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Author: Kazim Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4337  
Subject: Dredging up the MLM discussion again... Date: 4/13/2000 1:02 PM
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Last month, we had an argument about the scam or non-scam nature of Multi-Level Marketing companies. (See http://boards.fool.com/Message.asp?id=1040026000020012)
There are a few points I want to toss out, now that some time has gone by:

1. I asked Fang1 to give me an example of a pure MLM company whose stock is a good buy. As an example, he gave me the ticker GTMI. I notice that its run-up was fairly recent, after a long period, and speculated whether this might actually be a pump and dump scam in the making. At the time, the price had run up to 2 1/4 -- high compared to recent years, but pitifully low compared to the companies earliest prices years ago. Later, the stock went all the way to $4.

I sold an imaginary short of GTMI at $2 per share in my fake portfolio (I keep two portfolios on the Motley Fool, a real one and a fantasy one to play around with). Today I checked on my short:
http://quote.fool.com/simple.asp?symbols=gtmi
The stock is back at $1 -- from 4 it went straight back to 2 and then sank steadily ever since. Had you actually bought in on this hot stock, you would have lost half your money or more. I, on the other hand, made nearly $500 of imaginary money. I would say that my guess was spot on. Too bad I didn't act on this in my real portfolio, but I'm still a tad uncomfortable with shorting stocks for real.


2. Fang1 mysteriously vanished after I persisted in asking him to back up his earnings claim and show that he had really made money for the year. Again, as I predicted. This is so typical, and I can't say it enough. The people who are trying to get you into their MLM are about 99% guaranteed not to be making much money at it themselves. They "know" someone (have been introduced to an individual several levels up) who makes good money, or they make an unspecified amount which is "awesome" but they can't tell or show you precisely how much.

This is supposed to be a BUSINESS. When you're a Fool, you don't even buy stocks without thoroughly researching the company first, so why are so many people eager to turn their entire lives around on the advice of somebody who just prospected them in a mall? It boggles the mind.
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