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Strategies & Market Trends : Fatty's Donut Shop -- Ignore unavailable to you. Want to Upgrade?

To: Matt Brown who wrote (4396)	11/15/1999 7:32:00 AM
From: Mr Metals	Read Replies (1) \| Respond to of 5041

A link from the BISH... intelligentspeculator.com Penny Stocks - No Guts, No Glory Financing Dreams: The (Ad)venture Capitalists Last modified June 8, 1999 Nothing ventured, nothing gained, so the saying goes. That's how the West was won. In the United States, venture capitalists raise money for a variety of companies. Generally, they do several rounds of financing and grow the company until it is a viable and attractive business ready for major brokerage houses to take it public via an initial public offering (IPO) which nets tens of millions of dollars. The offering price is usually quite high but the investor is theoretically buying a company that has a track record and has decent prospects for future growth and earnings. Ideas and companies that fail along the way never get listed on a stock exchange and as such, the public rarely gets buried. The venture capitalists write them off and move on to bigger and better things. In order to be profitable, venture capitalists must make a killing on winners to offset the many losers. This process has served investors reasonably well over the years. In the world of penny stocks dealing with resource exploration plays or start-up companies, things are quite different. Projects become public very early in the game, when all we have are people and their ideas. The public, through the act of buying stock, essentially assumes a significant portion of risk that traditionally belongs to a venture capitalist. They also share in the potential rewards. Finding a mine is dependent on many factors. Experienced geologists can help simplify the search. Hard work and dedication pays off sometimes. In the final analysis serendipity and luck are essential ingredients. There are many resources and countless targets to drill on this earth. Most of the time it requires surprisingly little cash. It is the odds that make the game tricky. Almost all of the mining ventures are long shots. High technology start-up companies are totally dependent on management and core personnel. Most of these people are from large corporations who wish to become entrepreneurs. They must compete with companies with multi-million dollar R&D budgets. Scams and swindles are legend. It's the Wild West. There is no need to rehash them here. There are also many successes and these companies graduate to list on major exchanges; their speculative roots become a footnote in the company's history. The press does not like to publicize successful microcaps for fear of endorsement and only analyze disasters long after the fact. The public is never treated to balanced reporting because sensational headlines are more exciting. The role of venture capitalists in the world of mining and other ventures is obscure even though we hear the term used by many in the business. The roles of those who are involved in a deal are not well understood by those who are outsiders. Some stock promoters even call themselves investment bankers. We prefer to use the term "insiders" and we will show you the players and their respective roles. You may be surprised to see that promoters and brokers go hand in hand and at times, their boundaries will cross in their effort to profit from each venture they undertake to finance. Promoters and brokers need to make money from each and every deal. They are not in the business to take risk and hit home runs. If a drill hits, it is gravy. The meat and potatoes come from the deals themselves. Think of it as a lottery. The public repeatedly buys stock hoping for the long shot to hit. The promoters and the brokers set up the game and print the tickets. The first rule for making money is to buy those tickets wholesale, at the same cost as the insiders. The second rule is to make sure that the money raised by a public company goes into the stated venture. Finding a success is hard enough, but when money goes toward shameless promotion, wine, women and fast cars, the public doesn't have a hope in hell. Long shots are fine, but they have to be good shots. We look for good management with a solid track record. Those who believe corporate treasuries are there for looting should be held accountable for their crimes. Look, here is a cool investment They're tellin' him he just can't lose So he goes off and tries 2 find a partner But all he finds are users All he finds are snakes in every color, Every nationality and size Seems like the only thing that he can do Is just roll his eyes and say Money don't matter 2 night It sure didn't matter yesterday Just when u think u got more than enough That's when it all up and flies away That's when u find out that u're better off Makin' sure your soul's alright Cuz money didn't matter yesterday And it sure don't matter 2 night [ Prince ] -------------------------------------------------------------------------------- [ FAQ - Overview ] Penny Stocks - No Guts, No Glory Financing Dreams: The (Ad)venture Capitalists The Press The Brokers Penny Stocks: Anatomy of a Trade -------------------------------------------------------------------------------- Our Choice for Quotes, Charts and Filters Copyright ¸ 1998-1999 by Intelligent Speculator QUICK NAVIGATION:* Market Internals* Market Calendar* Global Event Calendar__________CHATS__________+ Technical Traders+ Stocks at the Hard Right Edge+ Gold, Guts and Glory+ Stock and Index Options+ Coffee Shop________FEATURES_________* Real Time Market Commentary* The Trader's Notes* The Closing Bell* Technically Speaking!* Views from the Ivory Tower* Hard Right Edge* Day Trader's Diary___FURTHER INFORMATION___* Recommended Reading* How to Trade* Post a Chart* Search Archives