Learn New Wall Street Terms
Here’s a guest post from a fellow blogger who is truly inquisitive about the economy, stock market, and all things financial. Investment terms can be overwhelming and hard to understand, but if you study up on just a few terms a week, you can become a savvy investor in no time — or at least you can talk like one!
Learn New Wall Street Terms
This latest downtrend or recession has taught a common man many new financial terms. These terms are not new to the financial sector, they were just buried under the good economy for some time. Now, they are becoming part of our everyday conversations.
1. Ponzi Scheme: A Ponzi scheme is also known as a pyramid scheme. It’s a fraudulent investment plan promising very high returns to investors from their own money or money paid by earlier investors rather than from any actual profits earned. One common way for the Ponzi scheme to attract investors is with the promise of high short term returns. This scheme was named after Charles Ponzi who made this scheme popular in the 20s. Thanks to Bernie Madoff this scheme was brought again into the limelight!
The US Federal Trade Commission says that because of the pyramid’s very nature, at least 70 percent of those who invest in a Ponzie Scheme will NOT see any returns and will lose their investment. It is mathematically impossible to recruit enough investors to pay out to all levels of the pyramid. (more…)
