What do billionaire investor Warren Buffett and alleged Ponzi schemer Bernie Madoff have in common? One blogger recently noted that they both manage money, have claimed outstanding returns, and kept their investing strategies to themselves. The blogger said that if he had heard Buffett's sales pitch back in the 1960s, he wouldn't have signed up, because he would have been wary of the secrecy and the apparently too-good-to-be-true returns.

I think most of that makes sense. Being wary of secrecy seems smart. Not trusting things that seem too good to be true also seems smart. Unfortunately, there are always exceptions. Whereas Madoff's scheme has imploded, taking many fortunes with it, Buffett's company, Berkshire Hathaway (NYSE:BRK-A), has racked up a compound average annual gain of 21% between 1965 and 2007. Along the way, Buffett has made defining investments in Coca-Cola (NYSE:KO) and Washington Post (NYSE:WPO), with more recent forays into companies such as Wells Fargo (NYSE:WFC) and ConocoPhillips (NYSE:COP).

So what's the difference between Buffett and Madoff? Honesty and integrity. You can see Buffett's great candor in his detailed annual letters to shareholders. I don't think Madoff's investors were treated so much like partners.

Note also that Buffett's early sales pitches were generally made to family and good friends, people who knew him. They weren't investing their money with a stranger. Later, he expanded to friends of friends, but again, there was always a connection. If you're relying on someone else to make buy and sell decisions with your money, make sure you find advisors you can trust.

Finally, it's important to diversify. I want to think that I'd have responded positively to Buffett's pitch years ago, if I'd been lucky enough to receive it. But I think that at most, I would have invested some of my money with him. In general, we shouldn't keep more than 10%, or at most 20%, of our nest egg in any one place. Unfortunately, that doesn't seem to have been the case for many Madoff investors, who lost entire fortunes. If they'd had just 25% of their assets with him, they'd have been left with 75%, and at least they wouldn't have been wiped out.

Remember that even wonderful public businesses can go through tough times -- and take your money with them. Eastman Kodak (NYSE:EK), for example, is down 86% over the past decade. Chico's FAS (NYSE:CHS), once a wonder-stock, is down more than 90% in just the past three years. Never put all your eggs in one basket -- or all your trust in just one manager.

Longtime Fool contributor Selena Maranjian owns shares of Berkshire Hathaway and Coca-Cola. Coca-Cola and Berkshire Hathaway are Motley Fool Inside Value recommendations. Berkshire Hathaway is a Motley Fool Stock Advisor selection. The Fool owns shares of Berkshire Hathaway. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.