What Are Investment Risks?

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What Are Investment Risks? - By: lar, Posted on: 2008-04-19

Picture this scenario:

In search of investments for working capital, an oil company sends consumers surveys of property that suggest the land is oil-rich. The company’s sales force tells interested consumers that top oil experts project the fields will yield thousands of barrels of oil a day — and a tidy return to investors within a year.

A film production company tells potential investors it is raising capital to produce a high-quality, low-budget family film with actors who are willing to sacrifice their usual high salaries for the sake of art. Claiming that the independent film market, cable television and video stores have increased the demand for movies, investors are "guaranteed" to make their money back. According to the prospectus, investor money will be spent on production, distribution and the screenplay.

Brokers of gemstones, rare coins or precious metals tell investors that the market price of these hard assets is skyrocketing. According to the brokers, the assets will increase in value — not only because experts have graded them rare, but also because of the demand.

Brokers of an FCC-licensed partnership tell consumers they’re raising capital to acquire a communications business that can be enhanced with new technology and turned into a competitive high-tech enterprise to be sold or developed for huge profits.

Investment brokers are claiming to sell ownership interests in a company that will offer Internet access to the public. The brokers maintain that investors will realize substantial gains from the fees the company will charge its users.

What’s wrong with these pictures? In a word — plenty.

The oil surveys are fake. The land owned by the company has not been drilled for oil, and in a legitimate deal, much more capital is required to determine if oil could be produced from the land at all.

The principals of the film-flam scam are the "producers" and "screenwriters." They take most of the money raised and then use a small amount to produce a low-quality film that is unlikely to turn a profit, let alone be released commercially.

Gemstone, rare coin or precious metal scam promoters often charge very high mark-ups and, as a result, consumers who try to resell their assets almost always lose most of their money.

The communication technology promised may be unavailable, unworkable or too costly. The partnership brokers take most of the money for themselves after they acquire low-tech businesses for consumers that would require millions of dollars more to have even a slim chance at turning a profit.

The fraudulent promoters generally structure the deals to siphon off at least 85 percent of investor money, never intending to turn over a functioning business with Internet expertise, equipment or staff. Investors are left with little capital, expertise or business with which to compete on the Internet.

It’s easy to make a new venture sound like a sure-fire money-maker, especially if the press is writing about successful legitimate companies in similar industries. Fraud promoters create the illusion of authenticity and success by incorporating, renting office space and issuing partnership units or stock certificates. But while they claim to offer investments in exciting sounding businesses or sell lucrative assets, they deliver cheap imitations of what they promise. As for consumers, they remain unaware that they’ve bought something of little or no value until their money is gone and profits have not materialized.

Article Source: http://www.girlarticles.com

Larry Westfall currently has about 50 web sites – from article sites to Thailand web sites. He lives online and has been successfully marketing eBooks | casinos | credit cards | and Thailand hotel rooms. As a retired soldier he has a straightforward - no BS - shoot from the hip - attitude - which he now applies to Internet marketing.
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