Due Diligence-Good God-What is it Good For? Is Every Program a Possible Ponzi?

[Jim Teague]

After the Bernie Madsen Wall St. debacle, I have been reconsidering my so-called safe programs. I have been also having an off-line debate with some members here about the
safety of Guardian Equity, V-Lane, CashLink Financial, some of the most "safe" programs out there for the online community. My point has been and continues to be to ALWAYS
take your principal back as quickly as possible rather than letting it "build for retirement"
or the big monthly payouts down the road. A private program I am in also limits the
amount of cashout the members can take in the name of letting the program build itself.
Folks, Bernie Madsen had balance sheets, annual reports, used major banks for his members accounts, welcomed visitors to his office for dog and pony shows and look what happened. I say get your principal back First and Foremost. After that, let it ride if you want.

[Ron Sanderson]

Jim,
You bring up some excellent points here. My point of view is that, no matter what, with these online games and schemes, ultimately the "returns" on your "investment" are going to come out of the pocket of someone else, who is eventually going to end up with nothing. What kind of way is that for us to try and build a secure financial future for ourselves and our families? How are we making friends and building relationships, when our gains are at the expense of others?

That just doesn't sit right with me. Thank you for bringing the topic to light, and by this, let's make it our time to shine in 2009, by doing the right thing for those we truly care about.

Ron Sanderson
ChangingTheWorld2gether

[Jim Teague]

Thx. Ron. I agree with you point about the last in as the loser for most surfs/hyips etc. I was speaking of non-ponzi type investment programs that are supported by "investments." A little different but your point is still valid. The problem is with the exception of the bank 3% per annum
most of us want to veer away from the super safe to something of a money making nature. So then
what? MLM type programs? Those are usually also of a matrix nature and don't work very well for the non recruiter. Usually they also benefit the earlier joiners as well. Just some thoughts. Don't know I have a complete answer other than divesify and get your principal back quickly.

[jenny stewart]

You have raised an interesting point Jim, and one of the difficulties with doing the necessary due diligence on a lot of internet programmes is that their "financials" are not available to us - we have to take people's word for it. But there is still a lot of homework that we can do - to find out who owns a business, the backgrounds of the people that run it, where it is, how long it has been running and any other information that is available from other sources than their own publicity, and many other things.

And the now famous "black box" theory should be a good way of working out if a programme is sustainable without using new members money to pay us out.

I.e. Take a black box - and into it goes your money and whatever other revenues the company has, from sales, investments and(including set up capital. This has to be equal or more than the amount of money going out. This is something to be looked at over a time period, to allow for seasonal ups and downs - but basically there has to be a profit or break even point, to avoid paying out old members with new members money. It works on every kind of business - on or off line and is pretty infallible.

Ron has made a very important point - it is one thing to get your original money out - but if it means taking new peoples money - then it is is not the right way to make money.

The online businesses that are not ponzis, apart from the fact that they must have more coming in that going out, sell a genuine product or service that has an intrinsic value, whether or not there is a rebate scheme, or affiliate sales scheme, and never pay you from new members money.

There is no legitimate way to make lots of easy money without taking very big risks, such as legal high yield investment programmes and you can win or lose your shirt on those, or joining something that means you take advantage of a fellow member. I am afraid that it is the old story - if it looks to good too be true, it probably is too good to be true

Ginethea, The folks with the 200% match on AVG will have to have their rebates funded from somewhere - and these are going to be paid on three times the amount they put in for advertising or whatever. Where is that money going to come from? I think you need to ask that question before you even think of going anywhere near it with your money.

And, going back to the talk about due diligence - ask questions, and more questions and dont be afraid to ask more questions. Noone in a legitimate business should or will expect you to trust them - they will be willing to give answers. If they dont or if they start hedging or even get angry - well that is a big red flag.

Sorry to be so gloomy about it all - but the only people I know who make good honest money on the internet work very hard for it.

[Jim Teague]

Jenny: With your black box theory in hand, what programs do you feel pass this test?

[Ginethea]

Hi Jim,
I agree, and that's what I did with ASD. AdViewGlobal (AV Global) is ASD in Uruguay. They are in pre-pre sign up mode, still writing their program(s). Letting folks get their ewalletplus accounts up and ready. Letting folks with serious money get 200% match for early funding for purchasing of their "page impressions", a more accurate terminology for ad packs. But I admit, once bitten, twice warned.
Later,

[Umberto Bernardon]

Hi Jim ,

I gave up on HYIP , autosurfs and all non recruiting programs a long time ago . The best I can advise you is to stick with one program . But you will need to recruit others to make some profit .

I choose for a very low fee program with no product .
The DD is simple , I talk to the owners on skype .
I put a message on my page if you want to look at it .

Regards

Umberto

[Tania Chin]

That is a sure interesting topic you brought up there Jim.

With so many programs going on out there, you have to wonder who you can trust with your money. The fact is as Ron said, "with these online games and schemes, ultimately the "returns" on your "investment" are going to come out of the pocket of someone else, who is eventually going to end up with nothing."

Is that the kinds of relationships we want to build with people? If I have to join a program and have to pull money out as soon as I turn a profit for fear of loss, then there is something wrong with that program on some level. I cannot in good conscience recommend such a program to anyone.

I get the emails in my inbox that says come join me in this, and that, and whatever on a daily basis and sometimes from the same people all over the Ning network. They are in so many programs trying to grab a buck here and there and when it is not turning out the way they planned its on to the next program.

Who builds a business or look for stability like that anyway? If they are going to hop, skip and jump all over the internet to make a buck, they might as well get a "job" (my opinion). There are REAL businesses and REAL investments on the Internet to be had but no one wants to spend the time to do due diligence instead they prefer to spend $10 here, $14 over there, and maybe they will spend the $200 over there because its "HOT" and people are making money like gangbusters.

The sad thing is that some of these programs are the "next big Ponzi" and their members may have the feeling that they are not in the right place but they will stay there because they are reaping some benefits, thinking of only themselves and the "Almighty Dollar" and that's just life for you.

Tania

[Alan Chapman]

now that I have wiped the tears of laughter from my eyes and I can collect my thoughts..

all I can say to some of these comments " is what a lot of bees wax"

you look at one guy, sure, in the USA their has been a string of these types who inside trade and cook the books.. remember worldcom or anderson the accountancy firm..

question?

what is safe and what is not?

what is a real bizz and what is a ponzie?

statement of fact about a ponzie..

a Ponzie needs new people to spend money so those already in the system can get paid.. I think we agree about that!!

OK, so what is General Motors then, a company that rely s upon new people coming into the car lot and buying a vehicle, so when people stop buying new cars what happens to General Motors?? yes, that is correct, they act like a "Ponzie" because the money coming in is not enough to pay those already involved out..

Jim is correct, get in, get your seed money out, but any talk of "come out of the pocket of someone else, who is eventually going to end up with nothing" is pure wishful thinking, I am sorry Ron, but all of life , in order for you to make money and put food on your table each day means you have to take money off someone else, it is not possible any other way..

so while we here discuss how it is not "correct" to be in a "ponzie" scheme the reality is all of business is a ponzie needing fresh money or bust..

[Jim Teague]

Thx. Alan. Good points all.

[Charlie]

Agree....Can anyone tell me what is not a ponzi? Shouldn't Bernie be a hero?

If Bernie is a criminal, what about those running the social security system???
How about the biggest scam of all, The "Federal" reserve being a private entity owned by private bankers. It is NOT a federal agency.

The public is manipulated and played. If enough people ever wake-up and say "no more", things could get interesting.

[jenny stewart]

Sorry Ron, but I think your sense of humour is not one many of us share.

A manufacturing business, however badly run, does not require new investors money to pay out investors. You must not confuse the payment of staff with that one - even ponzis often have staff to pay in their overheads! A manufacturer or anyone else that sells a product or service gets paid for that product or service by the customer and the deal is closed. If there is a profit - then the investors may well benefit and if there is not, then they wont get their dividends, and maybe their shares will reduce in value, but they are not paid dividends out of new investors money and it does not relate directly to the intrinsic business of the company - to make and sell cars or whatever.

The vast majority of people who want to make money on the internet wish to do so legally and ethically. There will always be "players" who dont care - on and off line, and as online business is still in its infancy and relatively unregulated, the sharks are congregating there. But this does not mean that the rest of us want a free for all which hurts the people we recruit.

Tania is quite right when she says the following

With so many programs going on out there, you have to wonder who you can trust with your money. The fact is as Ron said, "with these online games and schemes, ultimately the "returns" on your "investment" are going to come out of the pocket of someone else, who is eventually going to end up with nothing."

Is that the kinds of relationships we want to build with people? If I have to join a program and have to pull money out as soon as I turn a profit for fear of loss, then there is something wrong with that program on some level. I cannot in good conscience recommend such a program to anyone.

If you wish to be come a defender or aplogist for ponzi schemes, by using the usual "all businesses are a ponzi, including the social security system" arguement - try to remember that normal businesses have a service or product to sell that have an intrinsic value, irrespective of the sales method attached to it and that the Social Security is not a profit making business, but a social fund which is available to ALL the people who contribute to it, whether they are first or last in.

The only businesses that I can recommend "on line" are genuine affiliate marketing plans that relate to a real product or service that is sold on its own merits. Hard work and the returns are far more realistic - they wont be paying money for nothing - but at the end of the day they are sustainable, legal and you dont have to worry about being paid out of the money put in by the people you recruit.

Hard words? Maybe, but it is either that, or we all become opportunists without a scrap of humanity in us about how we make our money

[Jim Teague]

Thanks for the detailed post. Affiliate marketing plans do have the "intrinsic value" aspect
that most surfs don't. Another "product" with a certain value is forex trading. Many of the
investment programs revolve around this.