Con tricks and scams are as old as civilization, and the Internet has made some of them much easier. The sort of people who are targeted by scam artists are the ones who are looking for an edge, a way to make money that is easier than it should be, but are not quite sure how to do it. That's right, the sort of people who read BWH. Hopefully this post will give you a heads up as to how these things work, so you won't be the next sucker. I don't recommend running any of these scams - some of them are illegal and the rest of them generally give poor returns. There are far better ways of making money. However, I see trying to run variations on some of them right here in BHW, so I thought I would write them up.
1) The Martingale. This is a system that generates small steady profits balanced by the risk of an enormous loss. The classic example is a gambling system where you have an even money bet. You bet $1 after every win, and double your bet every time you lose. That way, after a string of losses when you eventually win you make back all your losses. The catch is that at some point you will have a string of losses so long that you will be unable to double the bet, either because you have reached the house limit or you have exhausted your bank account. You should assume that any FX, gold or stock market trading scheme, or any poker playing bot is an example of a martingale. Even if you write the bot yourself it may still turn out to be a Martingale without you knowing it!
2) The Spanish Prisoner. Also known as the Nigerian Money scam. You get a letter saying you can receive something of great value if you can provide your bank account details and/or pay a small deposit. Of course, additional payments turn out to be required if you make the first one. This scam dates back to the early 1900s at least. Every so often some Internet newbie falls for it and they declare a national holiday in Nigeria.
3) The Inner Circle scam. You are invited to join some elite club or web site. The membership is cheap, so you sign up. There is some interesting stuff there, but not very much. However, soon you are told that there is an inner circle where the read good stuff is. Of course it costs a lot more, but it has what you really need. So you sign up for that, and guess what? In a few weeks you learn that there is an even more elite group... The best non-Internet version of this scam is Scientology, but it also seems to be the becoming really common in the Internet Marketing world. 'Nuff said.
4) The Multiple History scam. Someone starts sending you racing tips or the winners of football games or stock market moves or whatever - anything you could make money off if you could predict it in advance. After about ten of these that were all correct they offer to sell you their next prediction as the bookies will no longer take their bets. What would you pay for a sure fire prediction that has been right the past ten times? Hopefully not a lot, as the scam artist has been sending these out to thousands of people with every possible permutation of results, and then just picking the one in a thousand people who got all the correct results to make the money pitch to. I've seen a variation on this where someone pointed to a blog showing near perfect FX market predictions all timestamped in advance of the move. I wonder how many blogs he started off with to get one good one?
5) The Abramovich method. I can't talk about this one as it is not allowed on BHW, but don't do it. You will end up in jail. If somebody offers you a long term investment that seems too good to be true, then it probably is. The only person qualified to manage your investments is you, and the best investment you can make is in your own knowledge and skills.
1) The Martingale. This is a system that generates small steady profits balanced by the risk of an enormous loss. The classic example is a gambling system where you have an even money bet. You bet $1 after every win, and double your bet every time you lose. That way, after a string of losses when you eventually win you make back all your losses. The catch is that at some point you will have a string of losses so long that you will be unable to double the bet, either because you have reached the house limit or you have exhausted your bank account. You should assume that any FX, gold or stock market trading scheme, or any poker playing bot is an example of a martingale. Even if you write the bot yourself it may still turn out to be a Martingale without you knowing it!
2) The Spanish Prisoner. Also known as the Nigerian Money scam. You get a letter saying you can receive something of great value if you can provide your bank account details and/or pay a small deposit. Of course, additional payments turn out to be required if you make the first one. This scam dates back to the early 1900s at least. Every so often some Internet newbie falls for it and they declare a national holiday in Nigeria.
3) The Inner Circle scam. You are invited to join some elite club or web site. The membership is cheap, so you sign up. There is some interesting stuff there, but not very much. However, soon you are told that there is an inner circle where the read good stuff is. Of course it costs a lot more, but it has what you really need. So you sign up for that, and guess what? In a few weeks you learn that there is an even more elite group... The best non-Internet version of this scam is Scientology, but it also seems to be the becoming really common in the Internet Marketing world. 'Nuff said.
4) The Multiple History scam. Someone starts sending you racing tips or the winners of football games or stock market moves or whatever - anything you could make money off if you could predict it in advance. After about ten of these that were all correct they offer to sell you their next prediction as the bookies will no longer take their bets. What would you pay for a sure fire prediction that has been right the past ten times? Hopefully not a lot, as the scam artist has been sending these out to thousands of people with every possible permutation of results, and then just picking the one in a thousand people who got all the correct results to make the money pitch to. I've seen a variation on this where someone pointed to a blog showing near perfect FX market predictions all timestamped in advance of the move. I wonder how many blogs he started off with to get one good one?
5) The Abramovich method. I can't talk about this one as it is not allowed on BHW, but don't do it. You will end up in jail. If somebody offers you a long term investment that seems too good to be true, then it probably is. The only person qualified to manage your investments is you, and the best investment you can make is in your own knowledge and skills.
