1000x returns on your stock purchase? You've been scammed.
I got a so called business opportunity a few weeks ago on a company that is supposed to give 1000-2000 times returns. I did not go overboard and I did like the company the PR person was selling. Since I bought the stock (there was about 3 million sold in 3 days) the stock has had limited liquidity. In fact 0 buying most days. My question is is this a good or bad sign?
Do I really need to tell you what you no doubt unconsciously know is true? You've been conned, my friend. This falls into the category of TANSTAAFL: there ain't no such thing as a free lunch.
This kind of situation always amazes me, actually. I mean, really, if you were involved in a company that had guaranteed 1000x returns, would you tell other people about it, or would you mortgage your home, borrow money from your Mom and sell your car to put in every penny you possibly could?
It's like those late night infomercials from smarmy guys who promise that you too could be on a luxury yacht, surrounded by beautiful women and charming men, rolling in the cash, and you don't even need to do anything to earn the money, just follow their simple one step program that's so darn easy, even a fool could do it. If that's the case, why bother selling it? Why not just hold on to it, make the zillions you desire and enjoy your boat ride rather than worrying about the film crew, cost of running the infomercial and paying for operators who are, presumably, standing by?
Here's another bucket of cold water on your fantasies of making tons of money: the average venture capitalist, someone who invests in risky business propositions for a living, is pretty darn thrilled if they can see 3-4x returns within 24 months and is secretly just happy if they don't end up at -100% of their investments overall.
The key phrase for all of these opportunities (or should i say "so-called opportunities"?) is the old "results not typical". Same with diet programs and everything else that we're constant teased with on television, in magazines and, often, in person too.
It's also like Ponzi schemes, which are alarmingly common and are even the basis of new apps that help you get lots of Twitter followers, for example. The basic idea is that I join, then when you join you pay a fee, part of which goes to me and part of which goes to the people "above" me in the pyramid. As long as new members come into the system, earlier members are paid off and can indeed realize significant profits. Once the chain starts to falter, though, all the people that came in late end up screwed, with nothing to show for their "great investment potential" but a cancelled check and a whole lotta chagrin. The Twitter version? Each person who signs up has to follow the people who are ahead of them in the chain, then they need to get ten people to sign up for the program too. Calculate it out and the early birds can see hundreds or thousands of followers, while the latecomers? They might see 5-10 new followers, even as they're branded as spammers for their efforts to get new folk to join.
Anyway, zero liquidity on your investment? I'm not surprised. I'm sure what you were doing was buying the shares in the shell or dummy corporation that the founders issued to themselves for free. You - and others - help buy their stock and drive up its value, then you realize you're left with worthless paper. This is commonly called a pump and dump scheme, and it's illegal too.
Swallow your pride and I suggest you call the local attorney general to ask them about how to report stock fraud. And good luck. Odds are you've just thrown away whatever money you've invested in the firm.
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