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#Financefridays - Don't invest in what you don't understand - Passive Investing Scams

04/09/2020


I almost got fooled into this Hyper Community BlockChain 300% return garbage. The sales pitch/zoom call starts with lots of truth regarding the need to make our money work for us. Passive income versus the low returns you can get on savings accounts and bonds. The well-spoken and passionate black speaker did also point out there are risks involved in all investments, including this one, but he put this in the same category as all the rest.




In a sense, he may be correct, but I personally view it as a more super risky ‘investment’, which can only produce the super reward, if the cryptocurrency it is linked to, bounces back up, or is doing well when you want your money. With fundamental investing/passive investing, and with analytical investing/forex/day trading or swing trading, at least I can cancel my original position/investment; with this, you cannot cancel your position.




Within my previous posts on passive investing, I have mentioned how important it is to do your due diligence. Understand what the company does and if their financial forecasts and current revenue, assets, debts are well managed; or if there are new contracts and announcements, to give you an understanding of how they will grow, even if they have debts. However, with this Hyper Community Blockchain that uses a platform called Hypercapital, it is not clear on who even owns Hypercapital. Although they will say they are linked or owned by Hypertech Global. Unfortunately, it is not clear if you are unable to easily find the company accounts for them or a bio on the owners from numerous sources.




During the presentation pitch on zoom (who by the way have surpassed expectations and have done extremely well during this pandemic. They became a stock on the open market only in March 2019 with a share price of $60. They have had a 424% growth since then, with a 397% increase in one year. They are presently valued at $418). However, let me not digress further. I was saying, during the presentation pitch on zoom, they do mention and encourage you to do a due diligence check on Hypertech group and the who, the what, the why, and the how of this offer.




It was stated they have an interest in 40 cryptocurrency exchanges worldwide, and all though this could sound impressive, bear in mind there are over 5000 cryptocurrencies; and the majority are not good investments when considering risk versus reward/potential growth. They also mention they’re linked to 4 crypto tokens in the top 200 including MOF, HCASH, UCOT (also known as UCT), and HDAO. None of these are listed in the top 200, MOF is in position 322, HCASH is no longer listed, UCT is rank number 2659 and finally, HDAO is 560th position.




The scheme offers you a daily interest of 0.5% for your blocks of $1000 investment. They suggest $10000 is the best model to start, which will stay locked up for 200 days. Within the platform, you will receive your daily 0.5% interest payments, which can be withdrawn with fees or invested back to then receive compound interest. After one of my questions were answered, as it seemed I was only allowed one, it came to my attention, that yes you would indeed be able to get 300% return in two years, but this would be 300% of the MOF cryptocurrency as your initial deposit would be traded into that currency and your interests paid in MOF. This is where I believe the super risk comes in, as there is no research I have found to give me confidence, this currency will last the test of time. Statistically, there are over 1000 cryptocurrencies that have failed which means 1 in 5 approximately will fail.




This scheme can be very worthwhile if you are very good at sales. As there are multiple extra interest payment benefits for introducing people, similar to other uni-level or pyramid schemes; where you continue to earn interest from the money your team members are also putting in and their team members etc. However, with a little google search, there are those that believe MOF is in fact HCASH which failed and now someone is trying to revive them, as they are stuck with millions of worthless tokens.




Pump and dump schemes/scams are where people try to artificially inflate assets or cryptocurrency. Through buying these assets at a very low price all at once, and then trying to get the price to rise through false and misleading information. Now I cannot be 100% this is one of them, although others on internet forums do believe so. Studies suggest one way to identify one, is where an unknown coin for no real reason seems to rise dramatically. A 5% price increase in less than five minutes has been set as an indicator. Funny enough, if you were to check the time graph of MOF prices, there does seem to be a few crazy rises which I cannot find research to explain.




The company also states the vision is to have a $300 Billion IPO (this means joining the stock market and becoming a public traded company) by 2022. I personally hope many are not left disappointed.




Cryptocurrency has very promising potentials which I will address soon. What are your views on cryptocurrency? I was told Bitcoin are like Microsoft and Etheruem are like Apple. Although you can get fractional shares of Bitcoin I preferred to hold just 1 Ethereum coin as their potential low is $425 but their potential high is $4000 by 2021 and they currently cost $470.97 which is already more than they did when I made my purchase (although for passive investing you do not need to be checking daily more yearly).




However, I have recently learned, a concept called ‘Bull run’ which makes buying any of the top 10 cryptocurrencies very exciting, especially Bitcoin would be my personal preference as they have become the new inflation-proof gold standard. In addition, a colleague explained clearly how he actually mines Bitcoin and makes a tenth of a bitcoin every two weeks. I will explore cryptocurrencies in a future post including being able to earn interest from them on a trusted platform such as Compound.




Ethereum is rank 2, second to Bitcoin in the cryptocurrency rankings. I plan to delve into all the amazing things they do as they are the train and others are the cargo my colleague explained.




I recently posted in an investing forum, the title of this message stating I will stick to my trading 212 accounts, that are regulated by financial authorities. Commenters replied stating how I dodged a bullet they would have taken my money and showed me a fake account, others stated ‘anyone guaranteeing returns on crypto is a scammer’ ‘I had this one lady in my inbox talking about a guaranteed return (30% return) every month on my investment. Never believe anyone when they say an investment doesn’t have any risk involved.’




However, the funniest response to my title ‘Don’t Invest In What you Don’t Understand’, had to go to the genius who stated ‘If that is the case men would never get married’




Being on forums is another very good tip for investing if you have the wisdom to do your due diligence and avoid believing everything you hear. Because a lot of them are on a day trading strategy and the goal should not be getting rich quick but slowly with planning and working backward so you can set targets (this is also a good tip if you are doing day trading or swing trading, having your target to leave and not getting addicted.)




Trading 212 also has a practice mode, feel free to check it out and get a free £100 for your real account when you use this link and deposit the minimum deposit. 
www.trading212.com.



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