Baltbear on Finance markets are like marshmallows

here’s an amusing 5 day, that could be seen as a sudden news related rally and digestion.

5 day chart

On the other hand, here’s another chart

Sadly, they are for the same ticker. So, where do you buy this puppy?? the theory of never catch a falling knife says not until it breaks below the bollinger’s…which currently is under 2. that will of course change.

by reading the filings you can get the sense that somebody wants this puppy at 4+ for long enough to get onto a national mkt (it;s currently :obb)

also in the filings is the news that warrants that strke @ 2 are all over the place.. bad.

also in the “news” is that aforeign money will be aiming at it. good.

where’s the balance point???

looking at the chart & the filings together, shows me a little shelf there just under 4.. like 3 7/8. given that the news is positive for the foreseeable future, that there had to be a lotttt of shorting at 6+, and only moderate sigs of covering thus far, placing decent sized orders all over 3 3/4 to 4 1/8 will probably get some fills.

and the bounce back on the next “news” will aim back close to 5, allowing limit sells at 4 1/2 to executre fairly quickly (th annual meeting is within 2 weeks and the pump will be getting pumped).

that’s ruffly 12 1/2 % in ruffly 2 weeks. an apr the prident speculator can live with.

when the chart says run and the boiler rooms say buy, the prident speculator says, lemme go read the filings.

Posted under business, markets

Whilst running some charts for a client, and catching up on a penny stock board while the algorhytms rhymed,

i was reminded of what lays deep under the foundations of the self-evidency of walres’ law, the problem of the st. petersburg paradox.

Prudent speculators might recall it in their dim academic past, or not. The problem for those in the biz of analysing the stories behind story stocks, as it relates to walres and the father of high-flying, bernoulli, is this is simple problem: how do you overcome the intuitive response against an inherently rigged game?

In casinos, the answer is “distraction.” In the market, when the rigged game is being played, the  similar answer is “expectation”.  Walres’ law, to cut closer to the bone, says if something changes in an ecnonomy, it’s because it was imported or exported. That’s basically garbage, becuase of what i used to call the 4s paradigm: sun,soil,sweat, serendipity. The sun keeps shining, adding more energy to the earth in a day than humans use in a year. The amount of soil per capita keeps going down, but with sweat and serendipity the gains from it, as corn or aluminum keep going up in proportion to sweat and serendipity.

The “story stock” player is betting on serendipity and sweat.

The momo player is betting on the force generated by a mob.

The two can frequently intersect, at which point explosive growth in mkt cap should happen, and be bounded by only 2 issues: the math of the st. petersburg paradox creating an intuitive bound, or walres law showing that stock is being imported into the market faster than liquidity.

Penny stock touters, in boiler rooms, bucket shops, private fuinds, etc., are often reliant on stories like, “it went form 3/16 to 2 in a year, and it hasn;t started yet.” Or perhaps, “it was holding 2, and suddenly it’s at 5, better let me sell you some before you miss the real gains”

Sound familiar??

Better yet, does this chart look familiar?

What does it tell the prudent speculator??  Time value of money added in:

do you keep tossing the coin after 7?

or did you leave @5?

the chart says it’s going to 8, and can be seen to predict 9+, after enough time goes by, but of course very time value increases the odds on the traditional failure of any martingale.

so, what does walres law tell you about the environment? Is the total supply of chips holding steady, or going up? is the ingoing liquidity  going to keep rising  at the same rate, or get stable?

at what point did you enter the game, and what perceived utility of outcome did you have?

so, if the coin toss here is a penny stock, what’s the play?

imho, when dilution is a known, and ingoing liquidity depends on a pump forcing it into the field, prudent speculating says leave in the first 1/3 of the game.

Posted under business

elsewhere i was reading that some of the most “reliable” and “promising” of the recent beneficiaries of the biobubble are perhaps “overvalued.” i laffed.

i’ve watched one go from auditor’s warning to having a mkt cap of $150+ in 5 months, mania driven.

penny stock letters, staged “summits” “conferences” andd…lol..a new class of preferred stock created in he spring, and announced to shareholders just in time for the annual meeting…which, based on the venue, the ticker expects no one to be at.

at least h1n1 is real. even tho present supplies of vaccines are getting closer to implied demand, the amount of public concern about present vaccine technology creates room for players. disease is generally real. new technology is often real. “expectations” on the other hand, for the prident speculator are understood to be a commodity, one of the few still manufactured in the usa. during a time of gloabal warming, the raw material for “expectations” is unlikely to decline

Posted under business

In a recent discussion about some newly issued warrants I had to explain “time value” to  somebody about to be worked over by the bucket shop punks who specialise in pumping the “next big thing.” This year it is tem cells. Next year…who knows? Prudent speculators take risks. They do not however take risks on the promises of ceos, board members, or bulletin board touts. They take their risks on the assets. The assets may be nothing but intellectual property, or a clear road on howe to get some. That’s what makes “story stocks” such an interesting arena. But sooner or later, risk management and reality collide with story-telling. At the point, the road to cash flow, appreciable assets and management style become critical.

As the economy picks up (as i predicted in February, a soft bottom is beginning to form in September) at the same time that credit card defaults are also again on the rise, as banks continue to keep credit tight, i anticipate that “real estate” is going to begin the process of recovering as a speculative sport. It will only be profitable for the bottom feeders. The heroic bottom feeders have been at work for 6 months. Those are the folks who had cash on hand in February and March, and bravely bought those residential properties that looked like they were going to be part of urban war zones. I salute them.

Remember Warren Buffet? Somebody told me there was nothing to learn from him. I laughed, since i recall BOA, and Tino de Angeles. Buffet understand being a prudent speculator, exceopt when he is overly prident, as he admitted a few years ago about selling MCD, because he thought the underlying real estate was being overpriced.

But it;’s a lot better to be wrong about something like that than to be wrong about overvaluing an unexecuted biz plan that depends on leased patents and paint on the tape for success.

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Posted under business

The State of Florida offers a warning to the prudent speculator. After 62 years of non-ending growth from cash glow coming in from other parts of the economy, Florida lost 58k people this past year–to outflow.
Florida has, since the end of wwii and various real estate schemes that have been hoin on since the time when the land was stolen from the Seminoles been building an economy based on importing cash flow–retirement checks–that would be never ending, because, as keynes saod, “in the long run we’ll be dead.”–at which point heirs would either bring their retirement cash to florida, or sell the land to those who would.
In order to sustain this model, housing and other resources had to be provided to a labouring class who would then be upsold into throwing more cash into the system, for the benefit of the insiders and “good ole boys” who lived in their mansions using pension systems as sharecroppers.
However, Florida, being subject to hurricanes, increasingly; being subject to power shortages when “nimby” operates over and over; being subject to needing to educate the children of the working class to higher and higher standards (in comparison to the 1 room school houses of the starting gate for all this madness);being subject to immigration pressures; being subject to the corruption of any bubble model–and may the prudent speculator hear me clearly on this: the corruption of any bubble model–finally, in order to stay alive must bring its utility rates, insurance rates, and tax rates up to a level that sustains the demand.
Miami-Dade is 5+% short of necessary cash to run crumbling services ($427mm/7.8bb). Never mind that it is $427 mm…that’s a “sound byte”.
Look at the 5+%. The distance between g&a and cash flow is the part that counts. As long as it can be predicted accurately–1 year, 3 years, 5 years–that g&a exceeds inflow from revs by more than 3%, th banking community an the investment community will legitimately stay away, or else demand higher control and ownership of the g&a.
That is what is happening in california. That is what is happening in Florida. That is what is happening in many small cap stocks.
The prudent speculator will always have “time to cash flow??” as a question.
“Investors” will have “net positive cash flow?” as a question–but speculators who roam story stocks, bright ideas, unproven tech, or the “next big thing” as their hunting ground cannot ask that question.
But if they do not ask, “other than selling stock, where does revenue exceed g&a and how fast??” they are going to get damaged.
And the running dogs of the “good ole boys” will just keep putting out power points at dog&pony shows, looking for the next crop of sheep.
“partnerships” and “purchased licenses” and “new alliances” are the condo-flipping tools of the equity market. “revenues from” are the tools of those who grow the economy.

Posted under business, markets