IS IT A PONZI SCHEME OR INCOMPETENCE?
“Only when the tide goes out do you discover who’s been swimming naked.”
Welcome to the silly season of investing! We have seen one of the longest Bull Runs in history, which appears to have come to an end in 2022. Rampaging inflation forced the FED to hike interest rates from near zero to between 5.25% and 5.5% in 2023. It was such a long upward trajectory for all asset types that many individuals new to investing had never seen a downturn.
With interest rates artificially held down for so long, it made neophytes and incompetents look like financial geniuses and hid fraudsters, cheaters, crooks and schemers. Asset prices were artificially inflated by low interest rates at the expense of savers. The low interest rates enticed some investors way too far out on the risk spectrum. Some investors are still chasing risky yields.
Bull Markets Create A Bubble In Bull$h!t
What Is A Ponzi Scheme?
Bubbles Can Lead To Bank Fraud
High Tech Online Ponzi Scams Go Global
How To Spot Sponsor Incompetence
How To Avoid Fraud And Investor Losses
Questions To Ask Yourself Before Investing
Due Diligence Questions To Ask Any Investment Promoter
The Six Due Diligence Questions For Sponsors are:
- What is the Investment Promoter’s background? (including their track record and the current state of their business)
- Is their current bandwidth (staffing and competence) sufficient for their upcoming projects?
- Can they provide professional referrals to verify their claims? (auditors, accountants, attorneys, regulators, independent review organizations and websites)
- Can they pass a personal and business background check?
- Does the sponsor/company actually own the properties/oil wells/equipment/technology they claim to own?
- What does your gut feeling tell you about the key principals running the firm?
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