The Ponzi Factor: The Simple Truth About Investment Profits

This book is well written and concisely sums up something deeply wrong with the modern financial world, which is the dogma that assumes money grows on the magic stock market tree. What surprised me wasn’t what Tan had written, but rather the absolute pathetic attempts by the naysayers at tearing down his argument.People buy stocks in order to make money from company profits. Companies share these profits by issuing dividends. You can potentially sell your stock shares to other investors at a higher multiple and make money from the capital gains. But the fundamental reason that anyone would own a stock is for its dividends. This is some basic level stuff. And yet, practically every critic has argued against this very simple and old practice of stock ownership. Frankly, that’s a sad state of affairs and only seems to demonstrate that the average investor has no business investing.Here’s a simple example. Suppose I start a company. I come to you and ask that you give me $10,000 and in exchange, I give you a certificate that does not include any voting rights nor ownership in my profits. In fact, I’m not going to pay you one red cent regardless of my profitability. All of my money goes to me and my creditors. Any takers? Because that’s basically most of the stock market today, especially in the tech stocks.Read this book.

You don’t need a finance degree to understand stocks...I definitely don't have one. You just have to look for companies that pay their investors.Short book with a LOT of big ideas. The author backed everything he said with excellent examples and illustrations. Everything was very readable and clear. It can take some time for the ideas to sink in but then I got it. The big takeaways is don’t pay attention to capital gain. The value of a stock is just a belief. Pay attention to dividends because that's real money coming from the company.Great book with a very fitting title. The truth really is simple after you see it. A lot of people can benefit from this short little book.

I am giving it 5 stars instead of the 4-4.5 because it is refreshing to read something that was NOT combed over by an entire team of ghost writers and editors. Most of the time when you read non-fiction these days especially anything to do with the social sciences it comes off so polished it lacks any unique voice of the writer. This small book reads a bit like a long form blog and sort of takes the form of a novel, which I am entirely okay with, as it contains personal accounts of what actually happened to the author. He confirms a few of the suspicions I had already about the Finance world. I have a Bachelors with honors in Economics and did a post-graduate certificate in Resource Economics. Being a micro-girl I do not have much background in the macro world of finance, or money and banking, but my understanding of how it is supposed to function in theory is better than the average person. That is financial markets are not some magical place where money grows on trees to me. I have a general understanding of the theories behind them.Most of my college days were spent deep in matrices, data and cost/benefit reports. I remember the kids from the Business school attached to our university were required to take one of the same statistics courses I was. Back then I remember thinking their ideas ran so counter to just about everything modern economics has to say about how people and economies function it seemed like everything they knew about the economy came from some 1970's or 80's textbook. Since three quarters of the class were actual statistics majors or in the economics department like myself, there was a lot of eye rolling and making fun of the business students. In our topsy turvy world however after college, the objects of our amusement were going to be the ones in charge of vast sums of money after they graduated. Whereas I would be lucky to get some low paying government position at a utility, or some temp job advertised "business degree prefered, degrees in other fields will be considered". From what I could see from the perimeter the business world seemed like nothing more than just a giant propaganda machine. Business school seemed more like a brainwashing factory rather than a real academic pursuit.I have grafted my own personal experiences onto this book so far, and I literally imagine the authors bosses and colleagues as some of my old classmates. Going to school in Montreal a fair number of classmates were rich Americans who are most certainly busy managing hedge funds and ponzi schemes right now.To be honest I am only half way through but thought I would leave a review as there don't seem to be any here. I will edit this later if I feel it requires it.I like probably most people reading this was drawn to the book based on a slick youtube ad.

Very informative, although I fear the only people who would read it are those who already inherently agree with the initial premises. i gave it four stars because while I agree with the author that the stock market is a Ponzi scheme (i.e., investors *do* only make money from other investors putting money into the system), he is badly in need of an editor, and there are a lot of parts that are overly repetitive, though I can understand the impetus to reiterate certain points more than once. I also wish the author would have went further to condemn how the entire capitalist system allows something like the stock market to exist, and investment is basically people trying to make money without having to do a lick of work, but as a former hedge fund person, I suppose the author wanted to believe that there is still good in the stock market if we "fixed" it; I am not so sure.

We had just watched the documentary on Bernie Madoff and searching the internet for more information, I came across this book. Even though this example is not in the book, It explains things like how in October 2008 the Icelandic stock market lost 77% in 3 days, primarily in three bank stocks. I usually highlight in books, and in this one, I have highlights on almost every page. Be forewarned. Learn hidden truths from this book, and your money will be safer.

This is an excellent book. If you have ever wondered how the stock exchange works; or what happens to all the billions that are reported to have been lost in a crisis; this is the book for you. It is a pleasure to read. The writing style is very clear and engaging. Difficult concepts are clearly explained and their relevance demonstrated. This short book has so much more than the big heavy tombs. There are some cracking jokes that highlight the points being made. Like the best books it leaves you wanting to learn more. This is the best book I know to get an in-depth, critical understanding of the global stock market. It is one of those wonderful texts that you can recommend to anyone wanting to have an understanding of the stock exchange whether they are a bus driver, student or economics professor. A vital read.

A perspective that will help everybody who thinks and works in the financial markets

The truth outs with this book. As primarily a dividend investor, it confirmed my worst fears. Anyone holding an over-valued US FAANG stock should be really scared ? Dot.com 2. As it was, I soon exited out of Berkshire Hathaway (probably wise in a bull market). Non-Ponzi stocks are freely available around the world, and pay out real money.

I have often thought about stock market works and wondered about the mechanisms of how money is lost or gained, this book has confirmed many suspicions I have had. You may not like the message, but it is difficult to dispute the reasoning about how the stockmarket functions as a less than zero sum game.