The bond is offered at its face value of $100. This is its first round. Each time it's sold for twice what the purchaser paid for it, it's marked as being in it's 2, 3rd, 4th round etc.
You might buy a bond in it's 10th round for $32,000 with the hope of selling it in its 11th round for $64,000. That person is taking the biggest risk with this bond yet, but they stand to make an easy $64,000 on their investment hoping that the next guy is willing to risk twice that to make an easy (if risky) $128,000 in a matter of minutes.
Hot Potato Investment Bonds: A completely insane addition to your otherwise balanced portfolio.
Plus they have a nice picture of Ben Franklin on the front with him saying: "Thou would havest to be out of thine mind to purchase this!" Hmm. Actually, that wouldn't help sell the product. He'd be saying "Go for it dude!"
UPDATE: Name has been changed to "Exponent Bond" to give it a hipper, less "old dead guy who probably ate a lot of sensible oatmeal" vibe.-- doctorremulac3, Nov 01 2014 First draft artwork http://www.allgoogl...ed_ben_franklin.jpgWarning: has the word "f*rt" in it. People who are offended by the word "*a**" should not click. [doctorremulac3, Nov 02 2014] 1 2 4 8 16 32 64 http://www.fool.com...-things-simple.aspxUnamused, the emperor had the inventor beheaded. [popbottle, Nov 02 2014] Bubbles, Crashes, and Endogenous Expectations in Experimental Spot Asset Markets http://noahpinionbl...bubbles-happen.htmlThis experiment was the inverse of yours. The value of the stock went down according to a predetermined and commonly understood rate. Despite everyone's full knowledge of the actual value of the shares, a price bubble still formed. [xaviergisz, Nov 03 2014] Exponent Bond https://www.dropbox...ent%20Bond.png?dl=0The serial numbers and issue information are printed in microscopic form within the circle. [doctorremulac3, Nov 04 2014] FTC declares bitcoin to be FTCeriffic. http://www.coindesk...erfly-labs-bitcoin/Or something, didn't read the article. Bitcoin articles make me sleepy. [doctorremulac3, Nov 04 2014] What stops me buying one for £100 and then marking it as 10th round?-- pocmloc, Nov 01 2014 <Irony>
U.S. National Debt. Baked and Widely Known To Exist.
</Irony>-- 8th of 7, Nov 01 2014 //What stops me buying one for £100 and then marking it as 10th round?//
Umm.. there's a database... backed by the International Monetary Standards Institute in... Stockholm.
//U.S. National Debt. Baked and Widely Known To Exist.//
Except that you might actually stand to make some money with this scam... er... investment.-- doctorremulac3, Nov 01 2014 So, the original issuer of the bond is liable to pay out, say, $64k, supposing that the bond's redemption date falls when the bond is in its 11th round. This is the same issuer that only received $100 for issuing the bond in the first place (all other revenues being received by participants in the secondary market). So, why would that issuer issue such a bond?
It's like a sort of suicidal inversion of a pyramid scheme.-- pertinax, Nov 02 2014 Yes
<Points at previous anno>-- 8th of 7, Nov 02 2014 //It's like a sort of suicidal inversion of a pyramid scheme.//
Yes, but the boys in marketing thought "Suicidal Pyramid Scheme Inversion" didn't sound quite as marketable as "Franklin Maximum Growth Bond"
The art department also suggested removing the crack pipe from Ben Franklin's mouth but thought giving him googly looking hypno-spiral eyes might be ok.
As far as the date thing, it wouldn't have a set "maturity" date like a regular bond, it would just be whenever you could get the next sucker to buy it.
Think of it as a Jackson Pollock painting that you don't need to pretend to "understand" only not as ugly.-- doctorremulac3, Nov 02 2014 So, it's a bond with no redemption date and probably no coupon* either. Damn, your marketing boys are good!
*If it had a coupon, the coupon yield would quickly become vanishingly small.-- pertinax, Nov 03 2014 By the way, not to attempt to pop the current market bubble from my powerless pulpit, but has anybody ever considered that all these social media stocks are monetized by advertising? Ok, now ask yourself, a stock market bubble bases on any one small portion of the economy, be it advertising, bundled mortgage securities or tulips: destined to grow forever? Now add a healthy does of billions of dollars in loans getting pumped into the economy that might have to be paid back someday.
Yes good citizens, there's clearly only one choice for today's volatile investment market: the "Franklin Maximum Growth Bond": tumor like growth for your portfolio.
As Ben Franklin himself would say: "Don't be a total pussy! Go for it dude!"-- doctorremulac3, Nov 03 2014 // all these social media stocks are monetized by advertising //
"all stocks are monetized by advertising"-- 8th of 7, Nov 03 2014 Well, the corn industry is monetized by people buying corn, car industry by people buying cars etc. Social sites sell adds, nothing more. Oh, you're saying the stocks themselves, got it. Yea, I guess.
Anyway, the first dot.com boom was supposed to be fueled by "premium content" where somebody would go to a blog such as this one and have the opportunity to pay $50 a month to hear what Doctorremulac3 really thinks about life. Any takers? Didn't think so. I think the only place that model worked is in the porn business. Not an expert but I assume they're making money somehow. Maybe they're just doing it for fun but I doubt it.
The new model is to see how many Geiko adds the average human can have blasted into his head every day. Want the news? Watch a Geiko add. Want the weather? Watch a Geiko add. Looking for the best way to kill yourself? Watch a Geiko add.
Nope, my money is on lucite encased tulips and time- bomb investment bonds.-- doctorremulac3, Nov 03 2014 //I think the only place that model worked is in the porn business.
Erm, not exactly...it's very difficult to get people to shell out for anything on the net, and most recently porn models have been supplementing their income by "meeting" fans of their work..so even porn doesn't really make money on the net.
//have the opportunity to pay $50 a month to hear what Doctorremulac3 really thinks about life..
(Imagines pay-to-read version of hb, with placeholders saying "click here to see what Doctorremulac3 said in reply to 8th, only 5 cents")-- not_morrison_rm, Nov 03 2014 The logo should be a bull balancing on an inverted Giza-like pyramid with a clamoring mass of unwashed standing on the ground next to the thing.-- the porpoise, Nov 03 2014 <ptr>click here to read what nmrm said about the porpoise's anno, only 5c</ptr>-- not_morrison_rm, Nov 03 2014 //(Imagines pay-to-read version of hb, with placeholders saying "click here to see what Doctorremulac3 said in reply to 8th, only 5 cents")//
I'm sure both versions would make the exact same amount of money.
As far as me paying for anything on the internets on a monthly basis, Netflix gets my eight bucks a month. If they asked for a penny more though I'd drop them.-- doctorremulac3, Nov 03 2014 hey nmrm, I see a pattern here.-- pashute, Nov 04 2014 I think an online simulation game of this idea would be quite successful. Advertise it with a viral youtube.-- pashute, Nov 04 2014 This actually already happens to some extent with art. Completely arbitrary value assigned to an asset that appears to have a history of doubling in value.
Sometimes the paintings are purposefully designed to be horrible pieces of crap that celebrate this concept of arbitrary assigned worth. Jackson Pollock is the king of this. His "painting" No. 5 (didn't even bother naming it) sold originally in 1949 for $1,500 and was sold in 2006 for 140 million. Today's it's valued at twice that. Pollock was a worthless drunk who was busy getting soused during WW2 while others were off fighting and dying to make the world safe for worthless drunks. Like Van Gogh, his train wreck life appears to help the valuation of these commodities.
Anyway, here's what the Franklin Maximum Growth Bond can do for you.
It shows the world you can take large sums of money and risk losing it. If you bought a $1,024,000 "pyramid bond" (probably as good a name as any) and stuck it in a frame on your desk, people are going to know you're a high roller. Anybody can can make smart investments, you can make dumb investments and even do so for the humor sake of it. Face it, it's kind of a funny investment. Not weird funny, ha ha funny. When somebody offers you $1,500,000 for it you just laugh. No, the price is $2,048,000. Non negotiable.
You're very very rich and want to be set apart from everybody else? Here's your ticket. Anybody in their right mind would say "I'd never invest millions of dollars in a beyond risky, possibly ephemeral bizarre investment like this, to which you would say "Yea, well, I'm not you."
Get it? So you're top dog already, but when the day comes that you make a cool million selling the thing, people bow down to your king Midas touch ability to create wealth like so many scarves from a magician's sleeve.
Think of it as a trophy. "I can do this, you can't." What kind of man can invest in a Franklin Maximum Growth Bond? Only the 1% of the 1% of the 1%. Tell the world "All you prolls can invest your welfare checks safely in 10% annual return mutual funds, I don't have to worry about such things. Money is a game for me. That thing that you worry and fret about? It's all a big joke as far as I'm concerned." This investment is a glaring show of dominance, the driving force that makes the world go around, throwing into sharp relief the contrast between the high roller and the knuckle draggers he's mercifully consented to share his planet with.
There's value in that my friends. My tongue is only partially in cheek on this one. After further review, I'm taking Ben Franklin off of the artwork. It would be a white piece of paper about the size of a check with a single 2" diameter black dot in the upper left hand corner. All the information would be printed too small for the eye to see.
These are a limited run of 10,000. No more will be made after this and they go for $1,000 each.
You can take that $1,000 and be a part of history or spend it on a used 1985 Toyota Corolla depending on what kind of man you are.
By the way, obviously you're under no obligation to sell these for only twice what you paid for it. Since the price of these things would sky-rocket the day after they were issued, if you can get $64,000 on your $1,000 investment within a couple of hours go for it. The 1st, 2nd, 3rd etc rounds are only the value assigned to these that allow you to declare them, for instance a "4th round bond" worth at least $8,000, but you can obviously sell them for whatever you want. If somebody offers you $1,100 the next day, you can take it but it's still a first round bond until somebody's paid at least $2,000 for it.
They're called "Exponent Bonds" (or by the slang term Martingale futures). Their purchase history is tracked by Sotheby's or an equivalent organization. The controversy they generated would be used as advertising. (News gal) "Imagine spending one million dollars on a piece of paper and then selling it for twice that? Well, that's just what the elite of the elite, richest of the rich are doing. Stay tuned, you won't believe this story."-- doctorremulac3, Nov 04 2014 How many miles on that Corolla?-- pertinax, Nov 04 2014 This is how the smarmy broker would sell this. "Sir, may I suggest that the car is a better investment for sir? This really isn't for you." Eh? Kind of makes you wanna say "Oh yea? Think I'm not good enough to buy your stupid piece of paper? Ok Jeeves, I'll take ten!"
Anyway, you tease, but you've gotta admit, if somebody gave you one of these you wouldn't throw it away, at least not immediately. I know I wouldn't. It's a piece of paper with a dot and some microfiche numbers on it, but if this were to be done, nobody in their right mind would throw it away if they had one.
That means that in concept, this has already created at least some value out of thin air. Where artists like Pollock and Van Gogh use their wretched existence to put a back story to their investment products, the absurdity of this product is what gets people talking about it. That and the fact that something that shouldn't work just might work.
Face it, more interesting topic of conversation than boring mutual funds. If there's value in publicity, and there is, this thing has it all. Controversy, novelty, class warfare, elitist jerks getting under the skin of non-elitist jerks. That's a news story, news stories are publicity, and publicity is value.
Some investments are world famous. These would be infamous.-- doctorremulac3, Nov 04 2014 A truly skilled investment banker would set up chains alternating between subsidiaries of his or her investment bank and arms length investors raked up from the credulous tax exiles on the shores of the Med, purchasing then selling on almost instantaneously, at a profit, this on-off-on-off chain throwing off double yr money profits every second transaction, all that is needed is either an oligarch in need of a large tax deductible loss to help him out of revenue related legal difficulties in Abkhazia and lord knows there's plenty of those. In essence, this is a serial simultaneous confidence trick - the idea of throwing this product into the market to swim free is a non-starter.-- calum, Nov 04 2014 Not sure what you're saying. Are you suggesting that somebody would buy these from financial partners to increase their worth then to burn it all for a tax write- off?
Then how come people don't do that with artwork?
The answer is simple: Because there's no tax collection agency on Earth that would let you get away with that. They'd just say: "Clever little scheme. Here's your multi million dollar tax bill, additional multi million dollar fine, prison sentence and striped pajamas. NEXT!"-- doctorremulac3, Nov 04 2014 I am saying that no-one would buy the product without knowing that they had someone lined up to buy it for its increased value and the only way to make a functional chain is (a) to control as much of the chain as you can and (b) to have an entity needing a loss or a write down at the end of the chain: the product is worthless without a subsequent buyer.-- calum, Nov 04 2014 Right. Like any other product in the world.
And yes, you wouldn't buy them. That's the point. Somebody worth a lot of money might buy this specifically to set themselves apart from you.
And the kicker is, they just might make more with this apparently frivolous investment than you make in an entire lifetime.
I think you're missing the point.
Why do people buy massive yachts, multiple houses, cars that cost hundreds of thousands of dollars, private jets, hundred million dollar paintings? What do they get for it? They must get something right? Do they need that hundred million dollar painting? Do they get a hundred million dollars worth of joy just looking at it when they could buy a poster of it for $4.95?
No. It's about declaration of one's place in the social strata.
Controversial, even anger inducing? Exactly. Brand recognition. "Hey, nice office. On the wall over there, is that one of those crazy Exponent Bonds I've heard so much about?" Owner laughs, conversation ensues, ice is broken. The owner of the luxury penthouse office has shown they're not above a little goofiness by buying into this little game. After the story and a couple of jokes he says "Ok, let's get down to business."
Image enhancement, pure an simple, but with a possible big payoff.
You know what? This is almost more of a game than an investment. Playful high rolling fun for a very exclusive club if you will.-- doctorremulac3, Nov 04 2014 As described in the original idea I believe that this would be an illegal pyramid scheme. As described in the big Nov 4 anno, this could be easily classified as art. It is an interactive art form between the artist and the owners of the art. To complete this, every owner should sign the piece when they receive it. Each owner would have the option of registering their piece at a central web site so people shopping for one of these can find one with the most auspicious list of owners.
Registration is free for the original owner. Subsequent owners can register for a mere $500.
Reminds me a bit of the ice bucket challenge with Bill gates challenging Elon Musk. In many ways, the purchase of one of these is a bet on the marketability of one's own name. You might get an interesting chain going if the participants pledged all the profits to charity.-- scad mientist, Nov 04 2014 The tricky part is that if there is any word or indication on this "pyramid bond" that it is art rather than an investment vehicle, it reduces the artistic value of the piece. I guess maybe it could come with a certificate of authenticity that has all the disclaimers on it.-- scad mientist, Nov 04 2014 //As described in the big Nov 4 anno, this could be easily classified as art.//
Somebody's getting it.
Note the design of the actual certificate. It looks like that for a reason.
I absolutely love the charity angle. Absolutely love it.
"I bought this for ten million bucks. I sold it the next day for twenty million and gave five million to charity. With my share of the profits I bought a five million dollar private jet. Not bad for a day's work.
Think my first flight will be to the ground breaking for the new wing of the children's hospital I just paid for."-- doctorremulac3, Nov 04 2014 //I think you're missing the point//Your point is ably and amply made. You should have more faith in your ability to make your points. I have chosen to ignore your point because it doesn't interest me, to think aloud instead about how you might actually make this work as described in the idea text.-- calum, Nov 04 2014 I smell a Kickstarter campaign.-- doctorremulac3, Nov 04 2014 The interesting point about art- by Pollock, Van Gogh, Rembrandt- is that the supply is limited by the fact that the artist is dead.
So the value of their work - unlike high-mileage Corollas, or Learjets - is in part due to the limited supply.
Which means that Franklin Bonds are sure to gain in value once the producer dies …
So … well, sorry, [doc]. Nothing personal, you understand. It's for the greater good, or if not that, the greater profit. Just stand still and close your eyes, it'll all be over before you know it.-- 8th of 7, Nov 04 2014 Well, if it's all for the good of the country...
I could promise to never do it again. Might be forced to anyway.
"Your honor, I am very sorry and have really and truly learned my lesson. I will never do this again. I only hope the court sees fit to note all the children's hospital wings my company got built before passing sentence."
Must be noted, as pointed out previously, this would certainly get the attention of the FTC. Legal or not, they'd certainly have something to say about it.
They don't strike me as a particularly fun bunch of guys so they might not be on board for the party.
See link for a somewhat, non-un-related story.-- doctorremulac3, Nov 04 2014 random, halfbakery