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What If We Were Too Transparent?

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It is very rare that I see a commercial that makes me laugh out loud, but this one did:

I could watch it a hundred times. In fact, I probably have.

If you haven't watched the commercial (come on, it's only 30 seconds), the grandfather is too transparent about his answers to some questions and unfiltered with his thinking.

The commercial was the first thing that came to mind this blog post by John Hempton, Chief Investment Officer, Bronte Capital:

"I agreed with Bill Ackman that Herbalife is mostly about ripping off distributors and people at the end of the chain. The product is more than twice as expensive as competitor shakes. I called Herbalife 'scumbags'. But they are highly cash flow positive scumbags and they will use the cash flow to buy back shares. ... They are scumbags then - but they are scumbags working for stock market investors."

So John Hempton's theory is that defrauding people ("ripping off distributors" to use his own words) is okay as long as the company is publicly traded and funnels some of the ill-gotten profits back to investors.

I wonder if he'd support and invest a public company that simply robbed banks if it paid a handsome dividend. Sounds like he would.

Where do you draw the line on being fine with illegal activity as long as it helps stock market investors? Would he back Murders 'R' Us?

Let's continue with some more of his blog post:

"That I pointed out was similar to tobacco companies. Tobacco companies kill 5 million people globally per year - 400 thousand of them in the USA. Is anyone stupid enough to think the government would close them? That has been a bad short thesis for decades!

Bill Ackman is shorting a profitable company - and his argument is that they run an illegal pyramid scheme. By implication his argument that the government is going to somehow close them down.

That is a really truly awful short thesis - the short thesis that Government is going to come and help poor people and a billionaire hedge fund manager! Normally neither group is high on the agenda!"

First off, I'd be all for the government shutting down tobacco companies. I don't know why the government hasn't done it long ago unless lobbying and political contributions are keeping them in the game.

However, there's a difference between ripping off distributors and tobacco. Is there anyone out there who isn't aware of the dangers of tobacco? It's not like people think tobacco is healthy and is going to make their lives better. Yet the marketing of MLM is that it is good and going to better the lives of distributors. Tobacco is bad, but it isn't fraud.

It's worth taking note that the government shut down Bernie Madoff's scheme. So Hempton thinks it is going to cherry pick which schemes to shut down? He thinks the government is going to ignore fraud, because it doesn't want to help a billionaire hedge fund manager? I honestly think that the government has more on its plate than caring about Bill Ackman.

To be fair this blog post of Hempton's was written over 18 months ago. With the benefit of that hindsight, we know that the FTC is investigating Herbalife. So the process to shutting them down is underway.

I couldn't let it go unnoticed that even when some people admit that MLM is fraud, they shrug their shoulders and support them anyway. One has to wonder how Hempton got in the position to be a chief officer of anything with the lack of logic... maybe the lack of morals got him the position. Can't imagine why anyone would put a dime of their investing dollar with Bronte Capital.

This post deals with: ... and focuses on:

MLM

Last updated on August 18, 2014.

The Lazy Guide to Budgeting – 7 Ways to Make It Easier to Stick With

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The following is a guest post by Fanny Seto. She is the creator of Living Richly Budget Printables, a 20-page printable bundle and budgeting system that makes it 20-seconds easier to stick to a budget. She is also the Editor-in-Chief of Living Richly on a Budget, a personal finance blog. I met Fanny when I […]

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Budgeting

Last updated on August 26, 2014.

Are Roth 401(k)s and Roth TSPs Better? (Part 2)

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[Editor's Note: I'll do my best to catch you up, but today's article depends on the foundation I laid in yesterday's article. If you find yourself a little lost, my best advice is to catch up with that one first.] Yesterday, I wrote about Money magazine article which is slightly different than the version that […]

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Investing, Retirement

Last updated on August 22, 2014.

Are Roth 401(k)s and Roth TSPs Better? (Part 1)

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On page 37 of this month’s Money Magazine, Penelope Wang makes a strong suggestion that everyone should stop passing up on Roth 401Ks because they are better than traditional 401Ks. This was shocking news to me. I figured that if this is true, it should be “Front Page” material, not a buried in a one-page […]

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Investing, Retirement

Last updated on August 22, 2014.

From Ice Buckets to Polar Dips: Making Your Fundraising Go Viral

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[Editor's Note: This is a guest post from a reader who goes by Tanya O. I had thought about not publishing an article about ice bucket challenge since it gets so much media coverage already. I changed my tune after seeing a commercial last night about the dangers of the "fire challenge" where (mostly) teenagers […]

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charity

Last updated on August 23, 2014.

Is Xocai a Scam?

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[This article was originally a placeholder. A commenter named Paul significantly hijacked the conversion on my article exposing ViSalus as a scam. I've done my best to move most of those comments and conversation to this article. Thus there's a little discussion about ViSalus which may be confusing, but I hope it is minimal. Finally, […]

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MLM

Posted on August 22, 2014.

Are You Friends With Your Checkbook?

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Most of us strive to try to keep a budget each month. Everyone has fixed costs that have to be covered, such as the rent or mortgage, insurance, and food. Some people call these a “monthly nut”, but I’m not a squirrel. I like to call these “necessary expenses” and have tracked them over time. […]

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Banking, Budgeting, Credit Cards

Last updated on August 20, 2014.

Does Anyone Understand Cell Phone Family Plans?

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If you asked me this question a few years ago, I feel like my answer would be a clear yes. It seemed relatively simple. Split a bucket of minutes and data amongst your family and pay a price and be done. Every couple of years, each person could get a new subsidized phone. Financially, I […]

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... and focuses on:

Spending

Last updated on August 19, 2014.

Ask the Readers: Best Place to Invest Around $1000?

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A few weeks ago, I wrote an article about whether I should invest my babies’ money. I think the general consensus was that I should, especially because I’ll personally make up for any losses. (Don’t you wish all investing companies were as cool as me?) So the question then becomes, where do I invest the […]

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Investing, Kids

Last updated on August 16, 2014.

Lending Club Update (August 2014)

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As regular readers know, I’ve been posting my Lending Club updates for years now. At the start of 2011, I was making a 4.78% return on my ultra conservative loans. I started to mix in more risk and it moved up to 5.90% by March and 6.42% by May. Three years later, I gave my […]

This post deals with: ... and focuses on:

Investing, P2P Lending

Last updated on August 13, 2014.

 
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