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Message
Coworker was propositioned with a ponzi scheme....- Updated-Gets Worse
Posted on 9/4/13 at 10:09 pm
Posted on 9/4/13 at 10:09 pm
So I stop by to shoot the breeze with a co-worker and he tells me of this friend he had in college who is making a crazy amount in the stock market (25%), when the friend offered to invest his(co-workers) money and guarantee his principal for a period of 6 months, in which he would take a small cut for his services and give my co-worker the rest of the gains. I then informed him that was the very definition of Ponzi scheme.....unfortunately, my co-worker is just out of college so he is very naïve and said he is going to give the guy money. This was after I told him he was a moron for doing so.
Anyone else been approached by someone touting a deal like this?
Update: now the guy told my co-worker that he will give him $6,400 in 6 months for 4k now
Anyone else been approached by someone touting a deal like this?
Update: now the guy told my co-worker that he will give him $6,400 in 6 months for 4k now
This post was edited on 9/9/13 at 12:40 pm
9
Posted on 9/4/13 at 10:49 pm to TJG210
If he's first in it could work out well for him. Maybe.
What is really moronic is investing money in something you don't understand. He's basically giving someone a personal unsecured loan at a high promised interest rate, simple as that, with zero insight into how the gains will be maintained.
What is really moronic is investing money in something you don't understand. He's basically giving someone a personal unsecured loan at a high promised interest rate, simple as that, with zero insight into how the gains will be maintained.
Posted on 9/4/13 at 10:57 pm to TJG210
That's not the definition of a ponzi scheme, but it sounds like something that could end up being one.
Posted on 9/4/13 at 11:02 pm to Beerinthepocket
He needs to check out what the investments are, how the broker is guaranteeing those returns, and what the are the behind the scenes issues the whatever firm this guy works for.
If it sounds too god or be true, it often is.
If it sounds too god or be true, it often is.
Posted on 9/5/13 at 3:22 am to Geauxld Finger
Yeah, that may or not be a Ponzi scheme. However, it is definitely shady.
Posted on 9/5/13 at 8:33 am to TJG210
When people start guaranteeing a return in investing/trading, don't just walk, but run as fast as you can from them.
Posted on 9/5/13 at 9:08 am to TJG210
quote:
So I stop by to shoot the breeze with a co-worker and he tells me of this friend he had in college who is making a crazy amount in the stock market (25%)
25% is crazy? I made 25% the past year on my index funds.
(although that is not typical, obviously, I don't consider it crazy - that's how 8, 10, 12 percent averages work - 3% 1 year, -1% the next, 16% the 13, etc.)
Posted on 9/5/13 at 9:41 am to TJG210
I know a guy who if given 10k will give you a $500 visa gift card every month for life. I've got buddies in at 100k, getting 5k in gift cards a month for about 5 years and counting. Guy has never missed a payment, still I can't pull the trigger
Posted on 9/5/13 at 9:42 am to ItNeverRains
:|
Posted on 9/5/13 at 9:51 am to ItNeverRains
When can they get their $100k back and stop getting the gift cards?
Posted on 9/5/13 at 9:53 am to Meauxjeaux
quote:
When can they get their $100k back and stop getting the gift cards?
They can't - they bought a "gift card" annuity, I would assume.
I'm wondering if the guy isn't faking the prepaid cards - surely he would have gotten caught by now, huh? Or, he has found some exploit with a prepaid program that somebody hasn't figured out yet - maybe an extended promotion.
Posted on 9/5/13 at 10:13 am to Ace Midnight
quote:
I'm wondering if the guy isn't faking the prepaid cards - surely he would have gotten caught by now, huh? Or, he has found some exploit with a prepaid program that somebody hasn't figured out yet - maybe an extended promotion.
I might be wrong, but from what I understand about the gift card industry is that there are discounts offered to bulk purchasers. So, for instance, if you buy a shite-ton of $20 Red Lobster gift cards you can get them for like $15 each.
I don't know if the Visa gift cards work in a similar manner or not.
But this is basically how companies like Gyft.com make their money.
Posted on 9/5/13 at 10:20 am to WikiTiger
quote:
I might be wrong, but from what I understand about the gift card industry is that there are discounts offered to bulk purchasers. So, for instance, if you buy a shite-ton of $20 Red Lobster gift cards you can get them for like $15 each.
yeah its a good investment on the behalf of the retailer, red lobster in this example.
1) they know gift cards arent redeemed 100% (i dont know what the number is but i bet Darden group does)
2) even if #1 wasnt true, the gift card acts as a catalyst to get a customer in the door whom may have not come in previously. additionally, how many people spend EXACTLY whats on the gift card and nothing more? anything extra is profit that would not have been ordinarily realized.
i wonder how steep a discount this guy is getting
Posted on 9/5/13 at 10:55 am to TJG210
quote:
my co-worker is just out of college so he is very naïve and said he is going to give the guy money.
"A new college grad and his money are soon parted."
Posted on 9/5/13 at 11:56 am to Meauxjeaux
quote:
When can they get their $100k back and stop getting the gift cards?
Anytime they want. The gift cards are prepaid $500 Visa. This is all I know in terms of the agreement. But the guys that do it are all very successful and swear by this guy.
Posted on 9/5/13 at 12:08 pm to Ace Midnight
quote:
25% is crazy? I made 25% the past year on my index funds.
25% isn't unreasonable (or impressive) when you consider the Dow is up 24% from June of 2012 to today.
What should be scary is the "Guarunteed 25% return." In the stock market there is no such thing as a sure thing.
Posted on 9/5/13 at 12:45 pm to ItNeverRains
quote:
Anytime they want. The gift cards are prepaid $500 Visa. This is all I know in terms of the agreement. But the guys that do it are all very successful and swear by this guy.
how does tax work on this? Can't be legal right?
Posted on 9/5/13 at 2:01 pm to TJG210
quote:
Anyone else been approached by someone touting a deal like this?
Yes I asked a few pointed questions and they changed the subject abruptly. I like to do this to Amway etc drones too.
Posted on 9/5/13 at 2:22 pm to TJG210
quote:
So I stop by to shoot the breeze with a co-worker and he tells me of this friend he had in college who is making a crazy amount in the stock market (25%)
I'm up nearly 35% in 4 weeks.
My scheme: Buy low, sell high.
Posted on 9/6/13 at 6:59 pm to foshizzle
quote:Only a person with a screwed up moral compass would knowingly invest in a scheme that by definition screws the late investors.
If he's first in it could work out well for him.
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