If you're being promised a 500% profit then whoever's offering it has to be making a lot more than that to be able to guarantee it.  People who can GUARANTEE making that sort of profit don't need to raise money $50 at a time from random people on the Internet.

Let's say I worked out some way to make a huge profit over a year - and KNEW it would make somewhere between 800% and 2000% profit.  What would I do?

Well first I'd work out how much cash it could use and see if I could fill all capacity myself.
Then I'd speak with some friends (that's people I actually know - not people who have PMed me once on a forum) and offer to cut them in for a good chunk of profit (they MIGHT get 600%)
Then I'd see if anyone here was interested in significant investment in it - people I'd dealt with before (they might get 200-400%)

By then we're talking millions of USD invested anyway - so there's no need to be selling $50 to randoms AND giving them a lot of the profit.  Why would I bother trying to make an extra few hundred $ here and there if I'm already going to make millions?

If someone doesn't have money themselves, doesn't have friends/contacts who DO have money and doesn't have a reputation then is it really likely that they've stumbled onto a magic money-maker?

Most ways to make massive returns only work with a very limited amount of cash anyway - they aren't scalable to the extent that you can start throwing pieces of the profit away at random.

Ignore it - it's just a scam.

PMBs can't sell anywhere near what they believe to be the break-even point or they're no longer guaranteed that they'll make a profit.

Despite pretending to be a bond (where the issuer bears the vast majority of risk and investors don't) most PMBs are actually making sure to price themself so that the investor has all the risk (in some cases to where it's guaranteed investor will make a loss).

That's also why you don't see PMBs trying to actually be bonds and guaranteeing return of at least initial investment by a certain date.

There is also risk in relying on difficulty rising a lot for quite a while when pricing.  Most such assessments rely on assuming other manufacturers, with no hardware yet, will reach market.  It wouldn't take too much of a fall in the price of BTC for some of those to no longer get to production - as they'd no longer be able to recover initial production costs from mining or sales whilst competing with those (ASICMINER and Avalon, maybe BFL) who have already recovered their NRE so can sell at a much lower margin.  People also look at the recent massive rises and ignore the earlier long, much flatter periods - forgetting that once a certain saturation point is reached growth will slow down again.

It's as dangerous to overestimate difficulty changes as to underestimate it - but PMB issuers in general make sure to overestimate by a TON so whatever happens they do well and maybe there's a slim chance investors will get back most of what they paid.

I'm not commenting specifically on this one's pricing BTW - just on what's generally been the case.

Didn't miss it - was doing something else for half an hour.  Am up to date on transfer again now (unless any occurred in last few minutes).

The reason for ANY change in the price of MINING/SELLING (other than a reduction because of a dividend being paid) is that the market (i.e. everyone investing collectively) has decided that the previous price was wrong.

In this particular case the change is almost certainly caused by one particular group - those who held SELLING.  SELLING got a big dividend today.  Pretty much by definition those holding SELLING are the people who believe it's better value than MINING - i.e. they believe (or believed) MINING was over-priced.  It's fairly safe to assume some of those used their dividends to buy more PURCHASE, split it then sold the MINING.  Once their MNING have gone we'll find out whether the rest of the market agrees with their new valuation.

Will do it now - missed that one as it appeared in my transaction list in between my transfers out to you :

2013-06-17 17:34:42    DMS.SELLING    transfer-out (eltopo)    160    0.0395    0    6.32
2013-06-17 17:34:24    DMS.PURCHASE    transfer-in (eltopo)    54    0.06574    0    3.54996
2013-06-17 17:34:19    DMS.MINING    transfer-out (eltopo)    160    0.02929    0    4.6864

I'll send yours then have a careful check - usually there's not many transfers at a time, but after the dividend there were quite a load.  I'd spot it before next dividend - when I check that the numbers match (i.e. make sure that number outstanding has increased by same amount as there were salesm which would make any missed transfer obvious),

Sorry about that - there were a bunch of transfers in and your second transfer of 11 came whilst I was still processing ones that had previously arrived.  I managed to miss noticing that you'd done a second one for the same amount.

They're sent now - oversights like that are always easily fixed.

Yeah - you were one of the first ones to send after dividends were paid.

Been too busy doing transfers to do any trading myself - so missed out on the arb opportunities there were for those who were quick.

Math all checked out and wallet balance was consistent with spreadsheet to 3 decimal places (difference in low digits is beause dividends are rounded to nearest satoshi plus I always round management fee in fund's favour).

Nice try whoever put up PURCHASE at the old price - but you only had it there for a few seconds before I got the new one up (you beat me as with it being for hundreds of BTC I have to treble-check before submitting the order).

BTC Balance (BTC-TC)    901.35506956
12500 LTC-ATF.B1    125.00000000
TOTAL ASSETS    1,026.35506956
   
Outstanding MINING   15655
Outstanding SELLING   15655
Outstanding PURCHASE   580
Effective Units   16235
   
Block reward   25
Difficulty   19,339,258
Hashes per MINING   5000000
   
Daily Dividend    0.00013002
50 days (Min Liquid)    0.00650111
100 days (Forced Close)    0.01300222
365 days (Buyback)    0.04745810
405 days (IPO)    0.05265898
400 days (Post SELLING div)    0.05200887
410 days (Pre SELLING div)    0.05330910
   
NAV Post MINING Div    1,024.24415939
NAV/U Post MINING Div    0.06308865
Days Dividend Post Div   485.21
SELLING Dividend    0.01107977
NAV Post SELLING Div    844.36406963
NAV/U Post Selling Div    0.05200887
PURCHASE selling price    0.05460932
PURCHASE buy-back price    0.05096870

SELLING dividend (for both SELLING and PURCHASE) is now queued for immediate payment.  Once they've gone through I'll unlock PURCHASE, place new Ask/Bif and the fun can continue.

Sold   2292
Swapped   377
Total   2669
Price   0.066149
Total   151.613508
Less Fee   151.310281
Man Fee   4.53930843
   
Units   16235
Excess Div   0.00003111
Refund   0.50507085

Details of today's management fee - and also of the refund made for the extra dividends being paid.  Rest of report will come once I've completed paying dividends.  The management fee and refund have both been transferred.

Oh - PURCHASE gets both dividends by the way.  So no need to panic if you haven't exchanged any - you'd still get the MINING and SELLING dividends.

Only way you miss the dividends is if you decide to send me the PURCHASE right before the dividends process - where I wouldn't see it in time.  Basically don't send me PURCHASE from 10 minutes before dividends are due up until after dividends have been processed - that's why I try to always take down PURCHASE Ask 10-15 minutes before dividends : so noone can buy and accidentally miss out on a dividend by sending it to me just before dividend payment.

MINNG div is issued at 16:00 GMT - which is about an hour and 15 minute from now.  After that's processed I'll double-check all calculations then SELLING div will be put up for immediate payment - so it'll come 5-10 minutes after BTC-TC processes the MINING div.

PURCHASE will be disabled for trading from about 10 minutes before MINING dividend until after SELLING one has processed and I've, again, checked that all the math (and wallet balance) match with my spreadsheet.  Once everything's checked, PURCHASE will be enabled for trading again and new PURCHASE Ask/Bid will go up.

MINING and SELLING will be left open for trading all the time.

5 minutes if I'm actively checking.
An hour if I'm around but not checking a lot.
8 hours if you send just after I go to bed.

Whenever I check I catch up with all transfers in. I try to check at least once an hour when I'm around a computer - which is most of the time

If you're going to do comparisons you need to do them based on what they'd be charging when your hardware arrives.

Either that - or compare your price to their price minus the dividends they'd have paid whilst you waited for delivery.

Also this needs clarification :

" To compensate for this, the first months of operation will give approximately 20% higher coupons/dividends."

How many months?
Replace approximately with an exact definition.  It's a contract not a vague statement of general intent.

Holding DMS.PURCHASE long-term would make a profit from three sources:

1.  The markup on sales of PURCHASE after you bought yours.
2.  Any revenue from investment.
3.  The discount on repurchases - if someone sells back PURCHASE or MINING+SELLING then a bit extra is left in the fund.

That has to overcome the 3% management fee + trading fees.  If the fund runs long enough (and I can't see it being likely that SELLING will vote for closure this year) then you'd make a profit yes.  But that profit would be pretty small and likely not justify the CP risk.  Just holding PURCHASE gives CP exposure to me and to BTC-TC.  Nobody except me can assign a 0% CP risk to me - and noone except burnside can assign a 0% CP risk to him.

If investment takes off that could change - but right now with high difficulty changes I have to keep the capital very liquid anyway.

I'm not sure what your point is with trade-ins.  The ONLY assets that would be accepted in exchange for PURCHASE are ones which SELLING investors have voted to accept us investing in.  And I still don't have to accept them  - I'd only take them if I were considering investing in them anyway.  Taking them in trade-in saves us the exchange fee on buying them AND the exchange fee on selling PURCHASE.  Remember that I won't touch anything unless it has a fixed face value with redemption at (or near) that price - so there's no real room for any exploitation by someone waiting for a dip in the price.  Things that have dips in their price aren't things that we'd take anyway.

If you could give an example of what sort of problem you see I may be able to explain better - I think (but can't be sure) you're concerned about problems which, if they were real, would mean the security would never get touched by us anyway.  Bonds and loans are pretty much all we'll touch - and those only if SELLING investors approve it.

You may want to consider NOT calling it a bond - if you call it a bond it'll definitely make it harder for you to get moderator approval.

That's because it is NOT a bond - nowhere is there mention of returning capital at the end.  A few moderators will vote NO on anything that isn't a bond but calls itself one - as it gives the misleading impression that capital is secure and will be returned ('real' bonds have a face vaue that doesn't change - and which in nearly all cases eventually gets repaid).  Yeah I've heard the arguments that it IS a bond but is denominated in hashes - which fails the smell test immediately when the selling price isn't defined in hashes.

I'm staying out of the argument on price as, right now, I have no interest in defining, determining or arguing over what a fair price for PMBs is.  I AM pretty satisfied that furuknap isn't intending to scam.

Maybe a prediction of what you believe difficulty (and hence dividend) will be at expected delivery date would help make the value of this obvious?

Just to be clear on this.

100k shares

You deduct for expenses.

50k of the shares you keep for yourself.

So if you sell only 10k shares they get 10% of profits between them but would have put in around 50% of capital (the existing orders were equivalent to about 10k share of value).

At best investors get half of 'profit' - which there'd be absolutely zero of when you only have pre-orders and are keeping half of income yourself.  Yeah - they'd get some money back but never as much as they put in.

10% management fee is fine.  50% is pretty much theft - and it rises to 90% if you only sell 10k shares (as the percentage of profit is based on NUMBER of shares whilst the percentage of capital coming from shares rises from a lower base - only ever reaching 50% given to investors if you sell 50k shares).

Yes that's the estimate.

When capital rises over 410 days of dividends for MINING, SELLING gets a dividend to reduce capital back to 400 days of cover.  That maintains over a year of cover at current difficulty for MINING (which will obviously last a LOT longer with difficulty rising) and returns unneeded backing cash to SELLING.

As difficulty rose massively this time, SELLING gets a pretty big dividend.  If difficulty rises by under about 3% on a change (exact percentage can vary slightly) then SELLING would get no dividend at all (in fact from memory think it's around 5% after a change where it got a dividend - as it has to make up not only the dividends to MINING but also the 400-410 day gap).

WEEKLY REPORT




A slightly slower week than the previous two but still respectable profits.  NAV/U grew by 3.86% (before management fee) of which 2.36% is estimated to be from trading and the other 1.5% from LTC's small drop vs BTC.

S.DICE

There was some debate on S.DICE recently - with the issuer attempting to get investors to replace the betting pool with funds from the next dividend.  This has now been resolved.  S.DICE is having a very good month so far - both in terms of trunover and also in terms of luck (the house is performing better than expectation - compared to last month where it performed worse).  With the fickle short-term nature of BTC investors I therefore think it likely the price will rise as dividend day gets nearer (unless luck changes for the worse).  We're therefore holding slightly more than usual of them (other times we hold extra its usually with the intent to sell immediately - this time I'm not in such a rush).

S.MG

At the beginning of the week S.MG was IPOed on MPEx - it's highly speculative investment being a games company with hardly any disclosed detail so far.  We took a small position at IPO - I'm expecting a chance to sell for a decent profit at some point, but maybe not for a while.  As it may well be a longish-term investment and is also on CoinBR I've listed it with the pass-throughs.  I'm not planning to run a pass-through to it as I expect very little market activity on it for a while.  It would be pointless me NOT disclosing it anyway - as it's the only stock on MPEx we don't have a pass-through to, so it would be kind of obvious what we had.

ODDS AND ENDS

Holdings on BTC-TC are higher than usual this week.  They are NOT in any of my new DMS securities (I'd love to invest a chunk of LTC-ATF capital in it - but it would be against the spirit of the rules preventing cross-investment into funds/securities from same issuer.  DMS does holds LTC-ATF.B1 but that's debt not equity so not an issue with the spirit of the rules - there's no issues over voting rights or valuation.)

Bid is at 50.45

A management fee of 1 unit is due and will be transferred after I click the Post button.

I'll see about getting the split issue progressed this week - and also something else of benefit to the fund.

Ah right - my misunderstanding.

The price used is whatever the system sets (I don't edit it).  I believe it uses the most recent 7-day average - but aren't honestly sure.  Looking at recent outgoing ones in my records it definitely looks more like its a 7 or 30 day average than a 24-hour one (as we haven't been going over 7 days the 7 and 30 day averaeges are the same - so can't tell which it is).