12DailyPro: What I Know, and What to Do About It
by BradH
30 January 2006
Today’s title notwithstanding, this column is usually not about 12DailyPro. However, I do get asked about this program a lot, and I thought I should take some time to answer a few common questions, give you some updated mathematical analysis, and point you in the direction of a stable investment strategy.
There are certain things I will not speculate on. I do not know much more than the average investor concerning the GPT convention, a conference organized by 12DailyPro and scheduled to take place in Charlotte, North Carolina at the end of February. However, online investment programs do not decide when to collapse on the basis of arbitrary convention dates. Rather, they rise and fall due to the flux of money in and out of them, and that is something I am certainly better at figuring out than the legitimacy of some conference.
I also do not know whether or not 12DailyPro has any income other than new member upgrades. Charis, the 12Daily admin, has implied in the past that they do; however, I have enough experience in this industry to know not to believe every vague statement about a program’s outside income. Thus, for the purposes of my calculations, I assume that they are a ponzi—that is, new member upgrades are used to pay for old members’ withdrawals. If they are indeed a ponzi, this means that my models are accurate. If they are not a ponzi, this means that my models are overly cautious. I think a built-in skepticism toward programs is a good thing for mathematical models to have; thus, I always assume that 12Daily is a ponzi when modeling its performance.
The most useful mathematical tool I use to study 12DailyPro is the required reinvestment percentage. I briefly introduced this model in my last column (Autosurf Industry: The Long View), and I will use a slightly different form of it today. In essence, this model compares the growth in a program’s reach value on Alexa to the amount it must pay out in a certain period of time. Once we have that ratio, it is easy to calculate the percentage of profits that people must be reinvesting in order for 12Daily to break even.
In this specific model, I divide 12Daily’s running time into specific 21-day periods. This is roughly the time it takes for a member to get paid 44% profit from an investment. I then calculate 12Daily’s membership growth during that period using proxy data such as Alexa reach. The difference, then, between these two values is the percentage of earnings that people must reinvest in order for the program to break even. As we have assumed a 'ponzi model' this number can never touch 0%, but the lower the number the longer the programme should last. At the other extreme, a value of 100% would mean that members would have to reinvest all their withdrawals in order to sustain the programme. However, if we were ever to find a programme that could survive for any length of time at or above a value of 100% this would actually reveal that they were indeed able to generate external profits.
Of course, certain things complicate such a calculation. However, referral commissions, missed surfing days, and suspended accounts all probably cancel each other out to a large degree and have a negligible effect on the required percentages, let alone the overall trend.
As you can see, 12 Daily’s growth could have supplied the majority of payouts since mid-November. Overall, this graph should be encouraging to 12DailyPro investors, as the program was able to sustain much higher required reinvestment percentages before October 1st. However, keep in mind that 12Daily is about four times larger now than it was at the beginning of this graph. If 12Daily did have a steady external income source, it would have been much easier for 12Daily to make up for any difference between required reinvestment percentage and actual reinvestment percentage then than now. Simply put, a 5% change in the amount of money reinvested in 12DP now is a much larger sum of cash than a 5% change was four months ago.
However, the required percentage has been increasing recently to make up for slower growth in January. If this trend continues unabated, I doubt that 12DailyPro will stay in business all that much longer—unless, of course, they have serious sources of external income. Keep in mind that 12Daily is now a clear market leader in the autosurfing industry. The downside of that is they must recruit people who have never autosurfed before into their program in order to keep growing.
So what can we do with this information? Ultimately, investors can find security in diversification. While I still think 12DailyPro should be a part of any online portfolio, investing in little else is simply frightening. There are plenty of great programs out there, and one of my main goals in writing this weekly column is to help you pick the right ones out of the hundreds listed on AutoSurfMonitor. In my last article, I named two programs that are still going strong. In the future, I’ll analyze more high-quality (yet less well-known) autosurf programs, with the hope that perhaps those reading this will find diversification to be the best investment opportunity of all.
Brad Hargreaves is a second year economics student at Yale University. He
also authored The Syndicate, an autosurf modeling newsletter.
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