Part 8/11:
While Madoff perpetuated his scheme under the guise of a unique investment strategy, mathematical analysis clearly indicated the improbability of his claims. Experts pointed out that legitimate investment returns fluctuate according to real market conditions. However, Madoff’s reported returns were eerily consistent and remarkably smooth—an inherent contradiction of authentic investment scenarios.
Analyzing Madoff's claims, mathematicians investigated his reported average annual return of approximately 10.59% against benchmarks like the S&P 500 and genuine split-strike conversion strategies. What they discovered was alarming; the sharp ratio—measuring returns relative to their associated risk—was extraordinarily unrealistic, indicating that his claims were inherently flawed.