Risk

Felix Salmon says that "you can't simply look at Madoff's astonishingly regular returns and conclude that he was stealing money. In fact, it's quite easy to replicate those returns entirely legitimately." He concludes:

If Madoff is causing a crisis of confidence in the markets, it might be for this reason: that he's driven home the fact that you can never know for sure that your money is safe and that it will be there tomorrow. That's always a good reason not to invest in hedge funds, even when fraud isn't a problem at all. And it's a problem which even the most perspicacious fund-of-fund manager can't get around.