There is a saying old saying among poker players: If you can't identify the mark at the table, you're probably him. The mark is the sucker. The guy who is caught with enough money to play, but not enough sense to keep it.

With Worldcom, state government was the mark. The company figured that Mississippi was in such need of a major corporate player that it would delude itself into believing whatever the company pedaled. Need a major loophole in state tax law, go to the legislature. Need approval of a questionable tax scheme, talk to the tax commission. No one will look deeper. We're Worldcom. They need us. It is this latent fear that Worldcom may leave that made Mississippi the mark. Worldcom knew it and exploited it.

The marks in the most recent financial meltdown were in many cases the same sort of institutional investors which lost millions of dollars in the Worldcom and Enron securities frauds of just a few years before. How could this be? I suspect we will find that most institutional investors suffered from a heavy dose of delusion, sprinkled with a dash of greed.

Psychologists describe a condition known as "cognitive dissonance", which is our ability to morph reality into our belief system, as opposed to allowing our belief system to be shaped by reality. I suspect most institutional investors had convinced themselves that the problems of a few years before were the result of a few bad actors, and were not systemic or endemic. I also suspect that just like gamblers chasing losses at the casino, many institutional investors were seeking higher returns in riskier investments in order to get back to their baseline.

The lesson to be learned is this: when investing money, time, people or otherwise, manage your risk carefully. Appraise your investment carefully. Be honest with yourself about what you really know. If you do all of these things and still fall short, you have taken a calculated risk and come up short. There is honor in that. If you take a risk without doing these things, you're the sucker at the table.