As Paul Harvey says "now for the rest of the story".... any of this sound familiar?
MR. SHORT
Exclusive to Mr. Cyriuss
July, 1998
MORE ABOUT STOCK OPERATORS
After perusing numerous chat forum subjects, we concluded that the
average investor is in the dark about how a small cap deal really works.
While many blame the promoter(s), few are even aware a stock operator
manipulated them into their misery.
Examine any thread with several thousand postings and you will hear,
after the stock's demise, the pathetic grumbling of the believer. The
investor believed the story. The investor blamed the stock promoter or
newsletter writer, often for his own failings. The regulatory campaign
against newsletter writers exists only to beat the bushes and flush out
the true crooks: the stock operators. This strategy is hardly working
and stock operators continue fleecing the public.
Early in our own education on Wall Street, we learned about
newsletter
writers. If they are so good, why are they writing about the stocks
instead of trading those stocks themselves? Successful traders are often
too busy to share their secrets with you. No professional trader, in his
right mind, would tip you off to a hot stock until AFTER he accumulated
all the stock he could, even if went into hock to do so. Successful
stock operators operate along that same course.
Professional currency operators, hedge fund operators, only begin
their
media campaigns to generate bids so they can cover their positions. Did
you notice recently the media uproar, over the Japanese Yen, just before
that currency reversed course? That is how they manipulate the media so
they can close out their positions. A hedge fund operator, on the order
of George Soros, lends money to help bail out governments, as he earlier
did with Russia, with a $200 million bridge loan.
The most successful stock operators were once stockbrokers or traders
that turned to the promotion game because it paid better. Only when they
mastered marketing did they become operators.
In the penny stock world, stock operators turn to this vocation
because
they were banned from promotions or censured because of one or more
failed promotions. Have no sympathy for such characters because their
incompetence or criminality generally rings up more than $10 million in
losses before the regulator stings them. In their shadow world, and
often-extravagant lifestyle, the promoter sinks deeper into the bog and
becomes an operator. When his name has been sullied, he becomes an
operator.
The stock operator is the truly dangerous force in the penny stock
market. Because he is hidden and very effective, the operator has the
capability of creating high drama in a stock. He is the one who feeds
hyperbolic phrases to his stable of unwitting, but bought, stock
promoters. He is the one who hires the slugs to riddle chat groups with
flowery projections about the stock, the same slugs that howl about the
shortsellers and ridicule detractors. It is the stock operator who
trades the stock to higher price, forcing shorts to cover and enticing
the average shareholder to buy more and more and more.
The stock operator bribes brokers to recommend the stock to clients.
He
is the one who greases the wheels for funds to add positions. He weaves
the story for the promoters and captures their souls with options, cheap
or free stock. Others he locks into private placements, which means
you'll keep hearing about that stock until the letter writer or promoter
has cashed out.
The best stock operators are more effective in a bear market.
Speculators are more desperate for a good score to bail them out of
their previous losses. Most of the tricks used by today's stock
operators were perfected before and during the US Great Depression.
Indeed, the greater part of US securities law was born after the bottom
of that economic collapse because of the scams that conned investors
during the long drought of that period.
If you recently lost in the western Canadian or OTC markets, you are
among the best candidates for the next big scam. You will be eager to
recoup your losses. Your name is on an email or fax list. Someone has
your phone number or your address. You attended an investment
conference, subscribed to a newsletter or joined a chat forum, right?
They will find their way to you. But, in actuality, it is you who will
reach for their next story.
There is no shortage of lemmings itching for the quick buck. Penny
stocks offer a leverage unavailable in the senior markets. Where else
can you potentially gain by 1000% or more? That, at least, is the hope.
More lose 70, 80 or 90 percent of their investment than those lucky few
that score a double or better. Just as there are great numbers of future
losers lining up to spin the penny stock roulette wheel, there are
dozens of new promoters champing at the bit to launch a new career.
Hundreds of new speculators, who think they can beat the odds. This game
won't stop because of the regulators.
The veteran stock operator is far too clever to be caught. His
attorneys
skillfully devise a strategy to detect and eliminate regulatory
reprimand. Poor suckers, those newsletter writers - they are bribed by
the operator and would also harm themselves by blowing the whistle. The
same goes for others trapped in his web. Regulators can do little in
stopping even the most treacherous operator. A handful every few years
are nailed, but rarely are those the best operators.
Many stock operators are merely auditioning for the job. One finds
those
half-baked stock promotions that helplessly sputter, leaving investors
bid-less, after a few short weeks. Amateur promoters, with not much of a
position, bluster and fumble while their following sinks down the drain.
IR staff that cash out their options during the first rocket ride.
Traders and shortselling syndicates obliterate their promotions. Indeed,
these traders and groups accelerate the upswing so they can obtain a
large enough short position to make it worth their while. Financiers who
initially fund these mock operators blow them away during the
roller-coaster ride.
The better the stock operator, the more glorified the presentation.
The
price target will represent a stratospheric valuation. The story will
include the overcoming of known obstacles, which are always to the
company's benefit. The opposition will be painted as incompetent or
desperate for what this company has. In the final, sometimes in the
earlier, stages there will be takeover talk. After all, if the property
or product is so good, a brand-name company will want what your tiny
company has in their stable of acquisitions. Because there are the
occasional, if infrequent, successes, the possibility alone sounds worth
the minor speculation. If you've been had before, you may even take the
quick profit, kick yourself for missing the "big run" and then find
yourself back in the stock at a higher price. That, again, is one of the
stock operator's tricks.
Blaming the promoters for your losses is as senseless as blaming a
gun
or bullet for someone's murder. Who pulled the trigger? The stock
operator. He designed the battle and already knows who's going to win or
die.
Once you are hooked into a story, the exit doors seal shut and you
can
not escape. At the exact moment that you begin to care about the
small-cap company, you are hooked. There is little to separate yourself
from the fantasy that is being created, for you, too, have become
imbedded in this dream. How pathetic are the defenders of those
manipulated stocks when you read their comments on the Internet chat
forums. The operators are howling in laughter. So are the professionals.
Without the little suckers, there is no one to fleece.
An entire industry has grown around the penny stock marketplace:
newsletters, specialized quote services, news release services,
stockbrokers, stock promoters, traders, shortsellers, whistleblowers,
chat forums, financiers and others. Regulators are too busy and
under-funded to eliminate the gross fraud perpetuated in this industry.
The infrequent indicted or penalized promoters are but grains of sand
across an entire beach. The powerful broker-dealers, especially in
Vancouver, Calgary, Montreal and Toronto live too well to resign from
this industry. The US penny stockbrokers love the fast and easy money of
the small cap business. They get cheap paper, dump during the
promotional runup and then shortsell for the ride down the tubes.
Where does this leave you? If you are fortunate, you will suffer
minor
losses and walk away from the game. That is unlikely. What drove you to
the penny stock markets will keep you there. Speculating in penny stocks
will never restructure the missing discipline in your life, which led
you to the hot tip in the first place. Your options are slim: walk away
disappointed, continue losing until you are broke, evolve into a cynic
using stock certificates for wallpaper, or learn the discipline
professional traders use to play these markets. At some future point, a
new promotion will strike your fancy and you may again be suckered into
the irresistibility of it all. A new mining discovery might bring you
back into the exploration market. And so it goes.
The hallmark of successful trades, that which separates the
professional winner from the novice loser, is technical analysis. There
is no substitute. Some use it but not enough and even fewer analyze
consistently well. With the breadth of available technical indicators,
most shun this subject or barely grasp more than a few basics. In this
business, knowing a little makes you dangerous. Technical analysis is
not a toy, but a powerful weapon. Judging from our cursory review of
numerous Internet chat groups, technical analysis is only occasionally
mentioned proportionate to the great number of postings discussing
daydreams and fantasies, rumors and wishful thinking, defenses,
complaints over shortsellers and promoters, soaring hopes and crushed
expectations, and general drivel.
It is our hope to radically alter the course of penny stock swindles
and Internet discussion groups. The next issue you will receive from
the Cyriuss group of publications: The Technical Register. This Internet
service will evaluate the most active venture issues traded on the
speculative stock exchanges, solely on the basis of technical
indicators.
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