I read a very interesting article by David from his blog that discussed, in length, about the possible factors that led to the current climate. He also included some examples of well-managed programs, such as TheVault, as countermeasures to hit-n-runners. I think it was very well written, and every investor, be it a neophyte or old-timer, should take a look. The article can be found here: Link
In response to his article, I want to post my own opinion on this matter. He mentioned that most long-term programs from 2009, such as GNI, Infinitiva, SazaInvestments, and most notably, GeniusFunds, collapsed because it was their time to go. I do agree with his statement, but I would like to add something to that.
I think GeniusFunds, for example, had enough funds in there to keep themselves afloat for at least several months, but it was simply greed that took over the admin(s). Of course, having a hearing with the Canadian government didn’t help matters as well. And there were some investors and bloggers who tried to make a name for themselves by being “prophets”; they predicted that GeniusFunds was going to collapse in X weeks. Was it helping the situation? No. But did they have fun doing it? Boy did they!
Some might ask why I think GeniusFunds had sufficient funds? It was as clear as water that no other programs out there were even close to being a real competition to GeniusFunds. Some investors that I am personally close to had invested close to $50,000 each. And they were reinvesting almost all the time, keeping the cash flow as fluid as possible because they, too, were aware of the risks when cash flow comes to a halt.
To make matters worse,the Canadian hearing prompted a hysterical response from investors who thought this was a 12DailyPro re-enactment show. And many bloggers/monitors took advantage of the situation to make a name for themselves.
And, with Genius’s collapse, comes the real “domino” effect, as mentioned by David. Suddenly, investors found themselves short of cash to effectively pull out of trouble. Add to that the terrifying surge of unemployment globally around mid to end of 2009, cash, for one, was scarce. People had to pay for piling bills, kids’ education, car loans, house loans, education loans, and the list goes on. They had to pull themselves away from these HYIPs, especially when all the programs collapsed one after another. By doing some simple calculations, if one had invested $3000, divided equally among programs such as GNI, GeniusFunds, and SazaInvestments, one would receive close to $800 per month. Some may think that’s a small amount, but for a family with 2 kids and an annual income of slightly over $30,000 (an average income in US), that’s a much-needed financial boost. When all those programs closed, that means the family lost one of their most crucial income streams. To add salt to wound, let’s assume the father – the breadwinner in the family – received the dreaded news from the company at this particular moment, how are they going to survive? How are they going to pay for all the bills? The only way out would be to stop investing in HYIPs, and save, save, save!
I won’t deny the fact that many high-quality programs launched after the collapse of those big programs, but most didn’t even make it past the 6-month mark. David mentioned that some new programs compromised themselves with a huge launch, and I have to agree to that. Programs such as Euronanoinvest targeted investors who made profits from those big, deceased programs, and launched an intensive advertising campaign at the get-go to ring in as many investors as possible. Many bit the lure, and I have to admit, EuroNanoInvest looked very promising at that moment. Nonetheless, the good fortune, or rather the lack of it, didn’t last long. The bad thing about fast growth is that fresh deposits end faster too. There is a limited investor base in HYIP, so when most, if not all, players have already made their first step, the growth just stops there. In other words, a program can only grow as far as there are as many players in the industry to support it.
Besides, greed plays a major factor here as well. Imagine when you log into your account and you see $20,000 in there. The money’s all yours to take, and there will be virtually no consequences if you decide to pull the plug and take off. For experienced admins, they know better than to scam at an early stage as they could possibly get more money if they could keep the program up for another 3 or 4 months. That’s why I suspect EuroNanoInvest, and a list of other new programs that shared the same pace of growth, was managed by young, inexperienced admins. They succumbed to greed and decided it’s better to walk away with all that cash.
When you put all these factors in play, the outcome is our current investment climate. Fear and Greed, these 2 are the main driving force that pushed our industry towards this free fall. Is it the investor’s fault, or are the admins at blame? I think this is a chicken-or-egg question, but what we could focus on is how to solve this problem.
David mentioned that an innovative idea is a good solution. Yes, that’s a good start, but I think it wouldn’t suffice. No matter how honest an admin is, or how creative, innovative or sustainable a program is, all that matters is whether there are enough investors depositing. Look at ProfitStars, which introduced some reinvestment incentives to encourage investors to redeposit, but failed to even make it past the 2nd cycle. The novel idea to encourage reinvestment already set the path for the program to take off, but I guess, eventually, the admin decided to scam just because he’s satisfied with a mere few thousand in his pocket. He failed to realize there could be more potential to his program. If the admin doesn’t believe in the product that he’s selling, how should we expect the product to succeed?
Therefore, in conclusion, I think for a program to be successful, or even just to be sustainable, there are 3 things that are needed:
1) A creative idea
2) An honest admin
3) A ready investor base
At the moment, the investor base is still at an all-time low because many left the industry to pursue better, and arguably more stable, investment opportunities. Plus, there are many still seeking a job. But I do believe that some day, maybe next month, maybe next year, but some day, these people will come back. When this recession is over, and people are getting their jobs back, we will see our industry back to its prime. Until then, I would suggest coming back to my blog often to keep yourself abreast with what’s happening in the industry, and to know more about what other “ground-breaking” articles I have for you! :D
Some might ask why I think GeniusFunds had sufficient funds? It was as clear as water that no other programs out there were even close to being a real competition to GeniusFunds. Some investors that I am personally close to had invested close to $50,000 each. And they were reinvesting almost all the time, keeping the cash flow as fluid as possible because they, too, were aware of the risks when cash flow comes to a halt.
To make matters worse,the Canadian hearing prompted a hysterical response from investors who thought this was a 12DailyPro re-enactment show. And many bloggers/monitors took advantage of the situation to make a name for themselves.
And, with Genius’s collapse, comes the real “domino” effect, as mentioned by David. Suddenly, investors found themselves short of cash to effectively pull out of trouble. Add to that the terrifying surge of unemployment globally around mid to end of 2009, cash, for one, was scarce. People had to pay for piling bills, kids’ education, car loans, house loans, education loans, and the list goes on. They had to pull themselves away from these HYIPs, especially when all the programs collapsed one after another. By doing some simple calculations, if one had invested $3000, divided equally among programs such as GNI, GeniusFunds, and SazaInvestments, one would receive close to $800 per month. Some may think that’s a small amount, but for a family with 2 kids and an annual income of slightly over $30,000 (an average income in US), that’s a much-needed financial boost. When all those programs closed, that means the family lost one of their most crucial income streams. To add salt to wound, let’s assume the father – the breadwinner in the family – received the dreaded news from the company at this particular moment, how are they going to survive? How are they going to pay for all the bills? The only way out would be to stop investing in HYIPs, and save, save, save!
I won’t deny the fact that many high-quality programs launched after the collapse of those big programs, but most didn’t even make it past the 6-month mark. David mentioned that some new programs compromised themselves with a huge launch, and I have to agree to that. Programs such as Euronanoinvest targeted investors who made profits from those big, deceased programs, and launched an intensive advertising campaign at the get-go to ring in as many investors as possible. Many bit the lure, and I have to admit, EuroNanoInvest looked very promising at that moment. Nonetheless, the good fortune, or rather the lack of it, didn’t last long. The bad thing about fast growth is that fresh deposits end faster too. There is a limited investor base in HYIP, so when most, if not all, players have already made their first step, the growth just stops there. In other words, a program can only grow as far as there are as many players in the industry to support it.
Besides, greed plays a major factor here as well. Imagine when you log into your account and you see $20,000 in there. The money’s all yours to take, and there will be virtually no consequences if you decide to pull the plug and take off. For experienced admins, they know better than to scam at an early stage as they could possibly get more money if they could keep the program up for another 3 or 4 months. That’s why I suspect EuroNanoInvest, and a list of other new programs that shared the same pace of growth, was managed by young, inexperienced admins. They succumbed to greed and decided it’s better to walk away with all that cash.
When you put all these factors in play, the outcome is our current investment climate. Fear and Greed, these 2 are the main driving force that pushed our industry towards this free fall. Is it the investor’s fault, or are the admins at blame? I think this is a chicken-or-egg question, but what we could focus on is how to solve this problem.
David mentioned that an innovative idea is a good solution. Yes, that’s a good start, but I think it wouldn’t suffice. No matter how honest an admin is, or how creative, innovative or sustainable a program is, all that matters is whether there are enough investors depositing. Look at ProfitStars, which introduced some reinvestment incentives to encourage investors to redeposit, but failed to even make it past the 2nd cycle. The novel idea to encourage reinvestment already set the path for the program to take off, but I guess, eventually, the admin decided to scam just because he’s satisfied with a mere few thousand in his pocket. He failed to realize there could be more potential to his program. If the admin doesn’t believe in the product that he’s selling, how should we expect the product to succeed?
Therefore, in conclusion, I think for a program to be successful, or even just to be sustainable, there are 3 things that are needed:
1) A creative idea
2) An honest admin
3) A ready investor base
At the moment, the investor base is still at an all-time low because many left the industry to pursue better, and arguably more stable, investment opportunities. Plus, there are many still seeking a job. But I do believe that some day, maybe next month, maybe next year, but some day, these people will come back. When this recession is over, and people are getting their jobs back, we will see our industry back to its prime. Until then, I would suggest coming back to my blog often to keep yourself abreast with what’s happening in the industry, and to know more about what other “ground-breaking” articles I have for you! :D
I hope Oilstructure is one of those successful programs you talked about. I invested 10.000 dollar in there.....
ReplyDeletehi Cody, you really did a great article here. I advise to submit it to hyipblogger Carnival party :)
ReplyDeleteI will leave some comments (my opinion):
-I think no one said Genius would fall next weeks, before they shoot themselves with the "new plan" for those with wealthy pockets.
Even I, suspecting back in December that Genius would see bad times ahead of it, only shared my Alexa idea with BaseBucks admin and never made publicy that Genius would go down in a couple months because I was aware it would cause a unecessary negative effect.
I believe all blogs start talking about Genius with their "new plans" update, including me.
Check here: http://dvdhyip.blogspot.com/2010/02/geniusfund-situation.html
-because of this update, I strongly believe they were indeed running out of money. Otherwise they were simply stupid by sending this update with new plans, because it helped a lot to kill Genius.
-EuroNano was simply a "fast ponzi", because they advertised so hard (I remember fixed banners in most forums) that they saw a very quickly growth. Of course after this fast growth, they probably saw the deposits vs withdraws reverted (negative growth) and pulled the plug instead of running until the funds dry out.
-Profits Stars probably was heavily attacked by hit n runners and I strongly believe very few people reinvested with their incetives due to the big fear among investors.
I agree it was a bit creative, but they should have taken serious measures to avoid hit n runners....
But these are just my personal opinions :D
I will link this article in my blog today,
David
I guess that a key to reincarnation is HYIPs, but not investors. There will be much more investors if HYIPs start operating more qualitatively and become better. We are simply dealing with a total renewal. Therefore it is natural. As well as the belief that everything will be good again. And I think it will be so even sooner than we hope...
ReplyDeleteI fully agree with you hyipnews, as I said in my blog, I already can see promising programs popping up, and with slow launches instead of idiotic massive advertising at launch.
ReplyDeleteThank you for all the constructive criticism! Somehow I only managed to find these comments while looking through my previous posts. Lols.
ReplyDeleteAnyway, @David, thank you for the links! It's always refreshing and enlightening to read your posts :)
@HYiPNews.com, do you think that for the industry to recover, it depends on the programs, instead of investors? That's a pretty interesting perspective..Perhaps we should discuss more on the topic?