Is HYIP a type of scam?

[New billionaire]

Dear all young entrepreneur,

I think most of you know what is HYIP (High Yield Investment Program). Basically it is an investment program that offers high return form 2% to 50% daily which is quite ridiculous.
Do you guys think that HYIP is a type of scam? Few months ago, I have a group of friends including myself had lost quite a big amount in HYIP. However, I also have friends who earned millions through HYIP.
In fact, I ask you guys about some opinion to whether any possibility of earning huge amount of money through HYIP or not.
The thing that always appear in my mind is that how they can come out with such high return. What kind of business do they do until they manage to earn such a huge amount to pay the return? Some of the HYIP say they are dealing with oil trading, stocks trading and etc. From what I know, even Warren Buffet can't earn such high return (like 700% and above) per annum. Therefore, I don't really know whether they are actually taking money from those who invested and just pay the interest to those who joined earlier. And lastly, the company closed down and those who joined later would lost.
It seems that the payment mode is always E-Gold for these kind of investment.
Anyone here play HYIP before? Care to share? Thanks.

[kingmoore]

That sounds pretty crazy, and has to be a scam, but I really know nothing about it.

[TheGodfather]

I was just looking at this stuff yesterday, I believe I came across it when I clicked on one of our fellow entrepreneurs sig links. This person seems to run a HYIP. So, we should really listen to what this person has to say.

Frankly I am interested, because you can start with such a low amount. I would just like try it out with a low investment.

on hyip.com most of them only promise a return of 2-4 % isnt that reasonable?

[opcut81]

Well HYIP is a hit and miss. I have invested in a small amount of money and thought I was doubling my money but the website stop paying and ran out with the money. So I think it is a scam but there can be a reliable HYIP if you can find it

[New billionaire]

I was just looking at this stuff yesterday, I believe I came across it when I clicked on one of our fellow entrepreneurs sig links. This person seems to run a HYIP. So, we should really listen to what this person has to say.

Frankly I am interested, because you can start with such a low amount. I would just like try it out with a low investment.

on hyip.com most of them only promise a return of 2-4 % isnt that reasonable?

Well, I think investing in HYIP maybe interesting but the risk is extreme high and they might be scammers. A return of 2-4% daily is considered very high. In fact, it is not easy to find a legitimate business that offers such return.

[MarcL]

Well you just have to be smart, if someone says your going to get 10% daily on your money, you know it is not true, so its a scam, but like 7% weekly or like 1-2% daily it isnt a scam... Plus you can use rating sites to see if people got paid out or not...

[New billionaire]

Well you just have to be smart, if someone says your going to get 10% daily on your money, you know it is not true, so its a scam, but like 7% weekly or like 1-2% daily it isnt a scam... Plus you can use rating sites to see if people got paid out or not...

Well,.. good idea. Actually, what do they do with the money that people invested? Any idea. Or they act as a pyramid scheme and use money of those who joined in the later stage to paid those who joined earlier.

[MarcL]

They invest it in forex, I own my own HYIP, check my sig... I just invest all into forex, Im 2 years expierence and just opened my own HYIP, I used to invest in HYIP's and made $200 off of it, but I got board with that and wanted to make more money, So I learned Forex.

[akula]

The statement "you know it is not true, so its a scam, but like 7% weekly or like 1-2% daily it isn't a scam" is like a dilapidated, abandoned, stray puppy.

It deserves severe sympathy, and it hurts to see a world where the lack of basic awareness about CAPM creates room for such outrageously miscalculation.

[akula]

Well,.. good idea. Actually, what do they do with the money that people invested? Any idea. Or they act as a pyramid scheme and use money of those who joined in the later stage to paid those who joined earlier.

dude..look....as with forex, or pyramid scams or whatever - it's all just a game of musical chairs.

you buy something, and hope to sell it to a greater fool. sometimes you are the greatest fool of all, sometimes not.

this has nothing to do with making investments in assets that produce surplus value. it's a game of hot potato. the trick is to pass it on before you get burnt.

[MarcL]

Well akula, could you return 10% daily to someone for over a period of time... Probally not, so adventually your hyip will go out of business because 10% daily is extream, they would have to take no profit or even get close to losing money...

[MarcL]

Well forex is just like the stock market except for currencys, nothing even close to pyramids

[akula]

Well akula, could you return 10% daily to someone for over a period of time... Probally not, so adventually your hyip will go out of business because 10% daily is extream, they would have to take no profit or even get close to losing money...

sorry bro....

forget it....

[akula]

Well forex is just like the stock market except for currencys, nothing even close to pyramids

actually, that's not entirely correct. there's very few (only 1) difference between NASDAQ (or another exchange/market [i.e. forex market] ) and a typical ponzi/pyramid scheme

the similarity is striking. with a ponzi scheme, you buy your way in because you hope that a later sucker will also come in and pay money, so you can get a stratospheric return. then, you hope to get out before the whole thing crashes.

with NASDAQ and FOREX it's the same thing. you buy at what you think is a low price (even though the seller thinks you a sucker because you're overpaying) with the hope of finding an even grater sucker.

To stop essentially worthless securities being sold to people who think they're getting good value, laws exists to ban certain types of conduct, demand certain kinds of disclosure, and require particular kinds of undertakings from companies who write FOREX contracts or list on NASDAQ.

If these laws didn't exist, NASDAQ would be the same breeding ground for Ponzi schemes as stock exchanges always have been since the time of the Edward's Coffee shop and (more recently) the IPO bubble in 1999

the point: with anything unregulated like HYIP or derivatives, it's always gonna be a ponzi scheme because the only thing that differentiates a ponzi scheme and a legit market for financial obligations is regulation

take away the regulation, and NASDAQ (the secondary market) is simply a vehicle to transfer wealth from one fool to another

the entire idea of an exchange is to help people get rid of things because they're of bad value (if it was good, you'd hold onto it), and if laws didn't exist, the exchanges will always revert to their basic nature, and the fools will continue to get fleeced

[New billionaire]

The statement "you know it is not true, so its a scam, but like 7% weekly or like 1-2% daily it isn't a scam" is like a dilapidated, abandoned, stray puppy.

It deserves severe sympathy, and it hurts to see a world where the lack of basic awareness about CAPM creates room for such outrageously miscalculation.

Dear Akula,

Thanks a lot for your explanation. It is really meaningful especially your comments about the stock market as a type of ponzi scheme if it is without regulations.
By the way, I really don't aware or even don't know wha tis CAPM. Care to enlighten? Thanks.