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This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone sellin

This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. The top 500 companies by market cap don't do much better than 6-7% annually on average.

piracykills 9y ago
> >6-7% annual returns I wouldn't say quite that low, even S&P averages are often higher than that. But 48% monthly is going to be something like a >1000% yearly interest rate. You really don't get much more of a dead giveaway than that, at that point you're either a fool or you're gambling and hoping you get out before a greater fool does.
- ashleyn 9y ago
  Willfully participating in a Ponzi scheme is a crime.
  - piracykills 9y ago
    Are suspicions really enough to put you into illegal territory here? If so it'd be a very hard crime to prosecute as unless you were working for them or something it's very hard to prove you aren't just another victim.
  - alehul 9y ago
    Rather than Ponzi scheme, I'd classify the investors as participating in a Pump & Dump. A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. In this case, by contrast, it's overhyping (to the point of fraud) a publicly traded security in hopes of rallying some investors to buy in, which increases the price, further validating the potential and convincing more investors to buy in. Merely participating through buying in a Pump & Dump process is completely legal; it only becomes illegal if you're the party using fraudulent information to increase the value of the security.
    - shkkmo 9y ago
      > A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. Isn't that exactly what they did? From the Article: > Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending iFan tokens. Pump and Dumps make their money by selling the asset once it's price has been inflated. In this case, the money was made throughout the whole ICO by fraudulently selling a security.
      - alehul 9y ago
        Offering bonuses for bringing other people into the program is a Pyramid Scheme tactic. Ponzi is specifically in cases where there's a portfolio manager or something controlling the entire operation and allocating returns to early investors through distributing the capital of the new investors.
        Buge 9y ago
        That's what Pincoin did >The company first ran the Pincoin ICO, promising constant returns to investors >Investors have been told that they would enjoy a profit rate of 48 percent a month from their initial investment, and recoup all investments after four months.
        alehul 9y ago
        Were they actually given that profit rate from the Pincoin team, or promised that the coin's value would increase? This really seems like a mess of illegality either way haha.
        shkkmo 9y ago
        From the article: > Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending iFan tokens. Then, last month, the team vacated their fancy offices leaving only an oddly well-made – if incomplete – website in its wake.
  - alasdair_ 9y ago
    > Willfully participating in a Ponzi scheme is a crime. Really? Which crime exactly? Take something like this, for instance: https://ponzischeme.io/ https://ponzischeme.io/ What is the crime?
    - boomlinde 9y ago
      Regarding your example, you're asking the wrong question. That's not a Ponzi scheme because it makes it clear what kind of returns to expect and that the returns simply come from other investors. A Ponzi scheme involves persuading investors to invest (and reinvest the returns) on a fraudulent basis. What Charles Ponzi did, and what has come to characterize Ponzi schemes today, is fraud. He made investors think that they were investing in something tradable (stamp coupons) when he actually only ever paid the returns using other investors' money, and it was able to go on for so long because most people simply reinvested their returns on the basis that they thought it was a sustainable investment. This dynamic doesn't exist without fraud. No one is going to invest in ponzischeme.io on any other basis than exactly what it is, betting to get in early and to cash in their returns before everyone else does. That said, if I was the world dictator, the ponzischeme.io guys would be in a labor camp, where they would be forced to do meaningful work.
- Carioca 9y ago
  >>> 100*1.48**12 11044.360771961152 That's ELEVEN THOUSAND percent a year. 110x your money every year. That's enough to turn a dollar into 16 billion in 5 years.
  - piracykills 9y ago
    Yeah, I managed to miss a digit when I ran the numbers myself so I was off by an order of magnitude when I wrote my post. Glad you checked it. Fucking hilarious what these guys will say - of course, I think that's a goal, to shock anyone remotely reasonable or who even tries to do back of the envelope math out of interest in it.
  - Aaron1011 9y ago
    > That's enough to turn a dollar into 16 billion in 5 years. I think it's actually 1.6 trillion
    - kcanini 9y ago
      It's actually 16 billion.
fpazin 9y ago
In brazil we have investiments that yield more than 10%... but market swings (and overall "brazil cost") add risk into it.
akvadrako 9y ago
7% is not ridiculous at all. twino.eu has been paying 10-13% backed by their own guarantees and a good income stream for several years.
- frgtpsswrdlame 9y ago
  So from looking at it twino is unsecured consumer lending? That seems pretty risky.
  - akvadrako 9y ago
    They charge much higher rates and have a good balance sheet, without much leverage. It’s not likely all their customers default at once, so the risk is lower then most instruments.
    - frgtpsswrdlame 9y ago
      >It’s not likely all their customers default at once, so the risk is lower then most instruments. I mean I would question this. Of course that's true in a good economy but it's not true at all in a bad economy. To invest in this I think you need to ask what actually happens if there is a downturn.
- justicezyx 9y ago
  Noooooooooo Past performance is not an indication of future.
  - solarkraft 9y ago
    Remember Bernard Madoff? Edit: Ran a Ponzi scheme (promised 12% p.a.) from the 1970s til 2008. $64.8 billion of damage.
    - kolpa 9y ago
      So you're saying that the key to success is to get in at the ground floor, and exit after a few years?
pibefision 9y ago
Take look at Argentina's market. You can get 20% of return on yearly bonds in dollars. Yes, its a bubble but its more mature than any kids ICO
- wtvanhest 9y ago
  I know nothing of Argentina finance, but if I take your sentence a facevalue, my assumption is that they have a high rate of estimated future inflation. There is no free money in finance.
  - notfromhere 9y ago
    Argentina is legendary for bad credit, so that's why returns have to be so high
  - dsacco 9y ago
    > There is no free money in finance. There can be free money in the sense that a strategy can beat the market at a similar or lower level of risk. The "cost" for this is in personnel and infrastructure capital.
  - TomK32 9y ago
    > I know nothing of Argentina finance They have a big sailing ship and an (obviously unpleasant) guy in New York got it impounded in West-Africa a few years back (purely from a sailor's perspective).
- JumpCrisscross 9y ago
  > You can get 20% of return on yearly bonds in dollars Argentina has basically turned defaulting into a sport [1]. [1] https://en.m.wikipedia.org/wiki/Argentine_debt_restructuring https://en.m.wikipedia.org/wiki/Argentine_debt_restructuring
- swarnie_ 9y ago
  Exactly. Return and risk are inherently linked. Anyone lending money to Argentina does so knowing their money is 50% not coming back.
simias 9y ago
Cryptocurrencies did manage to have a ridiculous performance over the past few years, I think that's why those obvious scams manage to convince people. The fear of missing out is strong and many people want to exploit that it seems. There are so many obvious scams running in the cryptocurrency world right now that it's hard to keep track and some are more obvious than others. See for instance https://getcryptotab.com/en/ https://getcryptotab.com/en/ which is an other obvious pyramid scheme.
dsacco 9y ago
> This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. That's actually pretty achievable using market neutral strategies. Considerably higher is also achievable, you just can't really access them unless you have a lot of capital. However, 6-7% per month would be much more suspicious and should be an immediate red flag.
- ikeboy 9y ago
  In my industry (e-commerce, sell on Amazon FBA) my biggest bottleneck is funding and I'm able to generate triple digit yearly returns on capital. It's gotten to the point I sometimes carry a balance on credit cards at 20% rates just to get more inventory. But of course it's not quite comparable, it's extremely time / labor / logistics intensive, it's hard to put large amounts of money to work, and risk is high (can diversify across different products and categories but will always be some risk). If you make 20% ROI and turn inventory every 2 months, that's a 120% return per year and very doable. A popular factoring company in the space, Payability, is charging an effective ~200% APR on funds (2% of gross sales for an average of one week to advance 80% of net, simple factoring math). That should give you an idea of the kind of returns people are making on capital, if the companies that finance them can ask for and get triple digit effective interest rates. But it's not something you can put $100 million into. If you look at the bigger companies doing this, they have much lower returns (e.g. etailz sells ~150 million a year, profit of 3 million, they carry inventory in the 15-20 million range - so something like 20% net ROI per year). If someone told me they were making 6-7% per month selling inventory direct to consumer, I'd consider it average, probably room for improvement.
matte_black 9y ago
So stop investing in average companies. You have any idea how much the FANG stocks alone have made me? I bought 200 shares of Amazon 3 years ago at 2 to 1 margin at $367, go look at the monstrous gains I’ve had up to today...
walshemj 9y ago
Shell is Yielding 5.5 now and if you brought in the past and took advantage of the BG merger last year (as I did) you could have an expressed yield of just over 7%. 7% a month and id agree with you
alasdair_ 9y ago
>This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. A 2X leverage ETF would have double that rate of return, minus the overhead and interest on the leverage. Of course, it would also have double the losses in down years. With enough leverage, you can "easily" create arbitrary levels of annual returns, just by increasing risk.
- pjc50 9y ago
  .. by increasing risk to the extent that you can lose more than you invested, yes. Leverage is quite dangerous for retail investors.
nikanj 9y ago
Here we call it "condo". It's somewhat insane that people base their futures on their home gaining 20+ percent per annum

piracykills 9y ago

> >6-7% annual returns I wouldn't say quite that low, even S&P averages are often higher than that. But 48% monthly is going to be something like a >1000% yearly interest rate. You really don't get much more of a dead giveaway than that, at that point you're either a fool or you're gambling and hoping you get out before a greater fool does.

ashleyn 9y ago
Willfully participating in a Ponzi scheme is a crime.
- piracykills 9y ago
  Are suspicions really enough to put you into illegal territory here? If so it'd be a very hard crime to prosecute as unless you were working for them or something it's very hard to prove you aren't just another victim.
- alehul 9y ago
  Rather than Ponzi scheme, I'd classify the investors as participating in a Pump & Dump. A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. In this case, by contrast, it's overhyping (to the point of fraud) a publicly traded security in hopes of rallying some investors to buy in, which increases the price, further validating the potential and convincing more investors to buy in. Merely participating through buying in a Pump & Dump process is completely legal; it only becomes illegal if you're the party using fraudulent information to increase the value of the security.
  - shkkmo 9y ago
    > A Ponzi scheme is when it's an investment vehicle (i.e. hedge fund) that provides returns to older investors through capital acquired from newer investors. Isn't that exactly what they did? From the Article: > Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending iFan tokens. Pump and Dumps make their money by selling the asset once it's price has been inflated. In this case, the money was made throughout the whole ICO by fraudulently selling a security.
    - alehul 9y ago
      Offering bonuses for bringing other people into the program is a Pyramid Scheme tactic. Ponzi is specifically in cases where there's a portfolio manager or something controlling the entire operation and allocating returns to early investors through distributing the capital of the new investors.
      - Buge 9y ago
        That's what Pincoin did >The company first ran the Pincoin ICO, promising constant returns to investors >Investors have been told that they would enjoy a profit rate of 48 percent a month from their initial investment, and recoup all investments after four months.
        alehul 9y ago
        Were they actually given that profit rate from the Pincoin team, or promised that the coin's value would increase? This really seems like a mess of illegality either way haha.
        shkkmo 9y ago
        From the article: > Pincoin was particularly unique in that it offered bonuses for bringing other people into the program, a tactic that might sound familiar. The scammers paid out in cash until January when they began sending iFan tokens. Then, last month, the team vacated their fancy offices leaving only an oddly well-made – if incomplete – website in its wake.
- alasdair_ 9y ago
  > Willfully participating in a Ponzi scheme is a crime. Really? Which crime exactly? Take something like this, for instance: https://ponzischeme.io/ https://ponzischeme.io/ What is the crime?
  - boomlinde 9y ago
    Regarding your example, you're asking the wrong question. That's not a Ponzi scheme because it makes it clear what kind of returns to expect and that the returns simply come from other investors. A Ponzi scheme involves persuading investors to invest (and reinvest the returns) on a fraudulent basis. What Charles Ponzi did, and what has come to characterize Ponzi schemes today, is fraud. He made investors think that they were investing in something tradable (stamp coupons) when he actually only ever paid the returns using other investors' money, and it was able to go on for so long because most people simply reinvested their returns on the basis that they thought it was a sustainable investment. This dynamic doesn't exist without fraud. No one is going to invest in ponzischeme.io on any other basis than exactly what it is, betting to get in early and to cash in their returns before everyone else does. That said, if I was the world dictator, the ponzischeme.io guys would be in a labor camp, where they would be forced to do meaningful work.
Carioca 9y ago
>>> 100*1.48**12 11044.360771961152 That's ELEVEN THOUSAND percent a year. 110x your money every year. That's enough to turn a dollar into 16 billion in 5 years.
- piracykills 9y ago
  Yeah, I managed to miss a digit when I ran the numbers myself so I was off by an order of magnitude when I wrote my post. Glad you checked it. Fucking hilarious what these guys will say - of course, I think that's a goal, to shock anyone remotely reasonable or who even tries to do back of the envelope math out of interest in it.
- Aaron1011 9y ago
  > That's enough to turn a dollar into 16 billion in 5 years. I think it's actually 1.6 trillion
  - kcanini 9y ago
    It's actually 16 billion.

fpazin 9y ago

In brazil we have investiments that yield more than 10%... but market swings (and overall "brazil cost") add risk into it.

akvadrako 9y ago

7% is not ridiculous at all. twino.eu has been paying 10-13% backed by their own guarantees and a good income stream for several years.

frgtpsswrdlame 9y ago
So from looking at it twino is unsecured consumer lending? That seems pretty risky.
- akvadrako 9y ago
  They charge much higher rates and have a good balance sheet, without much leverage. It’s not likely all their customers default at once, so the risk is lower then most instruments.
  - frgtpsswrdlame 9y ago
    >It’s not likely all their customers default at once, so the risk is lower then most instruments. I mean I would question this. Of course that's true in a good economy but it's not true at all in a bad economy. To invest in this I think you need to ask what actually happens if there is a downturn.
justicezyx 9y ago
Noooooooooo Past performance is not an indication of future.
- solarkraft 9y ago
  Remember Bernard Madoff? Edit: Ran a Ponzi scheme (promised 12% p.a.) from the 1970s til 2008. $64.8 billion of damage.
  - kolpa 9y ago
    So you're saying that the key to success is to get in at the ground floor, and exit after a few years?

pibefision 9y ago

Take look at Argentina's market. You can get 20% of return on yearly bonds in dollars. Yes, its a bubble but its more mature than any kids ICO

wtvanhest 9y ago
I know nothing of Argentina finance, but if I take your sentence a facevalue, my assumption is that they have a high rate of estimated future inflation. There is no free money in finance.
- notfromhere 9y ago
  Argentina is legendary for bad credit, so that's why returns have to be so high
- dsacco 9y ago
  > There is no free money in finance. There can be free money in the sense that a strategy can beat the market at a similar or lower level of risk. The "cost" for this is in personnel and infrastructure capital.
- TomK32 9y ago
  > I know nothing of Argentina finance They have a big sailing ship and an (obviously unpleasant) guy in New York got it impounded in West-Africa a few years back (purely from a sailor's perspective).
JumpCrisscross 9y ago
> You can get 20% of return on yearly bonds in dollars Argentina has basically turned defaulting into a sport [1]. [1] https://en.m.wikipedia.org/wiki/Argentine_debt_restructuring https://en.m.wikipedia.org/wiki/Argentine_debt_restructuring
swarnie_ 9y ago
Exactly. Return and risk are inherently linked. Anyone lending money to Argentina does so knowing their money is 50% not coming back.

simias 9y ago

Cryptocurrencies did manage to have a ridiculous performance over the past few years, I think that's why those obvious scams manage to convince people. The fear of missing out is strong and many people want to exploit that it seems. There are so many obvious scams running in the cryptocurrency world right now that it's hard to keep track and some are more obvious than others. See for instance https://getcryptotab.com/en/ https://getcryptotab.com/en/ which is an other obvious pyramid scheme.

dsacco 9y ago

> This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. That's actually pretty achievable using market neutral strategies. Considerably higher is also achievable, you just can't really access them unless you have a lot of capital. However, 6-7% per month would be much more suspicious and should be an immediate red flag.

ikeboy 9y ago
In my industry (e-commerce, sell on Amazon FBA) my biggest bottleneck is funding and I'm able to generate triple digit yearly returns on capital. It's gotten to the point I sometimes carry a balance on credit cards at 20% rates just to get more inventory. But of course it's not quite comparable, it's extremely time / labor / logistics intensive, it's hard to put large amounts of money to work, and risk is high (can diversify across different products and categories but will always be some risk). If you make 20% ROI and turn inventory every 2 months, that's a 120% return per year and very doable. A popular factoring company in the space, Payability, is charging an effective ~200% APR on funds (2% of gross sales for an average of one week to advance 80% of net, simple factoring math). That should give you an idea of the kind of returns people are making on capital, if the companies that finance them can ask for and get triple digit effective interest rates. But it's not something you can put $100 million into. If you look at the bigger companies doing this, they have much lower returns (e.g. etailz sells ~150 million a year, profit of 3 million, they carry inventory in the 15-20 million range - so something like 20% net ROI per year). If someone told me they were making 6-7% per month selling inventory direct to consumer, I'd consider it average, probably room for improvement.

matte_black 9y ago

So stop investing in average companies. You have any idea how much the FANG stocks alone have made me? I bought 200 shares of Amazon 3 years ago at 2 to 1 margin at $367, go look at the monstrous gains I’ve had up to today...

walshemj 9y ago

Shell is Yielding 5.5 now and if you brought in the past and took advantage of the BG merger last year (as I did) you could have an expressed yield of just over 7%. 7% a month and id agree with you

alasdair_ 9y ago

>This is one thing most people don't understand. If someone is selling you a financial instrument with >6-7% annual returns, it's as ridiculous as someone selling you a time machine or the cure to death. A 2X leverage ETF would have double that rate of return, minus the overhead and interest on the leverage. Of course, it would also have double the losses in down years. With enough leverage, you can "easily" create arbitrary levels of annual returns, just by increasing risk.

pjc50 9y ago
.. by increasing risk to the extent that you can lose more than you invested, yes. Leverage is quite dangerous for retail investors.

nikanj 9y ago

Here we call it "condo". It's somewhat insane that people base their futures on their home gaining 20+ percent per annum