What is bucket shop?

Those trading in stocks and shares or in financial products are quite familiar with the term bucket shop. The term is often not look at kindly and smell of distrust and a con job. They are supposed to trade in commodities like coffee bean, sugar, oil, wheat, pork belly etc etc. The general impression is that new investors often were attracted by the good returns and also tended to make money in the first few trades. Subsequently they will lose their pants, lock, stock and barrel. They have a similar modus operandi. They make sales talks of good returns to their potential customers. And whatever trades they ‘executed’ in the early part of the game often ended in big winnings. Then they will advise the investors to put in more money for bigger wins. Most investors obliged thinking that it was so easy to make money. And they will pump in more money and will receive monthly statements of winnings that will make them smile. The catch is that they cannot withdraw whatever money they put in. Their brokers will try all means to prevent them from withdrawing their money. These could be sweet words of good returns or more schemes to keep their money in. And if they fail to persuade the investors from withdrawing, the investors will be hit with their first shock, losses. All their trades will now be reported as losses and big losses. And any withdrawal will be less than they put in or even nothing left. In worst cases, they even owe money to the bucket shops from big losses. The trick of bucket shops is to keep asking their clients to put in more money and more money and to generate glowing reports of profits in their monthly statements. And the clients will be very happy just looking at the reports. What they did not know or did not ask is whether there is really any money left. Often actually not a single cent is there. The money is all gone except on paper, printed in the monthly reports sent to the clients, to make clients happy and to encourage clients to put in money into a bottomless pit. In short, this is what bucket shop is all about. Put in money and don’t expect to see it anymore.


Wally Buffet said...

Good morning Mr. Bean.

Hey, this bucket shop trick which is as old as the hills is now so well known that anyone who gets conned is not only an investment novice but a real good for nothing duffer as well.

My advice to investors would be to get a bank to manage your nest egg with their wealth management services or, if you have the time, go online and trade on non discretionary terms with trades only initiated by you with a reputable and reliable broking house.

And when you've made your money, for fuck sake spend it because you can't take it along with you when you turn in your red passport and meet the Emperor of Hades when the time comes.

Hehe. :o)

Chua Chin Leng aka redbean said...

Morning Wally. The same modus operandi is copied by many organisations to rob the innocent. Today they come in many forms.

The masses must remember the basic principles. Good return and easy money and money put in cannot take out.

Any scheme that works this way is a morph of bucket shops.

Matilah_Singapura said...

redbean, are you for real? Is this shit going on in S'pore?

The best part of the con in many of the old bucket shop operations: many of them did not even buy the underlying securities. Punters essentially "bet" on the price movements. Bucket shop pockets the money.

Chua Chin Leng aka redbean said...

A few years back someone handed me a name card. Also they were recruiting young and innocent school leavers on the pretext to training and learning on the job.

I don't think they are operating today. But the PRINCIPLE of how it works is copied by many organisations. So don't be deceived even if they don't call themselves bucket shops.

Anonymous said...

Many of these bucket shops are still advertising themselves in our local newspapers and they had been doing so for decades.

Anonymous said...

Is the CPF a bucket shop, or has common features like a bucket shop?

Chua Chin Leng aka redbean said...

CPF drawn down age would be raised to 63 next year, 64 in 2015, and 65 in 2018.

By year 2020 what would be the age?

Kaffein said...

Do your own investments and manage your own finances. Don't let others manage for you because more often, like you have mentioned, they are out for their own good first then yours. When it fails, it's always your fault.

But then some organisations don't allow me to manage my own finances. Can see but can't touch.



Anonymous said...

A foreign worker who was once accosted and accused of staring by few teenagers who demanded money to resolve the matter, it was only prevented from going ugly from the intervention of private security personels. Yet he once again said safety in Singapore is one area that impresses him.
With the many cases of homicide and suicide; jumping onto mrt track, flying down from highrise buildings, slashings by youths, middle age men fighting in bus and elsewhere and old folk died after having dispute.
How safe is Sin really?

Matilah_Singapura said...

If they are really scamming people, where is the all-powerful, rule-of-law state? Where are the folks from Treasury, Ministry of Finance, securities regulators: what? All collect high pay and allow scams to occur in what is a fantastic financial system?

Balls to them! They are not doing their job and putting my Hotel at risk!