As I listened to the podcast by Planet Money about the Herbalife company and the possibility that it was a pyramid scheme I began to think. Herbalife seems like a very successful company due to the fact that they have a good stock and their annual numbers always seem well above the average. What is not to like about this company if you are looking got invest in it? You would assume that if this company, Herbalife, is on the New York Stock Exchange that it is a legitimate company especially after hearing that it has been around for thirty years.
And if this company really is a pyramid scheme, how have they gotten away with this for such a long time. They could have just recently been starting the pyramid scheme because their business is on the downfall or they have been this way from the start. I personally have never heard of the product so I think it seems very strange that they have such high income with very little advertisement. Unless it is a popular product in another country this is just very hard for me to believe that what Herbalife is doing is actual and not a pyramid scheme. This wouldn't even be a conversation topic if people had actually heard of the product. But in reality Ive never seen or heard abou the product so I believe Bill Ackman is right with his claim.
The one thing I do not understand is that the short bidding on this company. What does it entail? and how do you do it?
In all honesty I would not doubt that other companies are doing the exact same. Last year my roommate and few other kids on the floor were involved in a company that seemed to have the same setup as Herbalife. The company was called Send out Cards, the owner was a graduate from Sacred Heart if I remember correctly. But the people would earn commission for everyone they recruited. It seemed like nobody made any money compared to the top guy, who was a millionaire while my roommate was lucky to make a few bucks here and there after buying a membership that allowed you to do certain other tasks that eventually never panned out to anything. It just didn't seem right that the guy at the top made profit off of every sale while my roommate was only profiting by selling a card to someone personally.
To me this all just does not seem right and by Ackman doing what he did made the population realize that investing in this company will eventually lead to you you personally losing all your money.
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