If it sounds too good to be true

eThe tortoise once went to the hyena to borrow a pot. He asked for the biggest pot the hyena had and promised to return it two days from that time. The tortoise returned the pot but he also gave the hyena back a smaller pot and told the hyena that his big pot gave birth to the smaller pot while it was at his place. This obviously sounded too good to be true but the hyena accepted the pots. A few days later the tortoise comes back again to borrow a pot, this time the hyena gives him two hoping the pots will probably give birth to twins. Alas the tortoise comes back a few days later looking so dejected and told the hyena that his two pots died a few days before then and he had buried their remains. The hyena was dumbfounded but for him to have believed that pots could deliver other pots left him with no choice but to accept that pots could also die.

Someone once told me “if it sounds too good to be true then it is too good to be true”. A few years ago a lot of financial “investment” companies flooded the country telling people to invest their money and get about 100% profit in a few months if they invite more people. A lot of people fell for this and this typically runs on the pyramid scheme (that has been banned in a lot of countries) and this is a fraudulent scheme in which the perpetrators recruit people to pay money to those above them in a hierarchy on the expectation that they will get payments from those below. When the number of newly recruited people eventually dwindles, the payment structure collapses. This is quite logical because the system will get to a stage that will require the whole world population to be part of the scheme and that is logically impossible. Parallel to this scheme is the Ponzi scheme which is a more cunning and devious scheme. In this scheme people are lured to invest with a promise of huge profits in a short time but the supposed profits are paid to early investors from money actually invested by later participants. The system usually runs for a long period of time as long as new participants keep coming in or the old ones re invest their returns and one of the most recent protagonists of this scheme is Madoff. A lot of investment structures in this country run on either of these schemes or a combination of the two and the recent downturn really revealed a lot in of this even from institutions that we expected a lot from. There’s a saying that one should put one’s money where one’s mouth is. This is true and I will further add that one should also put one’s mouth where one’s money is. Know the business you are investing in and not the figures it is giving. Understand the nature of the business you are investing in and investigate to see if they are running a games on their customers because though a few people make good out of them the majority loose their money on the long run.