This is one great post...moved from another board here on SI.
To: AsturiasPh.D/MBA who wrote (147609) 3/15/2006 8:30:45 AM
From: rrufff of 147657
Truthseeker, thanks for the note. I appreciate it. It's particularly meaningful because I have been attacked and implicitly threatened, I believe in jealousy, by a displaced resident, as a "promoter" as that term is used in stock discussion, merely for posting on a message board favorably or for posting on a message board in support of another poster or posters.
You and I have often disagreed with respect to a stock or a topic. But that doesn't mean that we can't have mutual respect.
I don't disagree with your comments on penny stocks in general. There are 1000's of pinkie penny stocks and I would agree that most are stocks that should be avoided. I spend as much as 18 hours a day doing research and I hope to be able to avoid the worst.
In interviewing, visiting or communicating with managements as part of my DD, my first and often only goal is to convince them to become "shareholder friendly." Most, although not you, would be shocked at the number who have no clue what that term even means or that there is even such a concept. They have been convinced by others, often professional promoters or financiers, to forget about the shareholders, raise as much money as quickly as possible, and let the stock price take care of itself. I tell CEO's that I want no inside information. I seek very little discussion on the product spiel as most can't be fully understood unless one is an expert in the particular product or service niche. Everyone believes, or at least can say, that they have the best oil well, computer product, perpetual motion device, or other product or service, available.
However, I do want full public disclosure as to the corporate structure and history, at least as a goal, and the expressed intent to do so with respect to its future. How the business plan is paid for is more important to me than the business plan (other than the "wow" factor, i.e., whether or not a success will attract the public.) On the other hand, the focus I often see, where a "basher" will focus on something that is not currently material to the current operation, often creates a buying opportunity, whether that is intended or not. Full disclosure is important but one has to realize that situations can change, people can change or be fired. I'm a firm believer in giving someone a chance to succeed, but, as you suggest, being wary and as a former President is credited with warning, "verify" but make your own decisions. Furthermore, many of these tiny companies can't afford to file documents that have professional proof readers, or expensive accountants, or even experts on SEC nuance. As much as we wish to encourage full disclosure, I saw a company yesterday criticized for filing financial documents in an unprofessional fashion. I understand the criticism but would prefer the filing rather than no filing. That's one of the nice things that I would encourage with the existence of pinksheets.com. Allow companies to disclose over time and as their resources permit. Uncertainty has a price and these companies will grow to understand that if they wish a higher investor acceptance and price, they will have as a goal fuller disclosure as well as the perception that they are "shareholder friendly."
Where I would disagree with you is the tendency of all of us to paint first, with a very broad brush, one that doesn't necessarily allow for something to be different from what we deeply agree. Again, all of us who are active on message boards do this.
Specifically, as you say, it is possible to make a lot of money in penny stocks, even in the pinkie area. There are some companies and CEO's that are run with the knowledge that they work for shareholders and not the other way around, and that they have an obligation to enhance the corporate currency, particularly if they are using that currency to build the business.
I spent about 2 hours yesterday with a CEO, an experienced oil man. Rather than talk about his company, he related to me how he had been scammed by promoters and vulture financiers, the latest a stock website that put out a "sell" on his stock when he refused to do business with the operator of the website. He found it refreshing that someone was offering free advice with respect to my own opinions of how to build a strong shareholder base, a base founded on honesty, transparency and the understanding that there is a fiduciary responsibility to shareholders.
This particular CEO realizes that his approach won't "pop" the stock overnight. However, the longer term investor, a term you perhaps think shouldn't exist in penny land, will provide more stability and help him grow his business in a controlled and relatively low-dilutive fashion.
Perhaps this seems to you and to others be a new concept but I think it has a chance to succeed. I like the trends with respect to pinksheets.com. The owner really wants transparency and more disclosure. I also applaud the efforts to tailor the SOX law to make it more affordable and efficient for small companies, rather than an exercise in funding auditors in a CYA style. I also applaud the movement to expose manipulation by moneyed interests, particularly in the hedge fund and naked shorting area. I pick those latter 2 areas, not to diminish the work of you and other "crusaders" against scammy managements, but because it is an area that I believe has thrived over the past few years and, as with other scams, needs darkness and secrecy to flourish. Like you, I also attract the ire of some vested interests in calling for changes in our market system, that would start with bringing the MM system and our exchanges into the 21st century, encouraging more open and direct transactions, competition in setting the best quotes, and equal access to trading and financial information.
I've often hoped that message boards could organize us retail investors in a way to level the playing fields against managements, moneyed interests, MMs, and others. Unfortunately, it has more often degenerated as a tool, lost in ego, with petty disputes and chest beating, all of which hurts the message, the messenger and the possibility of real change.
I'm pleased that a relatively new SI member has started The Transparent Flamingo on SI and IHub, in an attempt to learn more and to try to identify companies that are "shareholder friendly," a concept that has been underlying my posts for years.
My hope is to find, identify and make money with the companies that most would not consider scams. However, the fact that there are exceptions to generalized "all are scams" disproves the generalization. It is the reason why I often post vehemently in opposition to those who blindly claim that ALL penny stocks, all microcaps, all pinkies are scams, without investigation, without even knowing often a thing about a stock, often with what I call MGB, moronic generic bash. By saying that, it does not mean I condone moronic generic pump, the post that says, "to the moon," "chart says a double tomorrow GUARANTEED," etc.
As to your comment about TA and moving averages, I've always been someone who based his decisions on my own DD, largely research. It was something through which I thought I could both campaign for change and have an advantage in making money quite frankly. I don't believe it is unfair or against any rules or regulations to do a ton of research. I make mistakes often but it narrows the rate of error making. I laughed at one suggestion, from a banished former resident, that because I arguably missed something in a boilerplate filing from 1997 or another filing, I was somehow misleading in my posts. I know you have suffered similar type accusations. Our posts should never be used as the basis of one's own DD. My posts are no better or worse than anyone else's. They are my own opinions and not, in any way, to be used as a sole basis for anyone's financial decision.
Over the years, I've gradually been convinced by some expert proponents of various TA theories that there is a value to TA even in penny land. Underlying this opinion is my knowledge that one person can skew a chart in such a way that it changes most TA. So, I personally never make a decision in penny land SOLELY on TA. However, there are so many buys and sells made by TA that it can become that self-fulfilling prophecy. Furthermore, I do believe that manipulators of all stripes, including hedge funds and MM's, understand this and use these weapons, and very efficiently. This is what I believe and I've had years of experience. I understand that others feel differently. I urge fuller disclosure, efficient registration and regulation so that we can determine whether I am correct or not. The tendency for these entities to fight registration, regulation and disclosure, leads me to believe that I am more correct than in error.
Going forward, I would hope that there is more analysis, pro and con, that is based on research and not personal animosity. I have seen one stock board that has degenerated into basically a "bash the stock because of certain posters" the head basher, and followers, do not like for personal reasons or perhaps past flame wars that caused some personal angst. I suggest that, ipso facto, that board loses its very purpose. It would be very difficult for the true bear on the stock to find the coherent material arguments against owning.
When we get lost in "all microcaps are scams," the credibility of an argument with respect to a particular scam often is not heard and degenerates into a less than useful discussion. Further, a basher, (and I use that term lovingly), if he wishes to get his message across, who comes across as making fun of stupid longs or dismissing other arguments, does not change the environment for scams in general or his particular perceived scam. After all, it should be common sense that a long is invested, and not just financially, in his particular stock trade. It seems to be further common sense that someone posting positively is probably long the stock, while a "basher" likely has his own vested interest, perhaps undefined, in bashing. Note - I am not referring to you and understand that you have indicated that you have no direct investment in the companies about which you post. But I believe you are the exception. I don't believe it is wrong to be short a stock one bashes, just as I don't believe it is wrong to be bullish on a stock that one posts favorably.
Thanks again for the very logical and enlightening discussion.
Message 22261855
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