I write today on those apparently hugely successful individuals who make a lot of money in "sure" things that pay abnormally high rates of return, and you would swear they have a lock. You may of seen these types (hint: they usually hang out in HYIP forums and running their schemes on the bottom as signatures). They pitch their money making opportunities, and show how much you they make. Charles Ponzi was a prime example of that type of person. I am not going to speak on their opportunities, per se, but how they operate.
Want to know how these individuals get a lot of money? They know how to sell and market. They build huge lists, and collect referal commissions off people who sign up. Often times they will take all or some of the money out of their opportunities, and walk off with a HUGE profit in the process. In their case, unlike the other people, it doesn't matter if the opportunity crashes or not, they made their money.
Such individuals are very seductive. You can swear they have the Midas touch, and you can't go wrong. Well, guess what, they don't get rich with their own money. They will get rich off other people's money. They will often test an opportunity enough to see that it is persuasive, and their primary concern is that it sells well, rather than it is solid investment.
The Get Rich Quick Promoter is a prime example why you don't blindly look at earning statements or what they are doing and believe that they tell you things that are a lock for yourself. People can make money in these get rich quick schemes early. It is the long-term that counts. And, I do NOT mean that the person you are dealing with has been doing it a long time, just his opportunities are sustainable long term. Ponzi riders who jump from Ponzi HYIP to Ponzi HYIP are prime examples of this also. These promoters feel NO remorse that you lost money following their advice either. They believe it was your fault that you listened and trusted them to begin with.
I will add one more comment in closing here regarding actual investment opportunities. Some do have a limited time window to them, and do require time to act. Some investment opportunities do have a limited shelf life.
Showing posts with label get rich quick. Show all posts
Showing posts with label get rich quick. Show all posts
Friday, May 25, 2007
Friday, May 4, 2007
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.
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.
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