ERHC Energy Inc (ERHE)

[Phred6]

The argument that one can buy insurance for an initial investment by purchasing into a steadily declining death spiral is not a realistic approach. I've seen this more often than I like. Faced with toxic financing, a less than stellar management team, declining oil prices, Nigerian antics, etc. the prospects seem to be dim. Rather than thinking that you're dollar cost averaging, wouldn't it be better to approach any additional new purchases as a separate entity. In other words, ask yourself if you'd buy this stock if you were a new investor.

I watched a gold mining stock go through this same cycle of toxic financing, dilution, reverse splits, and false hopes. Currently, it's selling at .0001, has an IRS lien against it, $8,000.00 in the bank, and has gone through 49 million dollars with nothing to show for it. ERHE isn't as bad off as that, but it could be heading in that direction.

The money that people put into this originally has already been spent and is long gone. You cannot protect against an original investment that has already gone belly up. The question of putting more money into ERHE should be based on the current circumstances not on the false premise of protecting (insuring) one's original investment. Right now ERHE has to come up with enough money to pay for drilling a well and so far hasn't. Selling assets, dilution and toxic financing seem to be the current options. I'd base any decision to buy based on those facts. \V/_