25 Dec 2010 - Merry Christmas!

Hi guys! For those who celebrate this special occasion, Merry Christmas! And for those who don't, may you have a great day ahead!

With the recent unexpected collapse, I think CherryShares needs to be closely looked at to learn from what could contribute to a program’s closure.

First of all, I think the red sign appeared when CherryShares announced their plan to adjust the weekly return rate. That was primarily a sign that there was problem with cash flow. From there onwards, it was just a downhill slide for them.

Members and bloggers who have been in this industry for a while have had similar experiences already. And they most likely signaled to others to pull out right away.
That not only created an unnecessary panic amongst members, it accelerated CherryShares’ debit account. Members started pulling out their principal, and that certainly didn’t help CherryShares.

But, and that’s a big but there, some of the bigger members, I’m saying with investments over $10,000, remained loyal to the program. That explained why for a short period of time, CherryShares did not have any problem paying out smaller amounts.

The issue CS had with LibertyReserve just before the program collapsed showed a somewhat troubling sign of cash flow problems as well with that particular department. AlertPay did not have any problems because of 2 reasons:

• AlertPay is one of the most, if not the most, popular payment processors in the market now. People invest larger sums with this payment processor as they think it’s more reliable

If, and when, the account is suspended, CherryShares could not pull out any money anyway. They probably figured it would be better to keep paying

Nonetheless, CS had been paying consistently for almost 2 years. Why did they collapse?

I think it is simply their time to go, just as any HYIP would when they have expanded beyond their industry. The industry is only as big as the investor base, which is certainly not more than 10,000 I would say. Of course, there are some occasional big investors who just jump in when there’s a big program everyone’s talking about. However, these types of investors are few and far between. For a huge program like CS to keep paying consistently, processing over thousands of dollars every single day, there needs to be a huge money pool.

Unfortunately, that was just not going to happen. I know of a handful of investors who withdraw over $2000 every week from the weekly plan, and you can probably calculate yourself how much money they have in there.

If CS wanted to sustain the growth they were having, it needed to expand outwards. And it just didn’t happen for them, which was why they collapsed.

This may appear to be a simplistic analysis, but I’m sure much of this will make much more sense somewhere down the road, when there’s another program that you think might last forever suddenly collapses. By then, if you take another look at this article, it will probably strike some “aha!” in your mind.

That’s all for today folks! Thanks for reading! :)