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Microcap & Penny Stocks : GIFS -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (7505)	3/24/1998 7:31:00 AM
From: Tom W	Respond to of 8012

Ron, Truth is, the system isn't anywhere near perfect as it is. On average there is at least one new class action lawsuit filed every day alleging one or more forms of securities fraud. And there have been numerous frauds on investors by Natl Market System (NMS) companies, despite being followed by professional analysts. Forget all the frauds and scams from Small Cap or BB companies. Interestingly, there have been far fewer on NYSE and AMEX, despite AMEX's desperate seeking of new listings and willingness to take anyone practically. There are other weaknesses in the system as well. The current two tier system of NASDAQ is designed to assure investors that an NMS stock meets a higher degree of financial stability in terms of net assets, profits, etc. One advantage for NMS listing is that the stock is "blue skyed" automatically in all states, and is also marginable. However, a company can pay to be listed on the Boston or Pacific exchange, and gain most of these same benefits, even tho it fails to meet the listing requirements for NMS. I recognize the need for a market for cos already public that break down and fail to meet the minimum listing requirements for NASDAQ or NYSE. I disagree that start-up companies should ever back their way into being a publicly owned company thru the bulletin board. I have personally participated in the "birthing" of about 20 companies, many of which are still around and doing well, thru the IPO process. I have also participated in the venture capital arena, and know that there is a virtually endless supply of capital available to finance a start up company worth supporting. I firmly believe that any decent company should remain private (where costs are also lower) until such time as it can meet the new listing requirements of either NASDAQ or NYSE. And if you are familiar with O'Neill's CANSLIM approach to investing, you will realize that it involves highly successful, rapidly growing companies with accelerating earnings. I view stocks on the bulletin board as broken down and troubled. With the one exception of RUDY, and even there I waited for them to fix the problems that caused them to first be dropped from NMS, then subsequently from NASDAQ, I have not profited from venturing into BB stocks, nor will I again take those risks. When I can make the returns I have since been making, while there are still risks as with any investment, why bother with the headache. Frankly, I don't have the time to investigate every company I am considering investing in, nor visit their factory, nor demand (as a non-shareholder) to view their books or examine their assets. At best, I can visit the SEC site and review latest financial filings. But if the SEC is not also examining these filings, I no longer know how far I can trust them. Common sense can only apply so far, and I am not an accountant. Having read several thousand 10Qs and hundreds at least of 10Ks, I can often spot a problem or something that makes me uncomfortable. In GIFS case, however, they had not filed with the SEC before I made my first two or three investments. By the time they did file, it was too late to salvage most of the investment, and I gambled on the news releases being put out projecting earnings, anticipating that if I waited long enough all those earnings would eventually bring the stock back up. Every investor should do his or her homework before investing. The fewer professional analysts following a company (and be sure they work for a broker-dealer, not paid by the company for a "research report") the greater the risk. The greater the risk, the more caution and homework is needed. tom w