PSN,
TLC is a pretty funny character. I've laughed with him while lurking on some other threads. Check out some of his posts and you'll see where he's coming from. I like his humor in a warped way.
I've already posted it somewhere and it doesn't bear repeating in length, but there are abuses everywhere. Pump and Dumps abound in every segment but are most prevelant with the pennies regardless of HOW they went public. The trick, of course, is to do your DD. That means finding as many sources as possible - the company, SI, Internet, respected opinions from friends and experts, etc. DO IT ALL!!! When you plop a few thousand on a new car, you look at the reputation, consumer reports + comparison shop, etc. People need to wake up and be EVEN MORE diligent when buying stocks.
Look for the companies whose Principals have RESTRICTED STOCK. If they have the "greatest thing since sliced bread" they will be willing to hold the stock for a while. NO RESTRICTED STOCK = NO INVESTMENT FROM CLO!!!! Also look for companies where the guys in the driver's seat (actually managing the company) have options TO EARN, not most of their stock on the front end with little or no cost basis.
The MOST IMPORTANT POINT, however, is to look for those companies (whether private or a public penny) that ACTUALLY HAVE A PRODUCT & PATENT NOW!!! Where people get burned is when "the greatest invention since the wheel" is still in R&D or in "beta testing." When it doesn't materialize (or never really had any hope of materializing) - or something "better" comes along - is when you get taken to the cleaners. Call independent experts, etc. Make sure the company has what it says it has and has it NOW!!!
IMHO, a private company should only go public when they have what it takes ALREADY to gain in value. Otherwise, why are they going public? Especially by a reverse merger which is not a money raising activity? Make sure there is funding or a private placement contingent on the reverse!!!!!! And make sure there is a currently marketable product, because, as we all painfully know, speculation is great but earnings drive companies!!!!!
I only proceed when those conditions are met.
Clo |
