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The Power of the Blogosphere



February 13, 2009 – Comments (7)

I was reading an article today entitled Bloggers Will Catch the Next Madoff which included the following question posed by a blogger:

Ray Pellecchia, vice president of Corporate Communications at NYSE Euronext, asked an interesting question on his blog last week: "What would have happened if Mr. Markopolos had blogged his analysis? That is, what if he had posted the entire piece on a blog, under his name or a pseudonym?... I believe that blogging's fast, viral distribution would have been highly effective in this case, and brought down the alleged Ponzi scheme in a hurry. I wonder if future whistle blowers will use blogs if they believe their information is not getting through on official channels."

The article then went on to discuss the case of Stanford Financial and Stanford Bank of Antigua, and how the blogosphere has dredged up some very interesting and critical questions regarding Stanford.

This brought a bit of a smile to my face, and made me think, "Well, welcome to the party!"

We've been doing this kind of thing in CAPS pretty much from the outset.  While the number of similar stories right here on CAPS is way to large to try to include here, CAPS participants have been finding shaky companies, if not outright scams, for years -- and spreading the word.

One that I'll never forget is Pegasus Wireless.  Seth Jayson (TMFBent), about a year before he wrote this article, wrote the following short yet to the point pitch accompanying an underperform call on the company:

Complete hunk of junk even if it's NOT a scam, which it very well might be. Stories of some pretty shady dealings with some Taiwanese biz men are floating about. Perfect short to zilch.

And of course the whole housing debacle, in all its ugliness, was talked about right here on CAPS long before any of the mainstream financial press seemed to catch wind of it.  The blogs of Floridabuilder are the stuff of CAPS legend.  If you're new to CAPS, or haven't read his blogs, I strongly encourage you to do so.  He was 'spot on' more times than I can count, and well ahead of just about everybody else.

Heck, I even managed to join the party myself... and while I'm reluctant to toot my own horn, it was an awful lot of fun to write the following pitch (excerpt below) regarding AFV Solutions, and then watch the stock crumble from $7.95/share when I first put my red thumb on it all the way down to the current price of 2 whole cents per share.

"As part of our moving into the alternative fuel industry we anticipate acquiring equipment and other assets related to this industry. However, at this point in time we are unable to accurately determine an estimate for the amount of funds needed for these purchases."

Translation: We really have no clue what it's going to cost us to move into the alternative fuel business, but why let that stop us?

The list, of course, goes on... and on... and on....

I am reminded, once again, why I am a proud member of this community.  Will bloggers catch the next Madoff?  I think the chances are pretty high - and there's a good chance it'll be reported right here on CAPS - where people have joined together and have used their collective knowledge and intelligence to shed the light of truth on a whole host of shady stocks, if not outright scams, for years.


Russell (a.k.a. TMFEldrehad)


7 Comments – Post Your Own

#1) On February 13, 2009 at 12:29 PM, TMFJake (93.92) wrote:

And let's not forget our good friends from Exmocare (EXMA), which has now moved onto the Pink Sheets.  A Biofuel company that morphed into 1-900 Jackpot, before flaming out as a medical device company.  



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#2) On February 13, 2009 at 1:14 PM, XMFRosetint (45.06) wrote:

It's true, the blogs are a new and powerful source to get and spread information, but one must be careful that they're not getting misinformation.

That doesn't happen here on CAPS very often due to the size of our community and the massive differences of opinion of the members of our community, but it has certainly happened on slanted political blogs over the years. We need to make sure that we don't head in that direction and ensure that we retain the quality that we have today; it wouldn't take a whole lot for us to get to Yahoo! message board level. I'm surprised we haven't yet, but that says a lot about both the management of TMF and the quality of its memberships, and it's certainly something to be proud of.


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#3) On February 13, 2009 at 1:33 PM, CMFEldrehad (99.99) wrote:

In my opinion there's a one-word explanation as to why the content on CAPS is different from (and vastly superior to, in my opinion) the content on the Yahoo! message boards.



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#4) On February 13, 2009 at 3:08 PM, GoodVibe4Ever (< 20) wrote:

Russell - I posted the first comment on this post and I am sure it went through. Do you have any idea what happened to that comment?


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#5) On February 13, 2009 at 3:17 PM, CMFEldrehad (99.99) wrote:

No clue whatsoever.... but feel free to repost it!

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#6) On February 13, 2009 at 6:12 PM, GoodVibe4Ever (< 20) wrote:

Oh, Man! I thought the power of TMF gave you some way to sensor those who you don't agree with. I hoped to get my hand on that. :)

I just wanted to express my gratitude and appreciation to all of you guys on your long time efforts to help people and how Caps is one of the best places to stick around in those uncertain times, fraud, schemes that will be found more when this house of cards falls. Thanks again, Russell. And yeah! I said your name is my favorite trade ever. Happy holiday!


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#7) On February 14, 2009 at 12:00 AM, DemonDoug (31.51) wrote:

Russell - great blog and great comment on #3.  I will admit to my own schadenfreude of roasting people who have been overly bullish and completely wrong.

I think this has been one of the best learning experiences, and it's great because you can easily see what people are doing right, and what they are doing wrong, and you are so right, it's the accountability in large part based on your record of making good (or bad picks) that gives your writings more (or less) weight.

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