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Microcap & Penny Stocks : The Black Art of Making Money in Penny Stocks
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To: CIMA who wrote (80)10/11/1999 8:46:00 AM
From: Joe Copia   of 131
 
comments by Dave Reiner:

Here's the $64,000 question: How many OTC Bulletin Board companies have been ejected since the NASD implemented the Eligibility Rule since July 1? The answer is 341, or roughly 63% of the companies reviewed.

So far, the NASD has only reviewed 10% of the 6500 companies affected, so there's going to be an even greater flood of
companies heading to the OTC:BB graveyard - the Pink Sheets. Good!

The more information available to investors, the less risk. Less risk makes for a healthier market and we'll see more capital flow into Bulletin Board market once it is cleaned up.

However, The OTC:BB market spreads its asymmetric information very thick, which is good if you're talented at your due diligence, but bad news if you're one of the many who don't have time to spend day and night researching an unknown prospect. So if you are a god of microcap speculation/investing, the Eligibility Rule is going to
present you with more competition and cut down your phenomenal returns. For those still working toward a state of godliness, the Eligibility Rule may be the divine intervention needed to break through the mediocrity.

Some traders are distressed that large migration to the Pink Sheets will hurt liquidity. Poor babies! Don't invest in the companies who don't plan on compliance! A simple remedy to that problem. Besides, if the company in question doesn't have enough money to become compliant, then why bother? And for the companies who don't care about their shareholders or are too inept to become fully reporting,
good riddance.

Even the market makers of OTC:BB stocks are crying themselves dry, saying the capital-raising functions of the market are going to be hurt. Translation: What the heck are you doing? Don't delist non-reporting companies! How are we going to make up for the lost revenue?
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