State that declares Ponzi legal

[poorme]

I wonder if there is any states that declare Ponzi Scheme legal?

[damion]

If it is a true Ponzi scheme (no loopholes, etc), then it is illegal in all states.

Damion

[northstar5757]

stock market is basically a legal ponzi.

[concerned]

Originally posted by northstar5757
stock market is basically a legal ponzi.

How do you figure? If I am the LAST person to buy a stock, and then the company dows good, and the stock price goes up, I still make money. According to the definition of a ponzi scheme, EARLY investors are paid by LATER investors while the LATER investors get NOTHING.

[northstar5757]

Don't kid yourself. Your stock isn't worth jack unless soemone is willing to buy it (aside from dividends). It's all about getting in early and getting out early if you want to make the big bucks. Unless you're really lucky you wont make a fortune, aside from insider trading. I mean why do you think stock brokers use your money and not their own? The markets based on speculation just like a ponzi.

Obviously the stock market is a more complicated ponzi since there is a selling phase involved, but its all based on the assumption that future people will be buying. I mean look what happens when interest rates rise, people sell and stocks fall.

http://www.amazon.com/exec/obidos/tg/detail/-/0767907183/qid=1061921774/sr=1-1/ref=sr_1_1/103-9216827-9087862?v=glance&s=books

http://www.motherjones.com/fotc/fotc21.html

http://www.commondreams.org/views01/0412-10.htm

[northstar5757]

Of yes and lets not forget about social security or pension plans...

[concerned]

OK, I just bought some stocks from the company I work with 3 months ago, and the stock went up. I sold it and made money. The company was incorporated 30 years ago. I DIDN'T get in early, but I STILL made some money. On the other hand, if it was a matrix site, (and for argument's sake, let's say it is a 5 person cycle) and since I would have bought the stock after about 1,000,000 people bought the stock, since there are that many shares available. I would then have to wait for 5,000,000 people to buy before I see a dime. Therefor it is not a ponzi scheme.

If you don't buy that as an argument, then how about this. I have a car for sale. According to you it "isn't worth jack unless soemone is willing to buy it." Does that mean that when I bought a car it was a ponzi scheme? If nobody wants to buy my car, then it is still worth something because I can still drive it.

What you are talking about is economics. You are talking about supply versus demand, not ponzi scheme.

[northstar5757]

The car actually has some utility. Stocks don't, when you buy them you are banking that future investors will buy it off you...

You can't sell something if there is noone to buy it. If no one wanted to buy your company's stock then it really is worth nothing since it has no other utilty. Read the book I gave you the link to you can probably get it for free from the library :)

Yes I won't lie there are some stocks which are pretty safe. But todays market especially the tech market is overpriced. It's been over hyped.

[MatrixWatch]

Also, Ponzi schemes rely entirely upon the future investors and it will eventually collapse. Publically traded companies pay dividends based on sales earnings and other earnings from assets. The money we pay into a stock is a way for the COMPANY to make money which it then USES to compete on the market and acquire more assets. That, in turn, will reward the customers with a higher value of their stock. The matrix owners are assuming (wrongly) that the investors collect on their stock investments based on future investments alone. This is not how it works. There is no justification found on the stock market to lend credence or respect to the matrix-marketing model. It is apples and oranges-- A red herring.

What is really going on when matrix owners and supporters appeal to the stock market or sweepstakes programs for justification is a direct assault against the law. They don't want to be subject to laws that run contrary to their greedy hearts. Rather than admitting that what they have created is flawed, they instead go against the laws and accuse the government of not treating them fairly because the stock market or Publisher's Clearing House exists. This is ridiculous and uncredulous.

If matrix owners have a business product that they believe will sell, then they should seek to raise money from venture capitalists and bring their company public to be traded on the market. If they don't gain more business knowledge then they will always find themselves meeting up with people like me who will hold them accountable for their lack of foresight and advisement. I think that a few of the successful matrix owners out there would do very well in the business world, and they are involved with the matrix sites only because they were not aware of what they were getting into. If they chalk this whole episode up as a learning experience, they will likely empower themselves with more financial and legal knowledge, thus becoming a better business person.

For more basic info on stocks, etc. I would recommend the books by Peter Lynch, Robert Kiyosaki, Warren Buffet, and the Motely Fool website: www.Fool.com

[concerned]

If what you are saying is that when a company closes down and nobody wants to buy the stock then you are right. BUT you are not left with a WORTHLESS piece of paper. You still have ownership of a percentage of that company and all of it's assets. That would include computers, real estate, and so on. So then we get into the argument of the car. I would be part owner in some stuff that has some utilitarian value.

On top of that, since we have talked about ownership in the company, let's not forget about dividends. That is a share of the profits. So you are making money on your investment while you still own that stock, so you see, your profit DOESN'T ONLY rely on the future sale of that stock. I know a lot of people that have made more money then they invested JUST from the dividends.

I see that watchdog was posting the same argument about the dividends at the same time I was posting my argument.

[northstar5757]

ya but what about worldcom...enron..dynegy...adelphie...

[northstar5757]

Oh yes it's not a straight out ponzi. My post mentions dividends as well. But you're gonna make most of your money in capital gains. It's hard to argue right now though that the market isn't overhyped.

[concerned]

First of all, those are a few companies that failed, but some are still in business. Secondly, if someone got in at the begining and held on to their shares the entire time, they also lost money. Next, NONE of those business made any false promises. They never made any guarantees. Nobody said if you give us $25, then you will get back $1000 when X number of people follow. I'd also like to see where people only invest in 1 company. There might be a few, but probably 1 in a billion. Finally, I'd like you to take any 20 year period in history and show me where someone lost money in the stock market. You can't find any 20 year period, including during the Great Depression where people lost money. Even during the great depression, people held on to those stocks, and eventually a lot of them came back up.

[northstar5757]

Good point about looking at the long term.

[northstar5757]

But I don't think false promisses have anything to do with ponzi schemes though. Even if the matrix owners explained the risks ins't it still a ponzi.

And those businesses did lie to their stock holders which is how they manage to get so many people to buy in.

[mjkski]

And what is happening to many of those people who lied, cheated and scammed their investors?- Many are and have been sentenced to jail.

[northstar5757]

True, that's also why I don't play stocks :)

But you can't argue about some of those social insurance programs. Just wanted to point out that there are some programs out there which are very similar to ponzi schemes. Perhaps the matrix could work if it was regulated properly, but lots would need to change.