Proteonomix (Pink Sheets: PROT) is in the business of ... well it doesn't matter. It is a tiny little pink sheet company with no audited financials, a stock on fire (from $1 to $13 in just over a month), a negative book value, no hope of ever earning money, insider self-dealing, and a web site that was until recently overwhelmed by typos (thanks to fellow stock trader Investors Live for noticing and recording). [more]
If you subscribed to my twitter feed (which is a a must), then you were likely confused by my tweet from earlier today in which I simply said "free!!!!". That tweet was a celebration of having sold an investment property (a 4-family rental property) two days previously. I lost approximately 110% of my equity investment in the property. This is in addition to the money I lost when I sold my house at the beginning of 2008. And yet I couldn't be happier. Why? Because real estate has not bottomed and prices will continue to fall. Furthermore, over the next couple years, even after the bottom in housing, prices will remain stagnant. So while I lost a lot of money, I have avoided losing more. And don't cry for me--I've been doing quite well in my day job, so my financial situation is the same as it was before I lost all that money in real estate. [more]
Check out this article by David Baines of the Vancouver Sun. After spending over $100 million (Canadian) on a new "integrated market enforcement team" (IMET) division of the Royal Canadian Mounted Police (RCMP), there has been a grand total of 1 conviction and two charges filed. [more]
It is actually not uncommon for experts to be completely wrong and to make very dumb mistakes. A case in point comes with the charts of house prices relative to trends shown at Portfolio.com, taken from a presentation by Chris Mayer (who recently wrote an op-ed in the WSJ in favor of subsidized mortgage rates). [more]
Guess who plays the lottery disproportionately? Poor people. Guess who buys the riskiest stocks with the lowest returns (particularly penny stocks)? Also poor people. Interesting article here (pdf). People are also more likely to purchase volatile penny stocks in an economic downturn.
Not one of the hedge funds of funds or banks that steered investors to Bernie Madoff's funds has admitted their idiocy in failing to spot huge red flags. They have all tried to blame the SEC and other regulators. While the regulators failed spectacularly, even a successful effort on the part of regulators could not have stopped Madoff before he had harmed many investors. That was the case with Enron, with Bre-X, with US Windfarming, and with every penny-ante Ponzi scheme. A regulatory authority cannot act until a crime has been committed, and because of the need to prove a crime, there is little chance of stopping frauds when they begin. [more]
Besides being sketchy companies, most OTC BB and pink sheets stocks pay for a lot of things in shares. They also fund operations by selling shares at huge discounts. Those shares sold at discounts are restricted for a period of time (usually a year). What happens when that restriction runs out? The shares tumble as everyone tries to get out at once. Case in point, AE Biofules (OTC BB: AEBF) today dropped 88%. [more]
“There are no bad bonds, only bad prices,” the traders used to say. They should say it again, only louder. In the spring of 1984, long-dated Treasuries went begging at yields of nearly 14 per cent in the context of an inflation rate of just 4 per cent. Those, too, were fearful times, the recollected horror being the great inflation of the 1970s. Inflation was ineradicable, the bondphobes said. Now a new generation of creditors espouses the opposite proposition. Deflation is baked in the cake, they say. [more]
Okay, maybe it is not the bottom, but I am willing to bet that junk bonds will offer a good return on investment for those who invest now. At current yields, over 20% of the companies in a junk bond portfolio would have to go bankrupt each year for the portfolio to lose money. Large investors of course should pick and choose, avoiding bonds issued by private-equity backed companies. For smaller investors, the JNK ETF may be worth considering. It currently has a 19.99% SEC yield. The NAV at yesterday's close was $27.22. I may buy a small bit of JNK in the near future.
PILE the forclosures high in Las Vegas and Bakersfield.
Shovel them under and let me work—
I am the deleveraging; I cover all. [more]
Take a look at this article and see for yourself how poorly most stocks do. First, some other interesting facts from the study: [more]