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WBM#65: Playing the Odds

edited by Frederick Mann

(Excerpt from WealthBooster Magazine -- Issue #65 -- February 6, 2002)

[DTF's note: I strongly advise that you do NOT waste any of your time or money on any "programs", "money"-games, "HYIP", etc. - they are ALL scams of some sort or another (typically ponzi-schemes)! However these and related articles are included here as they are still relevant as general life commentary.]

The following is based on two posts to the Financial Independence List following the closure of a program called Income Ventures.

Correspondent #1:

We knew the red flags were there, we might have seen them but refused to believe our own eyes, now we are scammed again and again, what do we do?

[Editor: The warning signal, which I should have picked up, was that some months ago Income Ventures pooled their four separate funds and started "paying" 50%+ per month. They said that this pooling was temporary and would last a few months. I should have been suspicious about this reorganization.]

Another surprising thing is the number of people who keep saying "be ready to kiss our money goodbye when we invest," etc. Don't we want to learn from the bad experiences and progress? Now what do we do? Stop? That's not what we're here for. If we keep going we're going to keep getting burnt.

Is this a 100% money game where eventually all will fail? Or is it a 99% money game with 1% legit ones? If it's the former we might as well quit now. If it's the latter, how do we find that 1 legit one out of a hundred?

Correspondent #2:

I think most people miss the real point, i.e., the truth lies between the two points you mentioned.

The fact of the matter is, THIS IS A GAME where you play the ODDS, period. The mistake most people make is to try to make a judgement call on this one is good that one is bad, therefore I will put my money here.

[Editor: You can always improve your ability to make better judgment calls. Doing so will shift the odds more in your favor. You want to predict how much money you might be able to make with a particular program during its lifetime. (With some programs, e.g., WIGGL, it's a one-time "gamble" similar to a lottery ticket. You bet $25 to "win" $50,000+. If they pay out, great! If they don't, "que mal," "tempi.")]

You miss the whole point. If you dig deep enough you will realize that you/we don't really care whether or not it is a scam as long as we MAKE MONEY during its life-span. We ONLY get concerned when we lose that money.

[Editor: Part of good judgment is to make an intelligent assessment of the probable life-span of any given program. A crucial question is: "Can I recover the capital I put into it before it folds?"]

The expression "you must be willing to lose that money" comes from the simple reality that scared money never succeeds at anything. The acceptance of losses IS an integral part of ANY investment venture not just HYP (high-yield program). But in HYP it is more accentuated, because when you don't your mindset IS different and you take decisions that are detrimental to the outcome you want to reach.

If you accept that you CANNOT control these HYPs and how they are managed and by whom they are managed, then things get simpler. You go to a casino, you know the odds, and you play smart.

[As indicated in WBM#64 - HORSES FOR COURSES in order to win, you need to do whatever it takes to get a winning edge. Correspondent #2 has done that. Correspondent #1 hasn't.]

The name of the game is CASH-FLOW. In a program like Income Ventures you ONLY need two months to get your money back. Of course, if you always re-invest all the time and ***HOPE*** to accomplish these big compounding numbers, you are ALL fooling yourselves. That is exactly WHY AND HOW scammers live OFF YOUR GREED of not treating this like a real business that needs its cash flow to survive.

ALL or almost ALL of these programs WILL at some point fail or have problems along the way.

I hope this can be viewed as a wake-up call because scammers will always exist AS LONG AS greed is the driving force. Those that are NOT able to accept: 1) losses and 2) lower returns than the 50%+/month, are DOOMED to fail.

[Editor: Usually, the higher the return, the higher the risk. Most of your money should be in programs with lower returns.]

The harder you resist that paradigm the more you need to fine-tune your mindset.

The best investors (in the real world of public investment) have long understood that paradigm, that even the stock market is just a giant pool of money (a game) that gets shifted from one side to the other MOSTLY by the wind of sentiments.

You are in this for the money... not to be right about this program or that program. Scammers WILL EAT YOU ALIVE until you have made that mental shift... not just in your mind but in your guts too.

[Editor: Because it's often easier to steal than to produce the wherewithal to survive, there will probably always be scammers -- see #TL07B: The Nature of Government]

The ONLY way to accomplish a degree of safety is to have only 5% of your high-risk capital at risk in any one HYP at any one time. Of course, if you have 25% in Income Ventures or ANY other, your mindset is your enemy. Your motives are built on HOPE and on things you have NO control over.

The size of your bankroll does also matter. With $50 you are much more willing to risk it all and be driven by hope, compared to having a real "business plan" to become financially independent in a reasonable time-span.

Look, there is NO free lunch. NOBODY will hand anybody financial independence in 12 months with $50. So break that fantasy right now and move your mindset to the proper place.

When we say that HYP is a place for grown-ups we really mean it, because we know that when the tires hit the road, the weak hands simply cave in, call for retribution -- in fact now they WANT that 3rd party "protection."

This is (again) why and how ALL forms of governments start... inability of people to govern themselves, to live as sovereign individuals capable of fully accepting that their own actions drove them where they are and that losing money in the HYP is NOT the fault of the scammers but our own decision to participate in a world of 99% fantasy, driven first and foremost by greed.

If you grant that power to a 3rd party, it WILL be used and ABused.

I know that lots of people will probably swear at me or say I am crazy and it is because of people like me that scammers exist, because I don't fight them.

You don't have to fight them. In any system you have to learn to LIVE with the parasites. In fact, I make a living because of these parasites. I outsmart them thanks to the others who are too greedy to really understand the true nature of this game.

I can't ask people to make a mental shift in 24hrs, but again, the more you will resist that paradigm the more you are in trouble.

The other day there was an arrogant post from someone who gladly shouted he had "invested" 30k in Crystal Capstone and would roll it over (forever :-). I didn't reply to that one because there was not much to say. But I can tell one thing, you could hear the same thing when the NASDAQ was at 5500.

This is GREED at its paroxysm, guys.

You DO NOT need to be right to make money, you just need to diversify and extract money off the table ALL the time. But of course if you always want to double your money every two months you will be screwed for life. Your focus is on finding THE right program (hoping they won't screw you), instead of making money.

In fact I must thank YOU, because those who live from HYP are those who get the money from the people who refuse to take it off the table.

If I am crazy, it is because I am crazy to share this with you because if everybody really applied this it would lower the returns from HYP. On the other hand, it is so much easier to fight it than embrace it. It is human nature to choose the easier road... hope instead of discipline.

Check the first page on Frederick's site to become a member. (I am paraphrasing here) -- If you think you can just sit back, relax, and collect your dues you are dead wrong.

The brain is a smart toy. It will always remove things we don't want to see (not ready to see). So even if we "see" it, it does not compute, it does not register. In that little innocent phrase there is a lot of information, wisdom, and experience... everything lies in there.

No amount of research, no amount of due diligence, will ever save you ALL the unavoidable losses of the game, hence the necessity of accepting them as an integral part of the system. You have not only to accept them when they come but most importantly BEFORE entering the arena.

We all have our pain threshold, but in general having more than 10% in any one HYP is simply asking for trouble and you will deserve to be mad and screwed. There is no such things as 50%-100% per month without risk.

I want a million bucks tomorrow and I want my $50 to be GUARANTEED. Go! Here's my 50 bucks and don't bring me bad news. Just earn me the "freekin" money you told me you would.

I hope I have turned the switch "ON" for some and that diversifying is not just a word but encompasses a lot of meaning in the way you think, you operate, and in the end will fail or succeed.

Scammers do not make you fail, period.

Note that I will not reply to flames, anger, frustrations. If you can't see the wisdom and experience beneath this, I can't do anything more for you at the moment but thank you for your money :-)

We ALL have two basic choices in life and they determine who we are:

  1. You chase shadows of the past; or
  2. You work at building the future you WANT and take the outcomes along the way as feedback to adjust and re-align yourself toward that unique vision we all have of ourselves.

Good road to all.

[Editor: There is a great deal of information on how to succeed with HYPs at Bigbooster - register as a BigBooster Associate (if you haven't yet).]


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