was given to getting up on a soapbox when he observed well-to-do people doing stupid things. “Educated fools!” he’d rail. While his grade-school education probably did not make him familiar with the term “oxymoron,” he had coined a pretty good one.

I can imagine his reaction to news last week about all the institutions and well-known business figures who learned that they’d been victims of one of the oldest cons on Wall Street engineered by alleged investment wizard Bernard Madoff, who admitted, as the cuffs were slapped on, to losing up to $50 billion. Boasting of 8-12% returns, Madoff “invested” money from university endowments, owners of sports teams, retired Wall Street executives, and other hedge funds. What he really was doing apparently was paying those returns to earlier investors with money he took in from new investors. With the market collapse this year, enough clients wanted out at the same time that his fraud was exposed.

Anyone can be a victim of fraud. The stupid part, the part that qualifies these victims as “educated fools,” is that they violated the oldest rule of investment, formulated, I believe, by the Easter Bunny: “Never put all your eggs in one basket.” Some of Madoff’s pigeons gave him a majority of their life savings. One operator of a fund of funds placed almost all of the $300 million in assets she managed with Madoff, graphically violating the concept of a fund of funds. “I’m wiped out,” she said simply. At least two large banks marketed his funds. Madoff rode a reputation as a Wall Street investor since 1960 and a former chairman of the NASDAQ stock exchange to a position of assumed trustworthiness,  leading acquaintances to write checks with only the thought of getting a slice of his high-return pie. The individual investors  who were fleeced were wealthy people whose millions apparently weren't enough. A trader I once worked for, a guy who had made and lost at least two fortunes, used to say, "Enough is never enough."

So greed grinds its grist again. A cliché we learned early and often as analysts on the Street is recalled: “Bulls make money, bears make money, but pigs get slaughtered.”

Grandpa would have appreciated that one.