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January 31, 2009

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I'm wary by nature so I'm always checking into things. I have yet to fall for a 'too good to be true' offer.

Great post.

Our dad always used to "burst our bubble" when we got excited about things that he knew were too good to be true but we had no clue on. Once in Jr. High School we bragged to him about having like 12 friends saying "dad we are so popular, everybody hangs out with us" and he without thinking twice or sugar coating it said "don't think cause all these people hang around you two means that you are popular, you are not...you don't need to be popular". He gave us a quick lesson that made good sense and we never forgot that "bubble bursting" moment or any of the others. As work at home moms we find other mothers who could benefit from having their "bubbles bursted" when it comes to finding work online. Many of the offers available out here are just flat out scams and too good to be true. Yet struggling moms put what little money they have into them ne-way. The same advice you gave for finding the moral high ground in financial investors is along the same lines we give for finding legitimate work from home jobs. There are many businesses online ready, willing, and able to help, a simple search on the net for legitimate work from home jobs and digging from there will give sound information. Sista-WAHMs gives this post two thumbs up. A post that is too good but absolutely true.

The age-old statement, "If it sounds 'too good to be true' it usually is," can apply to numerous different industries although the article utilized a Ponzi scheme as an example. On a recent broadcast news commentary, the investigative reporter examined www.freecreditreport.com and exposed how its sale pitches, catchy commercials, and jingles mask the truth. Several times during the report, the reporter reminded views that individuals can accomplish essentially the same thing through www.annualcreditreport.com to monitor their own credit reports. For another example, heavy advertising to "refinance your higher interest rates into your mortgage and the interest might also be tax deductable." That bombardment of advertising not only RUINED many very good loan officers (as high as 37.5%) who LISTENED and ATTEMPTED to educate borrowers and potential borrowers about various other--and less risky--available options. Due to the constant bombardment, one mortgage brokerage finally decided that, if a borrower was unwilling to listen to WHY a cash-out refinance was NOT in this borrower's best LONG-TERM interest, the borrower's decision could possibly lead to eventual foreclosure. The truth is that, in MANY instances, the heavier or more frequent the advertisement stating how "good" a specific product or service is, the more likely the adage, "If it sounds too good to be true, it usually is" applies.

So true. Very good article and very interesting story about the wine.

An interesting thing about Madoff as well as the one that probably attracted otherwise intelligent people is that he wasn't offering spectacular returns. His returns were around 11% a year - something many funds provided as an average return over 10 year history at least until the recent crash. The key of course was "average" as opposed to year-after-year. The thing unusual about Madoff was his consistent return - in both good and bad years. But the fact that he wasn't offering 50% in 6 month but a "mere" 11% a year was what made supposedly savvy people like hedge fund managers believe him. They probably didn't think of his returns as "too good to be true". Even SEC looked the other way: as early as 1999 one hedge fund manager investigated Madoff's supposed strategy, determined it couldn't have possibly been true: not only a specific option trading strategy couldn't have achieved these returns, but at no point during the past years the number of PUTs and CALLs for specific companies was large enough to account for Madoff's investors. He decided it must be a Ponzi scheme and wrote to SEC about it. Nothing came out of it.

Madoff was also a family friend to many of his investor. That's I guess another moral - don't trust someone with your life savings just because it's a family friend.

Remember that commercial by Capital One, the credit card company with the catchy phrase, "What's in your wallet?" Well now you should ask "Whose in Your Wallet?" and if you don't know the answer you could end up with too much month at the end of the money.

I think the problem is that most people are inherently looking honest and always looking for opportunities. When you put those same values to work on different dishonest people when you have a problem. That is where and when these dishonest people take your money from you.

Another good one from Marotta.

I got an email a few days ago, supposedly from the CEO of NewLight Investments Co. He wanted to exchange links with me, but after looking at his site, I did not even respond. It definitely fits in the too-good-to-be-true category, if it's not an out-and-out scam. It's a really snazzy website, but the suggested returns and zero risk they advertise seem impossible. I am monitoring his website to make sure he does not link to my website, although I don't know quite what I will do if he does. If Marotta or FMF readers care to check out NewLight Investments, I'd be very interested in your reactions.

In response to the NewLight Investments site: It's not even a very good scam. It has no specifics whatsoever, numerous spelling mistakes, no "client testimonials", etc. I have seen better cons from the famous Nigerian 419 scams.

Maybe this is a test to see how stupid people are? Or maybe put up as an educational tool by a legitimate company to then reply to inquiries and explain why the respondent needs help. (Like the US government once put up a site and informed respondednts about ID theft.)

Or maybe it's simply a new way to distribute viruses.

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