ALL THAT GLITTERS IS NOT GOLD.

 

All that glitters is not gold. Or in other words, this old English proverb has precisely this to say to anyone wishing to invest their money. “Just because an investment may look good, it might not be what it seems.” A good example of this is a Ponzi scheme which is named after Charles Ponzi who was a fraudster who worked his scam in Boston in the 1920s. Ponzi fooled many investors with his scheme which involved taking their money and saying he was investing it in speculation concerning postage stamp coupons. He was so successful at working his scheme that he raked in $15 million in less than a year. That would be quite some performance even today, but back then it was spectacular! 

Many of his targets were unsophisticated folk and they believed him when he said they would earn 50 percent on their investments, or maybe even more. Why did they believe him? Because they wanted it to be true, and if it were true, then they did not want to miss out. It was glittering, and there was the promise of gold. Good questions for these potential investors would have been, “What is postage stamp coupon speculation, and even if it is a legitimate business, how can it earn the kind of returns that you are promising?” Once people began to invest, Ponzi had a problem. How was he going to provide these large rates