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  • Has The Direct Selling Association And Multilevel Marketing Given Up On Retailing? [View article]
    Thanks for the article. Keep up the good work. Pyramid schemes harm people. MLM's without effective safeguards will inevitably harm people.
    Nov 17, 2015. 06:49 AM | 2 Likes Like |Link to Comment
  • Herbalife: Connecting The Dots [View article]
    Hi Reel Ken,

    I believe that my argument mirrors the FTC's complaint against Vemma (an argument that did hold up in court) because I see only minor differences between Vemma and HLF. You say that there is a big difference between Vemma and HLF. Please elaborate.

    Nov 10, 2015. 06:32 AM | 1 Like Like |Link to Comment
  • Herbalife: Connecting The Dots [View article]
    Reel Ken,

    You're welcome. Thank you for taking time to comment.

    The FTC did not audit Vemma. They used the same basic framework for their argument that I used in my article (I copied their argument).

    Rewards for sales unrelated to ultimate users + incentives to seek those rewards + ineffective safeguards = pyramid scheme if retail sales are insufficient.

    I believe that The Declaration of Stacie A. Bosley Ph.D. could easily be rewritten for Herbalife.

    In the declaration against Vemma, Ms. Bosley conducted a review of eBay pricing data and concluded that the data demonstrated "the challenge in finding retail customers who will pay above the distributor's cost." Using a similar methodology Pershing Square showed that Herbalife distributors cannot make substantial retail profit because the products are available on eBay and other online marketplaces for prices lower than the even the discounted wholesale prices that Herbalife junior distributors are paying for products.

    I believe that the distributors without a downline are primarily buying the product because it is connected to a business opportunity. Take away the business opportunity and Formula 1 no longer outsells Slim-Fast or Ensure, let alone both of them - in my opinion.

    Nov 9, 2015. 07:17 AM | 2 Likes Like |Link to Comment
  • Herbalife: Connecting The Dots [View article]
    Reel Ken,

    I am glad to see that we agree on the definition of ultimate users. Our difference is our opinion whether or not the purchasers of Herbalife products are ultimate users. My argument is that they are buying the products primarily for the business opportunity and not for genuine retail demand. I use the following examples in my article:

    1) Genuine retail demand for nutrition, weight management, energy and fitness, and personal care product should not exhibit the "classic pop and drop" when entering new markets. These products fall into the category of defensive consumer staples.
    2) A tiny percentage a distributors at the top reap the vast majority of rewards. This is the kind of observation you would expect to see in a pyramid. I should have given credit to Peter van dear Nat for this observation in his Declaration against Fortune High Tech Marketing.
    3) Massive churn indicates an inability to obtain a significant retail profit and massive recruiting is required to keep the scheme going.
    4) Until a rule change last year, it made no enconomic sense to sign up for 25% discount when independent retailers websites were selling at 40% discount to adjusted SRP. I doubt that the rule change has changed the primary underlining motivation for the majority of members.
    5) Even a Chairman's Club member states that "The majority of our people have difficulty in reselling products, in general."

    More anecdotal evidence that I didn't mention in the article includes 37,000 nutrition clubs in Mexico and the fact that Formula 1 (~30% of sales) easily outsells Slim-Fast and Ensure combined. This doesn't pass the sniff test for me. I could go on, but if you are not convinced yet, more examples are unlikely to convince.

    However, I appreciate your point of view.

    Nov 8, 2015. 07:27 PM | 2 Likes Like |Link to Comment
  • The American Long Con, From Chain Letters To Multi-Level Marketing [View article]
    Thanks Robert. Keep up the good work.
    Nov 4, 2015. 06:25 PM | 5 Likes Like |Link to Comment
  • What Will Happen To Herbalife When The Government Kills The 'Golden Goose'? [View article]
    Thanks Matt. Keep up the good work.
    Nov 4, 2015. 05:48 AM | 7 Likes Like |Link to Comment
  • Herbalife's Misleading Lesson About The Collapse Of Qualification Buying [View article]
    Thank you for a great article. Keep up the good work!
    Nov 3, 2015. 06:58 PM | 7 Likes Like |Link to Comment
  • Herbalife: Connecting The Dots [View article]
    Reel Ken,

    Thank you for taking time to comment on my article. I have read your article "Herbalife: Pyramid or Sphinx?" and found it thought provoking. However, your definition of ultimate user is radically different than the definition I quoted in my above article from the Honorable John J. Tuchi and Stacie A. Bosley.

    Nov 2, 2015. 07:06 AM | 5 Likes Like |Link to Comment
  • Herbalife: Connecting The Dots [View article]
    Thank you. Can anyone tell me if the same four dots apply to NUS too?
    Nov 1, 2015. 11:36 AM | 7 Likes Like |Link to Comment
  • Thoughts On The AIG Ruling And The Implications For Fannie Mae [View article]

    Are any of the current lawsuits arguing that the 10% interest rate is too high? Any chance of the courts retroactively changing the interest rate?

    Jun 28, 2015. 12:44 PM | Likes Like |Link to Comment
  • Thoughts On The AIG Ruling And The Implications For Fannie Mae [View article]

    I would love to see your calculation in a spreadsheet. I believe Bill Ackman performed this calculation on page 98 of his May 5, 2014 presentation and came up with $75B for FNMA and $49B for FMCC.

    Jun 28, 2015. 12:39 PM | Likes Like |Link to Comment
  • Fannie And Freddie: Regulated Utilities, Cost Of Capital And Rate Of Return [View article]
    The precedent set by AIG makes it hard for me to fathom the government exiting Fannie & Freddie with hundreds of billions of dollars in profits. If the government exits Fannie & Freddie I could imagine the warrants being cancelled and Fannie and Freddie being recapitalized in the private markets (perhaps through a rights offering backstopped by Fairholme, Pershing Square, and/or others?).
    Apr 15, 2015. 07:56 PM | 1 Like Like |Link to Comment
  • Why Herbalife Is Still Illegal - Recruiting To The Pain [View article]

    You should write an article where RC Cola adopts the MLM model, charges 3x the price, and ends up outselling coke and pepsi combined.
    Mar 23, 2015. 06:04 PM | 1 Like Like |Link to Comment
  • Let The GSEs Pay Us Back Act Of 2015 [View article]
    Write your congressman to support H.R. 1036. I did.
    Mar 17, 2015. 07:25 PM | 1 Like Like |Link to Comment
  • Calvalley Petroleum Is A Cigar Butt [View article]
    Interesting. Any comments on management and their large insider ownership?
    Jan 18, 2015. 12:01 PM | Likes Like |Link to Comment