Hi Doc, Welcome to SI. I was wondering if you could help me, I get a sharp pain in my portfolio whenever I invest in OTC:BB stocks, any advice?
These types of articles you site, are normally paid for by the business and I see nothing wrong with the practice of "getting the message out there" to the public who must do their own due diligence.
First, having read the disclaimer at internetstocknews.com, I can't see anywhere that GGNC paid them to be included (I will check again). It doesn't seem to be the same thing as Wall Street Research, who's disclaimer indicated that they were paid by GGNC.
Also, in my post, I didn't say that there was anything wrong with the practice, just that there was very little information and that it was out-of date (almost 6 months old).
Now that you bring it up, however, here are my problems with this practice in general (I will draw from GGNC/Wall Street Research for illustrative examples).
* Many paid-for reports, are by their own admission not recommendations to buy or sell stocks, although they are written to appear as analysts reports (which normally do contain recommendations to buy or sell stocks). To novice investors, this type of report appears to be an impartial third-party analysts report, when in fact it is more-or-less an advertisement. In GGNC's case, this confusion is compounded by press releases which make references to the WSR while failing to indicate that WSR is not an impartial third-party.
* You say that they are only getting the message out there, and people can do their own due diligence. But that's exactly the problem, people can't do their own due diligence (or at least any meaningful due diligence) because the company is non-reporting. The only due diligence that can be done on these types of companies is ineffective due dilligence, such as:
1. Read the company's press releases (complete with disclaimers about forward-looking statements).
2. Read the company's web page.
3. Phone up the company to get the story of the day (ask Daniel Miller or Kowboy on the ABFG thread how reliable this is).
4. Read the hysterical rantings of the cheerleaders and paid shills on the Raving Bull and SI threads
Unfortunately, what we can't do is read audited financial statements filed with the SEC. Audited financial statements are where basic DD should start. Guess what -the SEC agrees with me, and has brought in rules requiring all OTC:BB companies to become reporting.
In SEC filings, we can find out the answers to difficult questions such as:
1. Who are the directors and management?
2. What operations does the company own?
3. What is the share strucutre of the company?
4. What is their address?
5. How many shares were issued recently.
Stuff like doing a surprise visit on the company, talking to their suppliers and customers, and checking out the track record of the directors and management comes later.
I figure if I'm going to be putting $5 or $10 or $20 grand (or whatever) into a company, I'm going to want to know a heck of a lot about it first, and possibly have to spend a few hundred $ getting that information. I'm certainly not just going to accept somebody's word for it, especially an anonymous tipster or anyone who is being paid by the company.
Remember, they paid cash for their recent acquisition.
Where did you hear that? I'm keeping an open mind on that matter until I see it written as a note to an audited financial statement.
Regards,
John Sladek |
