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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area -- Ignore unavailable to you. Want to Upgrade?

To: Crossy who wrote (2628)	4/15/1998 1:25:00 PM
From: Bosco	Read Replies (2) \| Respond to of 37387

Dear Crossy - thx for all the wonderful news. And good calls on COMS and MOT [did not enter due to preoccupation with filings, but I ve just dropped off the tax returns an hour ago - now I am a free man <g>] Btw, did you manage to avoid DMIC? I'll start looking into some of the stuff you ve been discussing. Thx again. rgds Bosco

To: Crossy who wrote (2628)	4/15/1998 2:57:00 PM
From: Crossy	Respond to of 37387

re: TRADING the OTC/BBs Bosco & all, the reasons for my "quiet period" over the last week was that I'm heavily researching OTC/BB picks. I firmly believe that in order to be in another market segment yet unknown to You - you have to make some enhancements to Your arsenal of tools. That's what I came up with: Many investors in OTC/BB learn their lessons the hard way - by experiencing the losses themselves. I learnt it the easy way by doing case studies on vehicles like EUTO, CVIA the easy way. Much cheaper but equally effective.. 0) All OTC/BB stocks are generally momentum stocks IMHO. This means it's ok to play them - but not to stay into it too long. There are exceptions to this rule - IF and ONLY IF the following preconditions apply, then a long-term hold & watch the company prosper is ok.. 1) DD is everything. The more info the better. Research pays off. You can't know too much about a stock You want to go really into for a long time 2) Only stay long in companies that are reporting entities to the SEC. Many OTC companies are non-reporting. Should be a part of every DD procedure to check those SEC filings. I once thought there was a shortcut around those tons of electonic documents. There isn't - believe me. I learnt to understand the language of the securities lawyers and to dig into a play 3) High numbers of float are alarming. When OTC companies do acquisitions they often issue shares which are then absorbed into the float pre-generated by some PR/hype. Look at EUTO for example. How many shares they can add to the float ? Well maximum number is the difference btw. authorized and issued shares. Again here reporting companies are easier to judge because this info is buried in the 10-Q and 10-K & 8K filings of the companies. The name of this problem is called :DILUTION 4) If You here the word convertible debenture in connection with a non-specified conversion rate Your alarm bells should sound: CVIA. I learnt this lessons way back in EXSO (1 year ago). Other examples in this regard is CAFE right now (Nasdaq main). This is called a "floorless" construct and a very dangerous one. The holder of such a convertible can short against the box and can always deliver the shares - since he got the convertible. The lower the stock goes the more he can sell. Again, maximum is authorized shares. Don't let Yourself get trapped into this one. Again a DILUTION related caveat. 5) The MM (Market makers - or call them Manipulators) are doing their things with OTC/BB stocks. I do not cry foul - just posting this to make it know. Be aware of their games when You invest in a BB. Often the spread would be horrendous. Never do market orders in OTC/BB the risks are too high. Don't chase a stock - let it come to You. 6) TA is worhy even in OTC/BB stocks. Get Yourself a quotefeed that supports OTC plays. Mine (DialData) does with a little help of myself<g> 7) Especially in OTC situations: Look for a winning team. Management is everything. When You see seasoned industry experts to join an upstart there must be somthing to it. Also, ex-blue chip top personnel often likes to go for fun in their retirement days. Many join the ranks of boards of OTC/BB companies they think they deserve their support. Look for this situation. It should spell major growth & prosperity ahead. 8) A plan is the path to success. When You oversee the biz-plan of an OTC/BB upstart, try to pick up those pieces together. Research the info. If you like the plan - if you think it is feasible then You are in sync with Your investment. A precondiction for a long-term hold. 9) Debt is a drag, a stone around an upstarting companies neck. If a company frees itself from debt by going public, it's wonderful and consequently frees up cash-flow that otherwise would have been used for interest payment. Cash flow & gross profit are by far the most important measurement ratios in upstarts. If they finance growth from within You have at least a promising situation. OTOH, heavily indebted OTC/BB companies should be avoided AT ALL COSTS. They are only suitable as momentum stocks and should be traded as such. 10) There's value to be found even in - thinly traded - bankrupcy & shell plays if You get hold on info that reverse mergers and/or emergence from chapter 11 is imminent. Good amount of DD and alert personality is required to spot & play such situations, though. 11) Don't buy a BB stock on a rumor. There's a purpose behind every rumor to be made. Some companies hired PR-firms to create "value" for their stocks. Fraud and abuse is often here. Sometimes the firms themselves egage in malicous practices, sometimes an "Investment Research Newsletter" does a little pump & dump. Look at some cases at: stockdetective.com Bottom line: don'T be among the SHEEP, do Your own DD to support Your picks. And that's not even all the tricks of the trade... to be continued.. (no guarantee but an intention of mine to adress related issues in the future) best wishes CROSSY