I absolutely love the curated news that google assistant gives me on my pixel while it may be on every android, but I have only had a pixel for the past 3 or 4 years so I wouldn’t know. It takes items that I have searched for on my phone or when signed into chrome and gives me news stories about the topic from all over the country. Sure it gets some things wrong (not sure why I had to let the system know why I wasn’t interested in ‘Kate Moss’) but for the most part they hit topics I am actually interested in. One that always catches my attention is the category titled, “ponzi scheme.”
There is No Such Thing as a Free Lunch When it Comes to Investing
Almost every news story includes a paragraph about how the investors thought they were getting a guaranteed rate of return that was double or triple that of U.S. government issued debt, safe products like a CD, or an annuity based product from a multi-billion dollar financial company. The story that inspired this post was out of a Philadelphia,
Sealey is the ex-Chairman and Chief Executive Officer of Global Standard Industries (GSI) and SEK Industries (SEK). He claimed that GSI was a multi-national private equity investment firm with more than 500 employees that specialized in investments of at least $50 million, according to authorities. That supposedly included more than $15 billion in managed domestic assets, and another $33 billion offshore.
Almost every investor was led to believe that the investments were risk free and that they would receive their money back with 10 percent interest within 90 days, according to authorities. He also led investors to believe that their “deal” had been delayed and that they could get their money back quicker if they invested additional money for other “deals” that GSI was involved with (emphasis added).
However, GSI really only had offices in Philadelphia and New York City, according to authorities. The company didn’t employ 500 people, and there were never any real estate closings or business takeovers underway by anyone at GSI. Instead, Sealey stole the money from his investors and used it for his own personal expense, including a personal driver, hotel accommodations, restaurants, spa services, retail shopping, and other personal expenses.
Principal and 10% Interest inside 90 days?! GUARANTEED? There is no such thing as a guarantee, at those rates, in today’s climate. I am not sure if it is a belief thing like in the case of the linear growth of Madoff, who claimed he was using options to lower volatility and lock in growth, or if it is a pure lack of understanding of return and today’s interest rate environment. I am not sure which I feel worse about – one is belief and the other is a lack of understanding.
I wish people would just ask *why* sometimes. Like why does a trading guru need to sell you his ideas for $20/month when he could just keep his mouth shut and make a ton of money, or start a hedge fund with a 2 and 20 fee structure? Why would someone who can consistently make 10% every 90 days, without fail, keep paying out that 10%? Maybe it is because they are trying to expand so rapidly and the cash flow supports it…OR it is because it is complete bullshit.
I think my fascination with the topic is analogous to my obsession with American Greed. I think there is a lot of the world that is just smoke and mirrors and I am always just curious about the dumpster fire that eventually presents itself.