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Matt Stewart

 
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  • Shattering The Personal Consumption Myth 3.0 [View article]
    the ftc lawyer said there is nothing illegal about internal consumption...if it coexists with legitimate retail sales...

    eg. if a company has customers outisde of the pay plan and sells to internal users there is nothing untoward about this...

    if, however, the only purchases that are being made are made by pay plan participants then you have a problem...not because of the presence of internal consumption but because of the absence of retail sales...
    Mar 18, 2014. 12:12 PM | 8 Likes Like |Link to Comment
  • The Pyramid Scheme Industry: Examining Some Legal And Economic Aspects Of Multi-Level Marketing [View article]
    Great Work Guys...

    The only way to make sure that the product is not the business opportunity itself is to tie compensation directly to consummated retail sales to "ultimate users".

    This standard alone would create the necessary incentive to reduce reliance upon recruiting.

    Inventory purchased would match with final demand one would hope.

    Perhaps there would still be business failure, but at least those in the upline wouldn't get paid up front for stuffing the channel v. getting paid only on sell-through.

    I actually like the term "channel stuffing" instead of inventory loading to describe how pyramid schemes work.

    Koscot is the way to go to clean-up this mess.
    Mar 17, 2014. 04:41 PM | 14 Likes Like |Link to Comment
  • Will The FTC Summon 'The Kraken' To Investigate Herbalife? [View article]
    ty..great post...any additional color you can add?
    Mar 17, 2014. 03:28 PM | Likes Like |Link to Comment
  • Will The FTC Summon 'The Kraken' To Investigate Herbalife? [View article]
    Doug...do you have any insight into how those arguments went? Is the central argument over internal consumption?
    Mar 17, 2014. 12:54 PM | Likes Like |Link to Comment
  • FTC Investigation Is A Game Changer For Herbalife Longs [View article]
    The FTC will shutter this pyramid scheme. Do not underestimate their integrity under the new regime. Same goes for Ms. White who now runs the SEC.

    If there is evidence of fraud the company will be shut down.
    Mar 13, 2014. 09:30 AM | 3 Likes Like |Link to Comment
  • FTC Investigation Is A Game Changer For Herbalife Longs [View article]
    Who is going to run the company when Mr. Johnson is arrested?

    How will they finance themselves when they file for insolvency protection?

    How will they pay the massive fines that will be levied?

    I love your optimism JD...but for its delusion
    Mar 13, 2014. 09:27 AM | 1 Like Like |Link to Comment
  • Herbalife In China Could Be The Ultimate Lesson In Costly Ignorance For Longs [View article]
    QTR....this may be your Magnum Opus so far...my biggest question right now is which senior executive at Herbalife will grow a conscience and turn state's evidence if they haven't already.

    Ackman made it clear on the call that personal liability for damages could be huge.

    Here's another question I have. How would you feel if you were the husband or wife of one of these HLF recruiters? What do your neighbors now think of you? What about your kids?

    I can only imagine the level of stress must be huge. Sleeping at night must be tough. Unless, of course, you are either delusional or a total psychopath.

    Herbalife is an obvious confidence game.

    As Mr. Ackman said on the call yesterday, if the potential marks had the full fact base in front of them nobody would sign-up to become a distributor. Still, the controlled recruiting machinery continues to proliferate in the dark alleys of society around the world while the cashflow spills its way to places like Newport Beach in California.

    One would think that a conscientious regulator would be licking his/her chops to take this monster out of circulation.

    I remain short and convinced that HLF will be shuttered and that the world will be a better place as a result.
    Mar 12, 2014. 09:02 AM | 6 Likes Like |Link to Comment
  • Argumentum Ad Hominem Shows Herbalife Desperation [View article]
    because the evidence of illegal activity is obvious...all you have to do is go to Youtube to find it...
    Mar 11, 2014. 12:09 PM | 3 Likes Like |Link to Comment
  • Argumentum Ad Hominem Shows Herbalife Desperation [View article]
    I think you are naive....Ackman is pressing his case but to argue that the advocates who have joined his cause did so because he paid them is a fallacy...

    isn't it more likely that they simply concluded that HLF is sinister and therefore joined the cause?

    Isn't it possible that Linda Sanchez acually thinks Latinos are getting hosed?

    LULAC seems pretty brigth to me...isn't this a good cause for them too?

    The reason Mr. Ackman is not a voice in the wilderness is because others have seen the truth too...

    this is nowhere in the Times piece
    Mar 11, 2014. 10:24 AM | 5 Likes Like |Link to Comment
  • Are Pyramid Schemes Inherently Fraudulent? [View article]
    Does your argument rely upon the notion that market participants have perfect information and therefore act rationally?

    Don't MLMs rely upon information assymmetry for their proliferation?

    Isn't this the central element in the fraud?

    Consider an Island economy like Newfoundland or Iceland. The Marketing Plan intentionally proliferate sto the pointo fo pain. Recruiting is emphasized over territorial exculsivity. As penetration, saturation levels increase the marginal participant has to lose.

    Why?

    Because the early entrants have secured whatever legitimate customers may actually exist.

    Still, the fruad perpetuates as, marketers of the "business opportunity" contend that the opportunity set for retailers is limitless - which of course it isn't.

    Whether or not real people drink Forumla 1 to lose weight or not is not what makes HLF a fraud. What makes it a fraud is the endless chain of recruiting that is the result of the incentives laid out in their comp plan.

    The life-cycle is always the same.

    Find a mark.
    Build their confidence.
    Capture their imagination and start-up capital.
    Watch them fail due to over-saturation.
    Wash. Rinse. Repeat.

    The world is a big place with a constantly churning population by age and demographic. Herbalifers an spin their yar for a very long time.

    Still...the evidence of fraud is obvious when one looks at the huge % of participants who make no money and subsequently quit.

    If HLF had a solid product with a solid distribution model turnover rates in its distributor base would be low, territorial exclusivity would be desired and paid for by distributors.

    Instead, we see this perversion of rational distribution economics where most of the gross margin is paid out to a perpetually churning salesforce with the most senior salespeople spending most of their time selling hopes and dreams v. product to consumers.

    Pyramid Schemes are frauds because what they promise is obviously impossible set against what they actually deliver.

    Like selling two tickets for every seat at a Rock Concert. The arena only has enough capacity for one ticket holder, not two. The guy who biuys the second ticket and gets there late gets hosed.

    That's how this scam works....over and over and over again.

    Too many distributorships leaves the junior recruit holding the bag.

    The sooner regulators shut it down the better.
    Mar 10, 2014. 10:04 AM | 12 Likes Like |Link to Comment
  • Does Mr. Stiritz Play Texas Hold 'Em? [View article]
    this of course explains why the stock is lower since January 1st...due to all of this buying...including a 10 million share buyback...

    seems to me someone has been selling too JD...
    Feb 13, 2014. 02:38 PM | Likes Like |Link to Comment
  • Does Mr. Stiritz Play Texas Hold 'Em? [View article]
    $66 = $100 (Y)
    Feb 12, 2014. 04:44 PM | Likes Like |Link to Comment
  • Does Mr. Stiritz Play Texas Hold 'Em? [View article]
    maybe...or maybe he has so many "outs" he is actually ahead...
    Feb 12, 2014. 04:43 PM | Likes Like |Link to Comment
  • Does Mr. Stiritz Play Texas Hold 'Em? [View article]
    I think something got lost in the edit...

    should be EV1 (X) + EV2 (Y) = $66

    of course any probability x $0 = $0 so residual is 66% of $100 target

    all of this assumption based of course as is the notion that there may be an array of outcomes v. straight binary

    still...if we take these as the extremes the math is simple...
    Feb 12, 2014. 04:36 PM | Likes Like |Link to Comment
  • Does Mr. Stiritz Play Texas Hold 'Em? [View article]
    I think it is fair to say that all three are aggressive...I think they would also perceive of themselves to be tight players...

    in the end...someone will look loose in retrospect...

    for sure...somebody is drawing dead...
    Feb 12, 2014. 11:26 AM | Likes Like |Link to Comment
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