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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    What is a Ponzi Scheme? How Do Ponzi Schemes Work?

    Question: What is a Ponzi Scheme? How Do Ponzi Schemes Work?

    Answer: A Ponzi scheme is a scam investment designed to separate investors from their money. It is named after Charles Ponzi, who constructed one such scheme at the beginning of the 20th century, though the concept was well known prior to Ponzi.

    The scheme is designed to convince the public to place their money into a fradulent investment. Once the scam artist feels that enough money has been collected, he disappears - taking all the money with him.
    Five Key Elements of a Ponzi Scheme
    1. The Benefit: A promise that the investment will achieve an above normal rate of return. The rate of return is often specified. The promised rate of return has to be high enough to be worthwhile to the investor but not so high as to be unbelievable.
    2. The Setup: A relatively plausible explanation of how the investment can achieve these above normal rates of return. One often-used explanation is that the investor is skilled and/or has some inside information. Another possible explanation is that the investor has access to an investment opportunity not otherwise available to the general public.
    3. Initial Credibility: The person running the scheme needs to be believable enough to convince the initial investors to leave their money with him.
    4. Initial Investors Paid Off: For at least a few periods the investors need to make at least the promised rate of return - if not better.
    5. Communicated Successes: Other investors need to hear about the payoffs, such that their numbers grow exponentially. At the very least more money needs to be coming in than is being paid back to investors.
    Steps in the Ponzi Scheme

    Ponzi Schemes are quite basic but can be extraordinarily powerful. The steps are as follows:
    1. Convince a few investors to place money into the investment.
    2. After the specified time return the investment money to the investors plus the specified interest rate or return.
    3. Pointing to the historical success of the investment, convince more investors to place their money into the system. Typically the vast majority of the earlier investors will return. Why would they not? The system has been providing them with great benefits.
    4. Repeat steps 1 through 3 a number of times. During step 2 at one of the cycles, break the pattern. Instead of returning the investment money and paying the promised return, escape with the money and start a new life.
    How Big Can Ponzi Schemes Get?

    Into the billions of dollars. In 2008 we saw the fall of arguably the largest Ponzi scheme in history - Bernard L. Madoff Investment Securities LLC. The scheme had all the ingredients of a classic Ponzi scheme, including a founder, Bernard L. Madoff, that had a great deal of credibility as he had been in the investment business since 1960. Madoff had also been the chairman of the board of directors of NASDAQ, an American stock exchange. The estimated losses from the Ponzi scheme are in between 34 and 50 billion U.S. dollars. The Madoff scheme collapsed; Madoff had told his sons that "clients had requested approximately $7 billion in redemptions, that he was struggling to obtain the liquidity necessary to meet those obligations."

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Sebi-Sahara case: Subrata Roy, others summoned tomorrow - PONZY SCHEME

      Sebi-Sahara case: Subrata Roy, others summoned tomorrow - The Economic Times

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Sahara and Ponzi schemes: What are the parallels?

        http://www.google.com.sg/url?sa=t&rc...lRkvHIQ3C-W56g

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          This thread has become a negetive news folder

          Comment


          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by wiseman View Post
            Just because the sector is RE does not mean a Ponzi Scheme cannot be played in it.

            cheers
            Good. So how a Ponzi scheme be played in RE ?

            Comment


            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Dear Gold Buyers

              Sad news (GS rarely gets it wrong on oild & gold)



              Goldman Sachs has cut its gold price forecasts for a second time in six weeks on Wednesday, citing expectations for an acceleration in US economic growth and the metal's recent lacklustre price performance.


              The bank lowered its 2013 average gold price forecast to $1,545 an ounce from $1,610 and its 2014 price view to $1,350 an ounce from $1,490.

              It also advised that investors close a long COMEX gold position, recommended in late 2010, and replace it with a short COMEX position.

              "Despite resurgence in euro-area risk aversion and disappointing U.S. economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," Goldman said in the note.

              “While higher inflation may be the catalyst for the next gold cycle, this is likely several years away.”

              "With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in (the second half of 2013), we believe a sharp rebound in gold prices is unlikely."


              Goldman Cuts Gold Price Forecast Through 2014 as Cycle Turns - Bloomberg
              Last edited by Baruch; April 10 2013, 06:22 PM.

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Already explained

                Originally posted by compuwalah View Post
                Good. So how a Ponzi scheme be played in RE ?
                Please refer the original post. Its hidden in there.

                cheers

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  I hate that...

                  I hate that 'i told you so' and the many new babas we have on the forum incl yours truly.

                  But then, did'nt I tell you guys

                  This thread should be offered to finance ministers of the world and most likely the depression would end sooner than later.

                  The most important solution is stopping all financial investment products like mf, futures etc. that lead to market and therefore economy manipulation at the hands of speculators and big groups. Bare sharemarket under a watchdog though is okay.

                  Yes millions (worldwide) would be jobless but i am sure the economy would improve and they would be employed in REALLY PRODUCTIVE fields. Most of the current finance field is purely speculative and therefore unproductive. They do nothing but create money out of thin air thus devaluing money, increasing inflation and creating bubbles.

                  My 2.....err...where are my cents? I seem to have none left.
                  Ladies and gents brace yourself for a ride in hell....in coming months.





                  Originally posted by Baruch View Post
                  Dear Gold Buyers

                  Sad news (GS rarely gets it wrong on oild & gold)



                  Goldman Sachs has cut its gold price forecasts for a second time in six weeks on Wednesday, citing expectations for an acceleration in US economic growth and the metal's recent lacklustre price performance.


                  The bank lowered its 2013 average gold price forecast to $1,545 an ounce from $1,610 and its 2014 price view to $1,350 an ounce from $1,490.

                  It also advised that investors close a long COMEX gold position, recommended in late 2010, and replace it with a short COMEX position.

                  "Despite resurgence in euro-area risk aversion and disappointing U.S. economic data, gold prices are unchanged over the past month, highlighting how conviction in holding gold is quickly waning," Goldman said in the note.

                  “While higher inflation may be the catalyst for the next gold cycle, this is likely several years away.”

                  "With our economists expecting few ramifications from Cyprus and that the recent U.S. slowdown will not derail the faster recovery they forecast in (the second half of 2013), we believe a sharp rebound in gold prices is unlikely."


                  Goldman Cuts Gold Price Forecast Through 2014 as Cycle Turns - Bloomberg

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    SEBI has gone beyond SC order, says Sahara Boss Roy

                    SEBI has gone beyond SC order, says Sahara Boss Roy - Moneycontrol.com

                    The market regulator had today called Roy and three other group directors to discuss sale of group's properties and recovery of unpaid dues. SEBI and Sahara Group has been in a tussle after the Supreme Court order directed the market regulator to attach properties of Sahara Group in connection with the refund case involving an estimated Rs 24,000 crore payment to over 30 million small investors.

                    In February, SEBI had ordered a freeze on the assets and bank accounts of the two Sahara group companies namely Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC).


                    Roy said that in the meeting held today, SEBI demanded details of his personal properties. Surprisingly, Roy who is known for living a lavish life claimed to have no immovable properties and said that he had cash of around Rs 2 crore in bank accounts and gems and jewellery worth Rs 1 crore only.

                    "Company provides us all facilities...personally I am not a very rich man, the company is very rich," he said.

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Hang me if any wrongdoing found in Sahara, says Subrata Roy

                      Hang me if any wrongdoing found in Sahara, says Subrata Roy

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