If you look at the great frauds of all time, Enron had that phantom trading floor. What Herbalife has is it has phantom or fictitious customers.
Sentiment: NEGATIVE
Herbalife: the customers are fictitious, the business opportunity is a scam, the university degree is a fraud.
It is a certainty that Herbalife is a pyramid scheme. We believe it's harming a population of low-income, principally Hispanic people in the U.S. to benefit a handful of super wealthy people at the top of the pyramid.
If you think of the typical Herbalife distributor and their level of sophistication, to this day I still don't understand the marketing plan - true story.
I think that the failures of Enron and WorldCom and other companies are partially failures of investors to recognize companies that are selling for a thousand times nothing, but chances are they may be worth only that.
Buying only what you know can end in disaster. Just think about Enron's employees and business partners, the 'locals' who bought lots of its stock because they thought they were in the know.
When Warren Buffett invests in a company, he is conferring upon that company something very unique: his credibility.
When I'm talking about a product, before it was a product, it was in my brain. So if I have an inspiration, I will literally get up in the middle of the night, and I'll dream about my customer... I don't feel like it's selling. I feel like it's talking about my children.
The challenge for capitalism is that the things that breed trust also breed the environment for fraud.
I invested in many companies, and I'm happy this one worked. This is capitalism. You invest in stock, it goes up, it goes down. You know, if you don't like capitalism, you don't like making money with stock, move to Cuba or China.
I've never commented much about my experience at Enron except to say, when I was there, it was a much more pipeline and asset-oriented company.
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