Jim, read your post on AOL, and thought I might be able to help by copying here:
Rsys is stuck. So are a lot of good companies.
The numbers and products are quite good, the business model and Glen Myers& co. seem sharp, intel's recent (and soon to be continued, I think) drop may have cost them a couple bucks, but it's not serious, the lawsuit is clearly a phony, but the stuff gets brutally manipulated each time it tries to crack 40. Anyone who can wait till the end of the year may realize good dough, since I firmly believe that this stuff should go to the 50's and
split to ease the small float problem.
BUT: The irrational, lemming-like character that I seem to see in the market is the real risk. Another tech correction, or another round of weird analyst croakings, followed by multiple downgrades followed by cosmic short interest could really set the advance back, and delay the realization of rational value in RSYS, PAIR, FORE, and many others for weeks or months.
Thesis:
I believe that the most likely general explanation--call me paranoid if you will- is that the street is, in a sense, a private club that includes the big institutional investor as the really important source of profits, and uses the small investor as a source of liquidity, when liquidity is needed to support large institutional moves at a good price. Most retail brokerage divisions either lose money, or barely break even. Why do it, then?
Is it because they need us for cannon fodder?
Example.
"Cosmic Capital" would like to take a significant position in a company, say (or a LOT of large investors desire a larger presence in an area or entire industry). Soon, a couple of influential analysts led by Cosmic's buddies Slease, Weasle and Trump (no insult intended, Don. Not much, anyhow.), and brokerage houses question the wisdom of the current business plan and express reservations about the competence of the window washing staff,
the whisper channel suddenly is overflowing with rumours about the health problems of a key executive-- all at least 10% true--and Cosmic Capital gets in at a steal. Manipulation? Why, of course not, boys and girls. Just the legitemate exercise of the obligation to inform! A testimony to freedom of expression and the free exchange of information!
Bovine Fecal Material, Fools. Something along these lines, plus the lemming effect took out the entire networking sector a couple months ago. A 40% loss in market cap in 21days? Aliens ate my Buick, too.
Conclusion:
I made the best gains of my short investing career bottom feeding after the networking crash, and I really do not like to invest this way, but the existence and pervasiveness of this game, and a very high and jittery market that is easily spooked means I must either join the game, or sit it out for the long term. So, Is that so bad? So is the "long term" somehow dead as an investment approach? No, I think not. But it is damaged. Vast amounts of
available mobile capital produce great ingenuity in the creation of new scams, and a climate of "hands off business, you sleasy politician!" removes most of the brakes. NONE of these scams has much to do with the real value of good comanies like RSYS. It has everything to do with the transfer of money-- and not much else. Too bad.
Am I aiding and abetting this scam if I bail at 40, and wait for the next sector to tank?
Probably. But at the age of 55, the long term view espoused in FoolWorld extends past my useful life span. I wonder if it has ever occurred to"Da Boyz" how disheartening it is for a soon-to-be-retired, but new investor to hear all this stuff about 20- year time horizons? It is the older investor who needs the higher risk but faster tracks.
As for RSYS I'm going to give the co. a little while longer to change their tactics, drop the "head down, nose to the grindstone"( or somewhere worse), and defend themselves. I like the company. I think they are being flogged somehow, but they gotta stand up, or i'm outta here. This has been going on too long.
Jim Miller
I hope this is what you were getting at. |
