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Nigerian Scammers Claim Another Victim
A Florida newspaper ran a story yesterday about a local retiree who fell hard for a 419 scam. The story goes into depth on the methods used to play on the target's beliefs and gain his confidence - in this case, the target (who lost $320,000) is still having a hard time accepting that they were thieves. Truly remarkable.
That's the reporter's email and phone number
The Register used to do a great 419 T-shirt, but you can still get an "All my money went to Nigeria and all I got was this lousy t-shirt".
Jim Stratton is the reporter.
If the jackpot is large enough, each ticket bought that week will have an average return higher than the cost of the ticket. However, that fact alone does not make it a good bet, because the variance overwhelms the positive expectation.
Uhm...you aren't familiar with the formula
?You should have got this in the first week of your first statistics course. :-)
Or maybe you aren't familiar with how lottery prizes work? If no one wins, the prize gets added to the next lottery.
The probability of a given ticket winning is the same each week, but the prize goes up. However, more people tend to play as the prize goes up, so the chances of sharing the prize go up, but the net effect is the "prize if you win" term goes up each week.
If a lottery goes a few weeks without a winner, this can push the expected payoff higher than the price of a ticket.
This is not an internet scam. It is an old scam that has been around for years, now it is just easier to find "marks" by spamming on the internet. In days of old, the scammers had to be a bit better salesmen and judges of character since they did a lot of cold calling. This lead to the possibility of one of the marks knowing what was going on and reporting them to the authorities. It relied on human greed then and it relies on human greed now, not human compassion or religious zeal. It is "money for nothing"...
Now most people just delete the spam, and those who try to report it usually are stymied by fake addresses or apathetic authorities.
If the Government wants to plan some stings, they can give me the money to send to these guys and we can get some of them off the net. I'll do it for a mere 10%
for real. my cousins who make shitloads of money still have student load debts. It's crazy.
The grass isn't necessarily greener on the other side of the fence
http://www.419eater.com/index.htm
You have the wrong credit card, my friend. The one I use for travel expenses (BofA Visa) is prime + 2%.
And any wage earner and/or homeowner who's not totally buried in debt gets constant offers of 0% "introductory offer" credit cards where the introductory rate last 6 months or more. If you have a card or two with high interest, get one of those and transfer the balance *with this caveat*: If you are even one day late on one of those special offer deals, you will suddenly stop paying interest and start paying what used to be called "vigorish" back when the government still regulated financial institutions. To me 22% or 24% interest is nothing but loansharking, even if it's done by a a supposedly resepctable bank or other financial firm.
If that happens to you, your best option (if you're not so buried that you should seek help from one of the credit counseling agencies that make deals with creditors for you) is to get another low-interest card or two... and watch yourself from then on.
Of course, if you're really deep in debt, you can always answer one of those friendly Nigerian emails. $20 million or $30 million ought to help you get a fresh financial start, right?
- Robin
While it's true that standard credit debts cannot force the sale of your primary residence, they instead acquire a judgement lien against your estate, a mortgage can and will be foreclosed upon no matter what the circumstances are.
"The strong will do what they want, the weak will do what they must."
-Thucydides
...I lived through the dot-com stock bubble.
You don't have to be old and retired to be seduced by people promising you 500% returns on $50,000 investments. Twenty-somethings will fall for it if you use enough marketspeak.
There were all sorts of people who lost tons of money in the dot-com bubble, old and young. But here's the thing: when you're young you can risk more in exchange for the potential of higher growth. This is very basic finanical planning: younger people have a much longer horizon and can afford a much more aggressive investing strategy. So it makes sense that twentysomethings would get excited by the possibility of a 500% return. Once you get older, however, any financial planner will advise you to limit your exposure to stocks and start shifting towards more conservative investments. When you're older, you can't be taking wild risks like when you did when you were much younger.
Comparing this idiot with younger people who lost money in the dot-com era is just not right. In this crazy world, none of us can be all too sure of a great many things. I invested in a mix of aggressive growth internet stocks and some nice, stable, reputable mutual funds. So although I lost some money, I didn't come out all that bad. But that's just because I'm a pretty cautious guy. I have some friends my age who lost considerably more because they didn't balance risk. So they didn't come out so well but that's okay because they've got decades in which they might end up blowing me away in terms of life savings. I don't think they're stupid at all, they just have a different outlook on investing than I do. However, those people in the 50s and 60s who lost a shitload of money in the dot-com era deserve my distain as much as this scam guy. When you are getting that close to retirement you just don't take crazy chances like that! That's just being greedy.
So please spare us this supposedly Insightful comment of yours that this scam victim is somehow just like the rest of us. He isn't. He's greedy and he's stupid. And now he's flat broke and I'm not gonna shed one single tear for him.
GMD
watch this
Most people probably do end up in situation similar to what you describe. But if you're smart, you can avoid getting yourself into difficult situations, even if it's a university education. I got a Bachelors in CE in '99 and now am moving in on 6 figures. Within a year or so, I hope to reach that. Now, how much did 4 years of university education cost? 20K at the state school. I paid off my loans in less than a year after graduating. Here's proof that you don't have to sell your soul to get an education. Hard work smartly applied can be rewarding.
Ok, I'm bored, so here's how I figure out when to play the lottery. First the main principle is that of the "progressive jackpot". That means that people play some game and if nobody wins, a pot grows and grows. Normally when playing poker or something with a progressive jackpot, you can't just sit down halfway through and start playing because you didn't put any money into the game. The lottery OTOH lets you start playing after many people have put their money in and lost. I think this is the same idea behind those teams that beat video poker by waiting for a huge jackpot, then playing all of the machines for days until they win the jackpot.
.6*.6 of the money, which is 36 percent, or roughly 1/3 of the total (About N dollars). Then you have the problem of if there's a 1/N chance of winning and 2N tickets are bought for that drawing, you will average 2 winners, and it could be more, but it could be less, so your real expected payoff is more like P(1 winner)*.36(Jackpot = J) + P(2 winners)*(.36(J)/2) + P(3 winners)*(.36(J)/3)...and so forth. It's a binomial distribution with p = 1/N, q = ((N-1)/N), so your P(X = 0) is ((N-1)/N)^2N, P(X=1) = C(2N,1)(1/N)((N-1)/N)^(2N-1), P(X=2) = C(2N,2)(1/N)^2((N-1)/N)^(2N-2).... All of the ((N-1)/N) terms are roughly the same and we can call them K, and we can simplify the combinations (By assuming that C(2N,P) is roughly (2N)^P/P!) for large N and small P to get
) +( 1/10)*(J/6)...)/7
.4.
If the lottery gives you a 1/N chance of winning the big prize per dollar ticket, and the jackpot is about 3N, then the tickets start getting worth it. Start with the 3N. First, they take away about 40 percent of the money if you pick the "lump sum" (you should consider this important since you pay for the tickets now and don't get to pay for your tickets over 25 years...), then you have taxes which will be about 40 percent of what's left, so you're looking at
P(X=P) = C(2N,P)(1/N)^P((N-1)/N)^P which is approx
(2^P)(N^P)/P!(1/N)^P(K) = (2^P)/P!(K), and the K is essentially constant over all P, so we can ignore it, so the P(X=P) is proportional to (2^P)/P!.
I will ignore the 0 winners case, since then you get a chance to play again next week, But the constants for the other numbers are : C1 = 2, C2 = 4/2 = 2, C3 = 8/6 = 4/3, C4 = 16/24 = 2/3, C5 = 32/120 ~= 1/4, C6 = 64/720 ~= 1/12, and it keeps going down.
Add those numbers up and make the last one a 1/10 or so to take care of the other numbers, and you see that the total is about 6.5 or 7. You have essentially a 2/7 chance of being the sole winner, a 2/7 chance of being a half winner, and so on, so your real expected value will look more like
(2*J+2*(J/2)+(4/3)*(J/3)+(2/3)*(J/4)+(1/4)*(J/5
which is approx ((2+1+4/9+1/6+1/20...)/7)*J ~= (1/2)*J, so you're looking at about half the jackpot being yours (ignoring the 0 winner case which lowers it even more to about
So, on top of the taxes and persent value which eat away about 2/3 of the value of the jackpot, the other winners make your jackpot about half or less of its value beyond that, so we're looking at about a 15-18 percent return on the actual "dollar value" of the jackpot. I tend to play when the jackpot is 3N where the chance of winning is 1/N, since I like poker and this situation only comes up every few years, but to take everything into account, you should wait until the jackpot is about 6N,. The only problem is that I was assuming 2N tickets bought for the current drawing, and if those numbers go way up, then the expected size of the jackpot keeps going down due to more players. So, I guess it will never be perfect, but it's nice to have better odds if you're going to play and the little prizes increase the expected value, as well, so it might be worth playing once in a while. And no I never won except for the little stuff.
Best. Comment. Ever. Enjoy!