Even Ponzi tried to be legit. A brief review of "Ponzi's Scheme" by Mitchell Zuckoff

I had finished the book "Ponzi's Scheme" by Mitchell Zuckoff recently and decided now to get a brief review of it up.

I found the book a very interesting read and worthwhile reading to anyone who is involved in trying to make money in high yield promised income or who wants to get rich quick. What you see shown in the book is the era of the roaring 20s where people were money mad and people schemed to get rich. Into this enters Charles Ponzi. He was an immigrant with big dreams of becoming rich. Along the way, he gets in trouble with the law, and thrown in prison. He gets out and still schemes and dreams. He is a man of the people, charismatic and popular.

Along the way, he believes he finds his answer in some European postal coupons called International Relay Coupons. He decides to capitalize on exchanging them in America for cash and returning them for huge returns. But, due to his lack of money, he decides to borrow money from others, and promise them a return of 50% on their money after 45 days. He thought he had it locked up, but had some loose ends. Well, postal officials get ahold of this and shut the acquiring of these coupons. While it wasn't illegal, it was unconventional and questionable. Ponzi is stuck. Rather than return the principle, he tries to buy time and get other ways to make money to pay back the investors, using their own money to pay previous investors. Then he is tripped up, and the house of cards collapses and all "Rob Peter to pay Paul" scams get named after him, eventhough that isn't what he was planning from the beginning. In this, as the book points out, Ponzi was a get rich quicker, and not a scammer. He desired to get rich quick, and wasn't looking to intentionally rip off people.

As a person seeking to make money and gain financial freedom, there is several lessons you can learn from the book:
1. People can sincerely mean well, and sound sincere, but can have a business plan that won't work. It doesn't matter if the intention is pure, the market is its own reality.
2. People invested with Ponzi because he was paying. Just because a program is paying, doesn't mean it will keep paying forever.
3. Ponzi made himself a man of the people, and was very popular, and charismatic. Just because someone is charming and speaks on success, doesn't mean what he is offering is good.
4. Ponzi was a bit vague with the how to's on how he made money to investors. A common theme I notice in all high risk, get rich quick, HYIPs, autosurfs, or any other normal return programs is they are vague with how they do it, and you have no access to their financials as you would with normal investing.
5. Ponzi called in an audit to buy time. I have noticed that with all high risk programs there tends to be delays, hiccups and excuses give for things being delayed.
6. Ponzi promised 50% return after 45 days. This was considered unrealistic. What is interesting is today opportunities will promise returns even larger than this. A reason why such large returns are unrealistic is that markets tend to drive down the returns on investments and value them based around the risk level. In cases where information is incomplete, or someone possesses special knowledge, they can get returns larger than normal. However, expecting more than 50% return over more than 45 days is likely a red flag. As of now, I don't know anything that works that gets returns in this ballpark.
7. Get rich quick schemes go back as far as man has been around and had the idea of wealth.
8. There is a difference between people who want to get rich quick and peddle these schemes and scammers.
9. If someone shows airs of success and is paying, people will flock in droves to the person, amplifying the appearance of success.
10. People will launch opportunities before the problems are worked out, and hope to fix them later. And, despite these problems, people will buy into the opportunities. If you have seen prelaunches that go on FOREVER, you may recognize this. Individuals have had sudden brainfarts and out have come a new opportunity they are pushing.

There are other lessons one can get from the book, but these are off the top of my head. I recommend anyone interested in making money to get ahold of this book, particularly if you are playing in the area of HYIPs, autosurfs, or any other high risk program. At least you will learn what a real Ponzi scheme is, as opposed to just a rob Peter to pay Paul one.