The Latest Penny Stock Pump And Dump Analyzed

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The Latest Penny Stock Pump And Dump Analyzed


Okay let’s roll the promoted stocks scoreboard:

Ticker Date of Article Price @ Article Price @ 3/18/13 Decline Annualized Splits
GTXO

5/27/2008

2.45

Canyon Capital Has Tapped Into The Pandemic Fallout: In-Depth Analysis [Q4 Letter]

CanyonCanyon Balanced Funds was up more than 41% net since the end of last year's first quarter. It took about 10 months for the fund to recover from the lows in that quarter, a few months longer than the 2009 rebound after the Global Financial Crisis. The fund has a little over $26 million in Read More


0.040

-98.4%

-50.8%

BONZ

10/22/2009

0.35

0.001

-99.7%

-73.0%

BONU

10/22/2009

0.89

0.001

-99.9%

-79.1%

UTOG

3/30/2011

1.55

0.000

-100.0%

-95.1%

OBJE

4/29/2011

116.00

0.167

-99.9%

-89.7%

1:40

LSTG

10/5/2011

1.12

0.010

-99.1%

-85.7%

AERN

10/5/2011

0.0770

0.0001

-99.9%

-93.4%

IRYS

3/15/2012

0.261

0.000

-100.0%

-100.0%

Dead
RCGP

3/22/2012

1.47

0.300

-79.6%

-55.1%

STVF

3/28/2012

3.24

0.420

-87.0%

-64.5%

CRCL

5/1/2012

2.22

0.026

-98.8%

-90.6%

ORYN

5/30/2012

0.93

0.110

-88.2%

-69.5%

BRFH

5/30/2012

1.16

0.515

-55.6%

-36.3%

LUXR

6/12/2012

1.59

0.009

-99.4%

-94.7%

IMSC

7/9/2012

1.5

0.900

-40.0%

-26.1%

DIDG

7/18/2012

0.65

0.042

-93.5%

-80.7%

GRPH

11/30/2012

0.8715

0.085

-90.3%

-83.5%

IMNG

12/4/2012

0.76

0.045

-94.1%

-88.9%

ECAU

1/24/2013

1.42

0.240

-83.1%

-78.8%

DPHS

6/3/2013

0.59

0.010

-98.3%

-99.4%

POLR

6/10/2013

5.75

0.070

-98.8%

-99.7%

NORX

6/11/2013

0.91

0.210

-76.9%

-85.2%

ARTH

7/11/2013

1.24

0.360

-71.0%

-83.6%

NAMG

7/25/2013

0.85

0.164

-80.7%

-92.2%

MDDD

12/9/2013

0.79

0.320

-59.5%

-96.4%

TGRO

12/30/2013

1.2

0.220

-81.7%

-100.0%

VEND

2/4/2014

4.34

4.900

12.9%

187.3%

3/18/2014

Median

-93.5%

-85.2%

Tonight’s loser-in-waiting is HydroPhi Technologies [HPTG].  This one can’t even get basic science right.  It claims to be able to split water into hydrogen and oxygen, and then recombine them to create energy.  Circular processes in general lose energy, otherwise we would have perpetual motion machines.

And behind the vapid analysis is an uber-loser.  His analyses never pan out over one year.  A clever speculator might make money occasionally, but not regularly, because the stocks he pumps are like this one.  Little revenues, negative earnings, negative net worth.  This is a recipe for disaster.

Think about it — if you had a miracle energy technology, would you merge your company with a failed internet advertising company “BigClix?”  I would think not.  You would keep your company private and enjoy the significant profits.

As it is, there are no profits, so where is this great energy technology?  This is a scam, and laws should be revised to allow prosecution of those who write such promotional garbage as we have seen.  It is no good to have the 4-point type disclaimers telling some of the truth, while the big type says “Buy, buy BUYYY!!!”  Also, as far as the web version of this promotion goes, the promoters pour in half a million.  As it says in the 4-point type:

Third Party Advertiser IMPORTANT NOTICE: Esquire Media Services Inc (EMS) has managed up to a $500,000 USD advertising production budget as of January 21, 2014 in an effort to build industry and investor awareness for HydroPhi Technology Group Inc (ticker symbol: HPTG). 

It’s easy to affect the price of a company that has bad fundamentals.  It’s overvalued to start; it will only be more overvalued at the crest of the promotion.  If you attract a bunch of people to the pump-and-dump who want to play the momentum, some may think they will be clever enough to scalp a quick profit along with the insiders.  Some of them win, and others lose.  Others believe the advertising, and stay to lose a ton.

Seth Klarman recently said, “It might not look like it now, but markets don’t exist simply to enrich people.”  This needs to be remembered by all.  Markets are for trading, and trading is a negative-sum game.  Those who buy & hold valuable businesses for a span — that is a positive-sum game, because the underlying asset is appreciating.

To close: don’t buy promoted stocks.  Never.  Those who are paid directly or indirectly to encourage you to buy are at best sub-agents for the seller — they aren’t on your side.  In buying promoted stocks, it’s like going to Vegas, minus the fun.  You will lose.  You will lose a lot.   The house edge is fixed — it’s only a question of how much you will lose.

Avoid promoted stocks.  As I often say: “Don’t buy what someone else wants to sell you, buy what you have researched and know has value.”

via: Alephblog

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.

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