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On a recent trip to Zululand, I found this interesting flyer on my car.

“What does the good Doctor have to do with finance?” I hear you ask. Well, a few natural herbs can help you attract customers, win the lotto and even pass exams!

Now I can hear a few people giggling nervously, whilst the cynics among you will be asking yourselves why, if the good Doctor can do all the above plus lots more with a few 100% natural herbs, why does he need to waste his time and money littering cars with his flyers?

What does a herb doctor have to do with a finance column? Well, just like the good Doctor, who makes seemingly ludicrous claims and people believe him, some very astute and intelligent investors believe that returns of 20% per month are achievable on a regular basis and they are taken aback when they hear that the investment was actually quite “risky”.

From Madoff to Tannenbaum and everything in between, “Ponzi Schemes” seem to pop up with regular monotony. Sometimes “Ponzi Schemes” are more regulated (Think of Enron or Steinhoff). In December 2017, when Bitcoin was approaching the stratospheric level of $20 000, I was getting calls almost every week asking how my clients could invest in Bitcoin, or even why I hadn’t invested them into Bitcoin. Strangely, now at levels of just over $3000, I am getting almost no questions about Bitcoin. The new kid on the block is Cannabis shares, everybody wants a share of this pot.

Why do so many people, who should know better, get caught? Greed leads people to believe that “this time it is different” and they tend to forget the tried and trusted adages that “if it looks too good to be true it usually is” and “there is no such thing as a free lunch”. People tend to forget that the law of supply and demand dictates that higher returns will have higher risks associated with them.

Now the question needs to be asked. Who is more gullible, the good Doctor’s patients or the investors that believe in “the next good thing”?

Kind regards,

Barry Hugo

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