You’re just too good to be true, can’t take my eyes off of you…
An empire is crumbling right before our eyes this month. The Farm to Market empire is starting to fall apart, facing a deluge of complaints and closure orders from the SEC. Investigations and probes are underway.
For context, one word: Ponzi. That’s it, read the paper for the rest, but that should be more than enough for the astute.
Here we are, at the tailend of a Ponzi scheme. A tale as old as time. Profit above all, money above sense, and the same furious, dangerously optimistic recklessness that has driven the lucky to wealth and the vast majority to ruin.
There are quite a few takeaways from this, many of which are lessons that are oft-repeated and deserve to be repeated. Let us divine.
The first is the general wisdom of “if it’s too good to be true, it probably is.” A healthy dose of cynicism and skepticism is crucially important when it comes to decisions that involve finances. Investments that promise significant returns at insignificant risk within an insignificant timeframe are unrealistic.
Money is not infinite and does not come out of thin air. It has to originate from somewhere. If the profits of what you’re investing into are that high for that low cost, ask yourself this question: If this business venture generates that much profit, why does it need investors?
The second takeaway is that you are not above being tricked; you are not above making mistakes. This, I think, is the more important takeaway, even though it doesn’t seem like it.
It is extremely easy to look at someone who has fallen for a scam and think, “Well, I’m better than that; that won’t happen to me.” But trust me when I say that this is never true, and this complacency could ironically be the reason one falls for a trick that is beneath them.
Sure, a Ponzi scheme might be easy enough to spot because it is such a well-known scam. But there is no perfect defense. Any fortress will have a weak spot.
This brings to mind the more elaborate schemes known as sha zhu pan, translated into English as pig butchering scams. These are called such because they take a lot of effort to establish connections with the marks, sometimes taking months of preparatory work. Hence, pig butchering—they fatten the pig before the slaughter for the most profits.
To illustrate this point, Last Week Tonight, a highly respected investigative show, ran a story on sha zhu pan. Among the victims they managed to get a hold of was an esteemed and established lawyer, who had run multiple background checks and consulted with experts and still managed to get scammed.
Do not think yourself above making mistakes; while this mindset may not protect you a hundred percent—for every thing has a weakness against which it has no defense—at the very least, you’ll have better odds and spot the lies coming from a mile away.
