~~~~~> flame wars
Rrufff and my fellow investors -
Let me start off by first apologizing for perhaps what looks like a Dr Jekyll, Mr Hyde switch. I know you guys have seen me pump/promote/condone/advertise/advocate/boost/pimp/abet/hype stocks that I now bash/condemn/decry/disown/criticize/loathe/abhor. Let me assure you that it wasn't from a loss of money in these stocks, but actually more of a culmination of painful growth. The stocks that I once claimed, I now denounce. But why?
This post is the best attempt to create a bridge of understanding. For those that have seen the road I have trudged, you know that I pick my battles wisely. I have never, in my short career, actually been in a "flame war". I earned my first ban this week. So why now? Because this issue strikes into my heart, and deals with convictions of a distorted process that have finally angered my soul. I know that most involved with this convoluted process probably know not what they do. I believe that I have been granted a glimpse of the full picture....here's what I see.
Part I. The Preservation of Capital
Alright, after a relatively short time engaging with the market, I soon realized that the first order of business is to preserve the capital or equity that is in my portfolio. If my capital is not preserved, then I will have no means to engage in the next trade. No matter how much advantage the next trade may be, I could do nothing because of a lack of opportunity. Not surprisingly, the majority of my focus was in effort to maintain my equity, while usually disregarding the equity of the other investors as being unimportant to the success of myself. I was dead wrong. Being new, I was not aware that in order for a stock that I own to go up, other investors must have the opportunity to purchase the stock I own. Another investor wanting to purchase the stock, but lacking the funds does nothing for the price of the stock. So, therefore, we are actually in a symbiotic relationship within the nano cap/micro cap market even if we are not aware of the dependence.
Now, if you will, lend me your imagination for just a minute. Imagine a lake that is filled with water. This lake is called Nano Capp Lake. The lake is filled each year by investors. The majority of the water is added in the beginning of the year, probably around income tax return time. The amount of water that is added each year is no doubt a finite amount. Only investors that are willing to live around Nano Capp Lake will put in. There is a strong prejudice and/or fear that is associated with Nano Capp Lake so we should not expect our friends on Big Capp Lake, Mid Capp Lake, or even Small Capp Lake to join in...the lake is ours.
Alright, also picture around our little lake businesses that need our water to help develop their company. Beside each company is a lock that allows water to go in. Each company has a large sign beside the lock that lists all the reasons an investor should open the lock and let some of water flow in. If the investor still cannot decide, then there is a phone on the wall in which is a hot line to the CEO of the company.
All companies around the lake agree to use the water wisely, and frugally. Matter of fact, a few companies even publish reports on their signs that tell the investors how much water they are using. Others allow outside inventory of their water through WTA's(Water Transfer Agents). Well, here's the part that gets weird. It seems that a lot of the companies take vast amounts of water from Nano Capp Lake, but never identify where the water is going. Sometimes it seems as though their lock is open all of the time, but their reservoir never get filled. Added to this enigma, is the fact that they usually have no report on their sign, and will not allow the WTA to give out water reports. Deepening the mystery, is the fact that often one or more other investors are clamoring incessantly to other investors to put their water into that company, and open the lock some more.
Unfortunately for all residents of Nano Capp Lake, the water is often quite low by the end of the year. Many lose all the water they ever put in, and really have no idea where it went. Many of the more transparent companies have to get less, because the greedy ones have got more...this cycle goes on and on. How sad.
Part II. The Preservation of Truth
Now, "what is truth"? I was taught that the best way to find out about a company is to read the PR's, examine the website, call the CEO, and call the IR Guy. That is only a half-truth. What will be found out is only one side of the story...the side the company wants us to hear. But of course! Why didn't I see that sooner? All the info gathered in that one-sided approach is from management, and no doubt biased. So, it's an unbalanced equation to say the least.
Know why The United States of America is the greatest country in the world? Because of it's system of checks and balances....we don't just blindly trust those that we put our trust in. We have freedom of speech, and transparency in government. If not then we surely would have had our own Caesar, Stalin, or Hitler by now. The problem is that when left unchecked, most cannot handle the power and they corrupt themselves. Simply put...self-will-run-riot.
So how do we balance the equation? How do we make sure we don't have an evil dictator at the helm? Accountable information. We must be able to attain information from an outside source such as a transfer agent or a filing that is public. That's what makes the calls to management really work. When I call management, I really don't want to hear the sales pitch near as much as I want to have information to determine if the CEO is honest or not. His level of honesty determines his level of character. If he is a liar, then I damn well want to know it, because if he is capable of lying then he is capable of anything. I need to know if he is going to sell shares or not, since, after all, if we don't have a share structure, then we don't have an investment....period. I must have a means to see if the CEO is telling the truth. The only way to do this is to be able to view the share structure on a timely basis. A transparent TA is the best, and reports will perhaps suffice if they are consistent. But if we don't have a transparent TA or a report, then all we have is the word of a CEO that may or may not be telling the truth. And trust me...may don't. Here's my list from 2005.
Bob Corr - RSHN - lied to me on the phone that the company was "in the black" and had no need to sell shares. Sold 1 billion before I bailed. This company is non-reporting and has a gagged TA.
Mark Astrom - VWKM - lied to me several times on the phone saying the company was not going to sell shares. Issued PR of share buyback for up to 400 mil shares. Bought back 120 mil. Sold another 3.2 billion shares. Told me he needed to "add water to the lake". Lied to another caller saying he did not make that comment. This company is non- reporting, but the o/s may be obtained.
Jim Turk - PLNI - lied to me via PR. Issued PR stating that the company would do a 200 mil buyback and reduce the outstanding shares. Bought back 200 mil shares and then sold
2.9 billion shares(Please don't rationalize the way this is done. I do realize that they did technically "buyback" the shares, but we all know the motive is disingenuous). This company is non-reporting and the TA is gagged.
Want to see the amount of water drained from Nano Capp Lake just from these three?
RSHN 1,000,000,000 * .0005 = $500,000
VWKM 3,200,000,000 * .0005 = $1,600,000
PLNI 2,900,000,000 * .005 = $14,500,000
Total....$16,600,000 worth of water drained from the lake on only these three known diluters.
Let's just throw this in real quick as well. FCDH sold 300 billion shares before doing a 1 for 10,000 r/s last year.
300,000,000,000 * .001 = $300,000,000
$316,600,000 worth of Nano Capp Lake drained forever....where is it going? And what do we do?
Part III. The Preservation of Justice
"Those who know me, know that I often call CEO's and IR's. More often than not, my call is not to obtain information but to "convince" them of the value of a strong shareholder base, one that is built through "trust." That is, if they want "us" to stay with them as they develop, then they should not be dumping and diluting. The latter, after all, tells us that they are BS ing us and it plays into the hands of the bashers and rightfully so." - rrufff
So everyone deserves one chance(even perhaps those that use gagged TA's and don't report) to do the right thing, but what about those that lie to us. This is the part, in my very humble opinion, is most screwed up. What we should do is refuse to invest in any company that has lied to it's investors. The old adage "Fool me once your fault, fool me twice my fault" should be in effect. But instead, we often just look the other way. Even worse, some of us spin these things as to be accepted, and then promote the stock some more. And make no mistake about it...all conversations about any given stock have some degree of promotion or angst inherent in it. If I have a thread regarding the stock, then i'm making a statement pro or con in regards to the stock.
So what do we do when we identify a diluter? We should refuse to put any more money into that stock, or that CEO...period. We should drop any threads we moderate on these stocks. We should stop spinning things to the good. We should not accept them. We should post the truth as we have experienced it. This is the only way to teach the diluters/liars that we mean business and we want to protect our fellow investors...and Nano Capp Lake.
Here's the general attitude that most people have about the above situation. "Ok...so some pimp these stocks like there is no tomorrow, but what's the big deal? Most of us know the way it works, and anyone that can't take it belongs some place else." Here's the real reason that those that pimp "pump and dumps" should be real concerned about whose side they are on(yes I'm referring to the spiritual). Please ponder this question...
Where does the money go?
Part. IV The Preservation of Love
"I'm not a smart man. But I *know* what love is."
~~~> Forrest Gump (1994)
Alright, that's a question I have been pondering. Matter of fact, it's THE question. Where could it be going? Here's a few of possibilities:
#1 A given CEO could use all the money for the business, and be close to a break through.
#2 A given CEO could use the the money to pay off the mortgage on his church.
#3 A given CEO could use the money for a life of luxury including drugs, gambling, prostitution, and the like.
#4 A given CEO could actually be sending the money to Al Qaeda/Bin Laden.
Hummm...the implications there are much more vast. So where would these CEO's most likely fall? Well, the best thing to do is think about their character. The same guys that have proven their duplicity over and over via PR's and phone calls. Perhaps # 4 is over the top(perhaps not), but let's just expand on #3....it's not much of a leap for someone with bad character.
So in scenario number three we have a CEO with a penchant for sex, drugs, and gambling. Let's say this CEO just sold $50,000 worth of stock that friday. This CEO could then go see his #1 drug dealer and buy $5000.00 worth of coCAIN. Then he could jump on his leer jet and fly to Vegas. After reaching Vegas he could go to his favorite pimp and get five women of like mind(if you know what I mean), and head to his #1 favorite sleezy casino. At the casino he get to go to the "private gambling lounge" and gamble naked with 5 women, and snort lines of coCAIN off their best parts. But that's not all. Unbeknownst to the CEO, his #1 drug dealer has bought machine guns for his posse with the $5000.00. Then the knocked off 5 gang members and 2 children in a drive by. See the implications? I could go on an on with this evil, but the point is made.
Well, I may not be a smart man, but that's not love. That's just ole "steal, kill, and destroy" at work. Which brings me to the one thing that so many seem to ignore....the moronic pumper. This is the one who always ignores the DD, and seems to care less about his follow man...and sure as heck doesn't care about the Nano Capp Lake, despite that's where he makes his living. It has to stop.
Each of us have the ability to promote stocks. Some of us have more ability than others. Those with the most ability MUST consider the stocks that they promote. Each of us is either being part of the problem or part of the solution. Each investor must consider who is leading them, and what is their source? Also, each leader must make the other leaders accountable. We need to point out pump and dumps and correct those that pimp them. Most importantly, we must stop trying to sell others on stocks that we know are pump and dump.
We must stop letting stocks that are bottomless pits drink all the equity from the lake. If we all stuck to stocks that have yet to prove to be deceptive, then we would all be a lot richer, because then our fellow investors would have more capital to join us when we found a diamond in the rrufff.
These are my thoughts today...and they are disputable and debatable.
GodBless-NoDoubt
cris
P.S. Do we want to be "a few good men", or do we just corrupt ourselves, and become a part of the current system? |
