"Do HYIP Investors Think They're Frauds"
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There're several schools of thought.
HYIP Sites and High Yield Income Programs are Ponzi Schemes
People who're still involved in these HYIP forums and web sites and investing in these programs believe that many are scams, but also believe there are exceptions. They believe they can make a lot of money by finding and investing in the genuine winners.
They believe that every HYIP that's yet existed has not survived for a full year because the honest ones simply fail. When the administrators don't make the money they promised to investors, they simply close up shop and take advantage of being anonymous and don't return the money. But if they had honest intentions to begin with, why are they anonymous?
And if they really were such successful day or forex traders, then why did they fail?
HYIPs are Frauds Because if They Really Made 1% or More Per Day, They Wouldn't Need Your Money
And if they really hadn't proven the success of their day or forex trading systems before accepting outside investment money, then to claim that they were great traders with the ability to guarantee huge returns was a fraudulent claim. They decided to have other people finance the learning curve of their trading careers and then failed. Most forex and day traders do fail. But they have no right to claim they're successful and take your money with that promise.
Interestingly, nobody denies that many HYIPs are deliberate frauds
In the HYIP world, that's a given.
I downloaded a short report posted on a monitor site on how to make money with them. According to this report, the key to HYIP success is diversification. The report assumed that most HYIPs were either frauds or would go out of business within 3 months, so the obvious solution was to invest in many HYIPs. The theory was that enough would pay you a profit to make up for the frauds and failures.
On several HYIP forums I found terrific information on how to do due diligence on HYIPs. That is, how to research the real identity and locations of the program administrations using domain name lookups, DNS, checking on any physical addresses given etc.
If you ever want to dig up information on a website and don't know how to do these thorough WHOIS lookups, I recommend you check out the due diligence threads of an HYIP monitor site. They'll teach you a lot.
I did see some people say that they'd learned not to be wary of HYIPs claiming excessively high profits, such as over 1/2%. These posters didn't seem to realize that "even" 1/2% a day return on invested money is extremely high and therefore a highly suspect number.
However, the operating assumptions of all these posts was that if they could find and avoid all the many HYIP frauds, they would send their money only to the legitimate High Yield Investment Programs and therefore make a big profit.
Otherwise, why even bother with all that "due diligence?"
Here's Your Due Diligence on ALL HYIP Sites -- They're All Frauds
Interestingly to me, I never saw anybody on these due diligence threads say, "Let's analyze how they claimed to be making such high returns and evaluate the credibility of their claimed investment/trading returns and techniques."
The lack of attention -- among HYIPs themselves, their proponents AND their critics -- paid to the business or investment model allegedly followed by the HYIPs to achieve their extraordinarily high claimed profits is amazing to me in and of itself.
Maybe that's because I'm using to reading books by traders and investors in which they obviously love to brag about how smart they are.
Also, I'm used to seeing marketing materials for investment newsletters and trading systems. Although some of the claims are certainly b.s., they do make claims. They do give you some explanation on how a given trading or investment system or strategy supposedly works.
It may not work that well for you, but a sales letter trying to get you to buy some trading software does not spend 1 paragraph telling you how it works in ridiculously vague terms, and another 7 pages telling you about how you can open up an e-gold account. They spend 7 pages telling you how terrific their software is and 1 page how you can order using a money order, check or credit card.
Whether you like or believe in trading software or investment newsletters or not, at least they give their prospects credit for wanting to believe that they are legitimate and credible.
It's amazing to me that the HYIP investing web sites make so little effort to explain and sell their alleged trading abilities
Real Successful Traders Enjoy Writing About Their Theories and Trading Techniques
It's apparent that their prospects neither know nor care about how the paying HYIP allegedly makes money. They see only the promise of 2% gains a day on the $50 they can afford to spend, and don't know or care whether the profit came from options, "manufacturing" or foreign exchange trading.
For all I know, that HYIP site that doesn't even pretend to day trade with the money, but simply moves people up a notch as others send in money after them -- a multilevel marketing scheme that doesn't even pretend to market anything -- does just as well as the sites that claim to represent groups of highly successful traders who now want to let $10 investors in on their good thing.
My own conclusion regarding whether all HYIPs are cons.
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