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My question was not "slanted to elicit a questionable response" by forcing any reply. It was a legitimate and pointed question, whose form you chose to attack rather than giving a substantive answer.
This leads me to draw a conclusion as to your defensiveness on the topic.
"Would you consider an agenda under which investors lose money buying stocks recommended by paid promoters to be dtetrimental to the IHub community?"
When a question is asked that also answers that same question (rhetorical question) it journalistic purpose is to elicit a questionable response. Any answer other than yes give the Inquisitor carte blanche to accuse the respondent of complicity as you have done here. Likewise, as I treated you with the same respect you gave me by asking "loaded" questions. I could insinuate that conclusions can be drawn on your defensive response as well.
thank you for playing.
David Weed
aka the Bird of Prey
www.warp-drive.com
Would you consider an agenda under which investors lose money buying stocks recommended by paid promoters to be dtetrimental to the IHub community?
What I consider an agenda is irrelevant. Your question is obviously slanted to elicit an objectionable response by forcing a reply that must agree or be condemned as a P&D. Would I also consider it an agenda under which investors were duped into selling in order for an entity to gain control or a more favorable holding in a company (S&D)? How about this…a group of troublemakers arrive on a board with the sole purpose of creating mayhem to artificially drive up the hit counters so that the site owners can get more for the advertising? More than mere investors getting taken there. All are difficult to prove and ultimately the responsibility of the individuals involved.
I take issue with that. The IHub community is the amalgam of its members. Bob and Matt have made it clear that they would like our input.
Input yes, final say so…no. But your input should be directed at Bob and or Matt. I submit my input via PM. Others feel it necessary to impose their will by disrupting threads and crying "mama" when their posts are treated accordingly.
Are you saying that if the "old guard" wins the argument, IHub is doomed?
That, which does not grow, dies.
David Weed
aka the Bird of Prey
www.warp-drive.com
Marty,
I enjoy a good clean argument as much as anyone does. I am not really trying to take you to task for any perceived sins either. In general I agree with you concerning the quality of the thought, not the delivery. BUT (it is a big but!) some individuals use that style to harass and harangue others into cyber fistfights that are nothing more than namecalling. I was taught a long time ago the first to resort to namecalling loses the argument for it shows that they have run out of valid points. By allowing open unfettered profanity on IHUB, management will be tacitly encouraging irrelevant posts. Some threads (the parking lot comes to mind) could at time degenerate into a cesspool of filth unsuitable for sailors on shore leave. Your point that it is de riguer in some cultures actually underscores my statement. In an effort not to offend I have stayed away from the term undereducated because so many deem it a racist comment. That is certainly not what I mean by it though. If one applies oneself in this country anyone can get a sufficient command of English to make profanity unnecessary. Thus my comment on laziness. Further by not taking advantage of what has been made freely available to all a lack of self-respect is demonstrated. How can one respect others if one doesn't respect oneself?
David Weed
aka the Bird of Prey
www.warp-drive.com
{i]Thanks, but no thanks
Now you are just being petty.
Respect is earned. Moderators that zap posts only because the posts point out the weakness of their argument don't get mine.
I have little doubt the feeling is mutual.
Clearly this topic has exhausted you capacity.
thank you for playing.
David Weed
aka the Bird of Prey
www.warp-drive.com
"Are you suggesting that deference should be given to any individual who hosts a board, regardless of his/her agenda or personal integrity, simply because of a time investment?"
Until an individual demonstrates by his/her actions that he/she has an agenda detrimental to the IHUB community or that his/her level of personal integrity is not up to the standards of the IHUB community...most definitely. Also remember I speak of the standards of the IHUB community, not my standards nor yours. One of Bob and Matt's most difficult tasks is to ascertain what the standards are for the IHUB community. Part of the turmoil currently underway is a result of the new elements being incorporated into the community. Some already long for the "old days" while others feel that their fresh ideas should take precedence. Ultimately a compromise will be reached and harmony will again reassert itself until the next batch of changes presents themselves. OR one side will win the argument resulting in the death of IHUB.
David Weed
aka the Bird of Prey
www.warp-drive.com
Hmmmm,
"No, the main difference is ownership. CoB's are members. HuBob's the house. CoB's play by house rules that HuBob makes."
Ownership in what sense? financial? Have not several CoB's here invested significant portions of time and effort in promoting the IHUB experience? You would deny them the same privilege of protecting that investment for scurrilous detractors posting off topic comments that are nothing more than a challenge to the CoB's integrity?
Over on what is now known as Usenet there are over 35,000 individual threads. Each one has an autonomous moderator. Some run their threads with equanimity and enjoy a free flowing discussion 24/7/365. Others have chosen to rule as the mood strikes them and receive little if any traffic. Some of those will eventually die some have existed for years because the miniGod refuses to accept that no one enjoys his/her diatribe.
The same would happen to the CoB's here. Those that operate fairly will thrive, those that don't won't. With or without a Supermoderator and with or without your input. Far more deleterious however are the roving bands of ne'er do well's that seek to destroy the good threads. They do so by all of the methods we have seen so prevalent on other systems that suddenly are en vogue recently at IHUB.
My advice to anyone that has had a message deleted (BTW, in 20+ years I've likely had more deleted than most folks have made yet.)...get over it. If you have a problem with a CoB...don't post there! There are plenty of other CoB's around surely you can locate one you like to post with. IF not become a CoB yourself! Then YOU can have a say in the future of the community.
This lack of respect for moderators is very disturbing. They have made a commitment above and beyond that of mere membership. Without them there would likely be no IHUB for you to post on.
David Weed
aka the Bird of Prey
www.warp-drive.com
Marty, this should take place elsewhere.
http://www.investorshub.com/beta/read_msg.asp?message_id=99244
David Weed
aka the Bird of Prey
www.warp-drive.com
reply to off topic comments from marty_lewis on the Q&A board.
B.O.P. I don't agree that the use of profanity says anything about someone's charactar. I think it just says that the person uses words that possibly offend some others.
Actually is show that a person lacks the command of their native language. In this case English. Since this language is spoon fed from birth there is no excuse for not learning to using the proper words. Profanity screams laziness and a lack of respect.
The idea that people all have to write the same way, IMO is not a healthy one, it discourages people from expressing their views.
IMO the purpose of a message board is to get across ideas. Some people spell badly, others have bad grammar. We all have faults. But what is the important aspect of a post? The correct spelling (etc) or the idea? If the idea or point or fact is understood, isn't that really what's important?
I have had exposure to a lot of different circles in my lifetime, from the best of society to the worst, from absolute saints to absolute sinners, and I have found that no "group" has a monoply on good ideas or intelligence.
Spelling and poor grammar are also indicative of laziness, but they do not necessarily demonstrate a lack of respect. As for you argument that restricting profanity forces all to post the same way, you and I have demonstrated to distinctly different styles and opinions on this subject. Yet neither of us has needed to profanity. I did not feel restricted…did you?
That all being said, I agree that profanity shouldn't be used, one can always say darn it!
Darn: def. A place that has been mended with interweaving stitches. -vt[/I] To mend a hole in torn fabric with interweaving stitches.
[I]instead of oh sh*T!,[/I]
unless you have socks to mend you usage is incorrect
[I]but I don't agree that it says anything about anyone other than they use different words than someone else to express themselves.[/I]
You are of course entitled to your opinion as am I. But let me ask a question…
Would you elect a man to the office of President of the United States if his speeches were laced with profanity?
David Weed
aka the Bird of Prey
www.warp-drive.com
Points of view yes, personal attack, character assassination, et al no.
One of your assertions from the previous I find most curious. You 100% disagree that a moderator should have carte blanche control over his board. Would you deny Bob the authority necessary to maintain order? As admin for IHUB he is essentially a moderator. The only difference between his position and that of a CoB is scale. He surpervises a much larger area. By your 100% disagreement you indicate that Bob should not be allowed to delete posts (or users) as he deems necessary. Be cautious in your reply for all are equal.No man stands above the rest.
David Weed
aka the Bird of Prey
www.warp-drive.com
You are, of course entitled to a different point of view. As am I.
David Weed
aka the Bird of Prey
www.warp-drive.com
Boys and Girls!
A might touchy this morning aren't we?
Kat,
Since the 1st Amendment is still in place you are of course entitled to expound upon your opinion. I merely was saying that the use of profanity in one's communication says volumes about one's character. And it mostly is not good. If you are capable of holding forth discourse without using profanity I'd be happy to debate the merits/demerits over on Georgia Bard's Corner.
Poet, Josef, et al...
IMHO the moderator (CoB) of a board should be allowed carte blanche with what he/she feels is acceptable to post on his/her board. If and only if a CoB is abusing that power should Bob take that moderator to task. Further, that should stay between Bob and the CoB. By posting your deleted messages here you are attempting to circumvent the process in place by "trying your case in the court of public opinion". As such you are undermining Bob's authority and credibility. Technically this is a violation of the topic of this board. However that is up to Bob to decide, Not I. What you are doing can only inflame the situation, I for one do not want to see IHUB damaged in such a fashion. Bob has been accused of allowing this very thing to happen elsewhere by not dealing with it harshly and swiftly. By making such statements as you have this morning you have placed Bob in a precarious position. If he allows you to post this unhindered, his detractors have more fuel to add to their fire. If he does delete your posts he risks creating more detractor. You obviously feel your posts are above deletion.
I apologize for posting this here. Since the inflammatory posts are here however it seems the most appropriate place to make the above statement. IMHO you have a most difficult task here at IHUB Bob, One for which I'm sure you are underpaid!
David Weed
aka the Bird of Prey
www.warp-drive.com
P.S. still wish you had an easy to use spell checker 8>)
Concerning the profane.
This is not directed at any individual poster. It is merely an observation.
Those that litter their communication with the foul and profane reveal a lack of skill in communication. While I will encourage them to improve that skill by posting without the profanity, I will not be quite so respectful if they insist on insulting the language by refusing to master it.
I'll also try not to publish War and Peace either. Though Hamlet in the original KLingon is a possibilty!
David Weed
aka the Bird of Prey
www.warp-drive.com
A question! What is the inactivity timeout set for? I was making a post and got a phone call, came back a few minutes later and I had to login again. I don't recall how long but I didn't think it was longer than 10 minutes. Anyway 15 minutes is usually good enough but if the system doesn't count the time your actively WRITING the post you might want to go longer before timeing out.
David Weed
aka the Bird of Prey
www.warp-drive.com
If you are looking I believe I can point you in the right direction. 8>)
David Weed
aka the Bird of Prey
www.warp-drive.com
Don't get too enamored, as an adjunct the program should also issue a warning for CoB's that have to high a deletion ratio on their boards. Since primarily the object is to hinder spammers, CoB's shouldn't be penalized for doing what they are supposed to so the program should not add confirmed spams to the ratio (delete when the accounts terminate). That way it still wouldn't become an avenue for a CoB to effectively terminate a detractor. After all the goal here is a viable community of investors FREELY speaking their minds.
David Weed
aka the Bird of Prey
www.warp-drive.com
Bob,
A simpler method that would be effective at dealing with spammers and miscreants alike and would have the added benefit of being somewhat automatic would be; to have posting privileges suspended AUTOMATICALLY when the ratio of deleted posts exceeds a certain level. The system could then generate an email to the user detailing how they can request a review for reinstatement. Most spammers will never return knowing that they'll be stopped as soon as the posts are made. Legitimate posters will rarely get deleted so they needn't fear an arbitrary descision. Set the activation level high enough to avoid "catching" the legits but low enough to freeze the spammers and miscreants before they can do to much damage. Also since the program is automatic, the Moderator will only get involved if there is a request for reinstatement. Spammers won't take the time to try and hit the site again much less apply to be reinstated. The program should also delete any suspended account after 10 days (gotta allow time to respond) automatically.
This still leaves the power in the CoB's hands, and it indirectly gives them more power to stop spammers (and more cause to police their board often!). It also will provide an easy vehicle to locate troublesome CoB's (not that we have any now, but as IHUB grows we will) who are overusing the delete button. Again this should all be automated. The human element would not be involved until abuse was taking place.
Sysop Rule Number 1. Never arbitrate. Make the machine enforce the rules. That way you can be the good guy and restore what the mean old machine took away.
David Weed
aka the Bird of Prey
www.warp-drive.com
VERY VERY BAD IDEA!
Are you familiar with the story of Pandora's Box?
If it operated as you suggest you would be...
1. Establishing an elite group with powers and privileges well in excess of all other users and moreover these excess powers are unnecessary. CoB's already have the necessary tools to appropriately deal with spammers and other miscreants within their individual boards.
2. Volume restrictions don't help; they actually make things worse. Imagine if you will an individual whose position is under attack by several other individuals. If you limited an individual to 10 posts within a specified time, the opposing group could overwhelm him/her easily without ever exceeding their own 10 message limit per poster. If the group numbered more than 10 the original poster would not even be allowed to respond to each detractor. Does that sound fair?
Again, many of the rules already in place can deal effectively with irresponsible individuals. As a Moderator of Moderator's you should only need to deal with CoB's, not policing individual posters. The "one man as God" method of policing a board has been tried many times before, and each has been an utter failure. Who watches the watcher?
If a CoB is abusing their position (mini Godhead) they should be handled appropriately. But the individual or group responsible for that should not be dealing with the individual posters, Only Moderators.
I do not say these things lightly or from the top of my head. I have almost 25 years of experience with BBS. I was one of CompuServe's original users. The best most effective boards I have ever seen were setup similar to our own government. With power equally divided and each group being able to check the other from abusing that power. It is not perfect, mistakes get made but it is a far cry from the worst that can happen.
David Weed
aka the Bird of Prey
www.warp-drive.com
Matt,
I have some very serious concerns about the apparent new rules being enforced here at IHUB.
In perusing through some of my favorite posters and boards I noticed that something apparently had everyone hopping mad. After a careful review of everything posted on the subject I wish to comment as follows.
Concerning at least one individual being terminated for the following;
1. Continued abuse of the CoB feature.
It is one of the risks opened when you allow thread or board moderators. However, the moderator's moderator MUST be above reproach or he/she becomes guilty of the same offense.
2. Continued personal attacks on me despite my very clear warnings against it.
As I was unable to view these PA's I cannot comment on them, however they would have to be highly inflammatory to elicit a termination.
3. The almost exclusively destructive nature of your participation since reinstatement from your previous suspension.
This is merely a rewording of #2
4. Overall conduct very unbefitting a Chairperson on the site, including personal attacks on me and others.
Again rewording #2
5. Continuing the "Bash Bob" theme on the Q&A thread despite very clear warnings to everyone in general and you specifically.
Again rewording #2
6. Continued harassment of me personally.
Again rewording #2
While I will not contradict the right of the moderator's moderator to enforce the rules, this appears to a casual observer to be nothing more than a personality conflict. As such it shouldn't have been grounds for termination. If you can't stand the heat, get out of the kitchen.
The resulting backlash has led the moderator's moderator to establish a separate thread for "bashing" him and established "rules" for posting to that thread. In doing so he hints at incorporating the "rules" for that thread to the whole of IHUB. And that is where he ceases to be objective and begins undermining not only his credibility but that of IHUB as well.
1. By establishing a "bashers board" he can easily single out detractors for exclusion. His initial rules statement underlines his intent to exclude the opposition.
2. The Rules as stated are technically unenforceable excepting the absence of the need for proof or the possibility of an appeal. The MM is a dictator and once he has lopped of your head there is no need for an appeal.
3. The supporters of the MM seem to attack his detractors with off topic issues, no relevant responses to the post at hand just personal attacks launched at the poster. (Let's see if this happens to me!)
4. While I agree that controversy is a driving factor in the health of a bulletin board, Controversy for the sake of traffic is not conducive to the long-term health of a bulletin board. Eventually, those posters that post based on sound logic and reasoned critical thought will grow weary of being trashed repeatedly and retire from using the service.
I expected the need for you to hire a MM from the beginning and told you such. My suggestion was for a committee of CoB's to act as a stop for the MM becoming too dictatorial. It is too late for that now, as with a sitting MM selection of an unbiased committee would be impossible.
As a partial solution I suggest that the power of the MM be limited to policing ONLY CoB's not individual user's, and although I know that your reason for hiring the MM in the first place was because you need to focus your energies elsewhere in the event of a potential termination you should review the facts at hand and agree with the MM before terminating a CoB.
In closing, Several have commented on the demise of SI due to many of the factors I describe above. Is it not ironic that the former MM for SI not only seemed unable to halt the decline at SI, but also now appears to be fostering the very same environment here? Including the talk of an "invitation only" site! I submit to you that SI failed because it was clear that an elitist "inside circle" could post as they pleased while Joe Public was cut off for pointing out the inequities. And to think they actually expected people to pay for the privilege!
I'll post more later.
David Weed
aka the Bird of Prey
www.warp-drive.com
Some Thoughts on Due Diligence (DD)
"What some consider DD and what I consider DD are worlds apart..."
So What is Due Diligence?
This question is often unanswered or worse misanswered. Many "investors" consider the latest 'hot tip' to be sufficient DD. I don't. Even if I choose to evaluate a 'hot tip', most never get past my Technical Screening process. Those that do get to pass the following rigorous gauntlet. Why so difficult? I wish to avoid actually having to visit the company! But that is another tale altogether.
This is my idea of DD:
1. Gather all contact information available.
2. Read the Filings. Perform Fundamental Analysis.
3. Contact IR to verify steps 1 & 2.
4. Read the Filings.
5. Review independent sources for ratings or opinion.
6. Read the Filings.
7. Review trading logs.
8. Read the Filings.
9. Judge Public Sentiment.
10. Read the Filings.
11. Review Technical Analysis on non OTC issues.
12. Read the Filings.
13. Review Fundamental Analysis.
14. Read the Filings.
And last but not least
READ THE FILINGS!!!
What do you ask the IR?
Since step one involves gathering contact info most opening questions will involve verifying that information (ie Transfer Agent). This lets the IR know you are serious and have done your homework.
If you have read the filings you can and should ask the status of any financing agreements and or recent announcements (PR's) that are relevant. In the case of a PR that says something will happen by x date, you can ask if date was met, and if not why not. Don't be confrontational just ask about status.
How you do things will have a great impact on the response from IR. Deliver questions straightforward and forthright. Don't try to cover too many topics at once. When you hammer an IR they tend to defer their answers. Nobody likes to get the third degree.
The biggest thing to remember is that this conversation should take place BEFORE you buy the stock and AFTER you've read everything available about the stock. As you read there will be questions that arise. Some will be answered by further reading, only the few that remain after your research will require an email or phone call.
Do IR's Lie?
A good IR won't lie because that breaks the distinction between an IR and a PR. Listen for hyperbole. A good IR will remind you of Joe Friday on Dragnet...just the facts. Too much enthusiasm may indicate that you should place your investment elsewhere.
My DD will usually begin with 25 issues or so. By the time I'm done with steps one and two it's usually down to 3-5. More often than not I delay contacting IR until the last step. That way I don't have to write more than one or two.
Good DD doesn't happen by accident. It also doesn't eliminate losses. But it can go a long way to reduce the frequency of losing.
Good luck to all!
David Weed
aka the Bird of Prey
www.warp-drive.com
Diversified Technologies Group, Inc. Announces
``RealityCast'' Technology
March 16, 2001 07:58:00 AM ET
MIAMI--(BUSINESS WIRE)--March 16, 2001--Diversified Technologies Group,
Inc. DTGI President, W. Steven Garrett announced today its wholly-owned
subsidiary South Beach Live, Inc. is scheduled to launch its primary real-time
live High Fashion Model home website on April 2, 2001 using "RealityCast."
ModelDorm.net's goal is to prove that quality representation and professionalism
does exist in an industry fraught with mediocrity and lack of refinement. The
vision of ModelDorm is a fully exposed community of professional high fashion
models with real-time cutting edge streaming video and audio technology. The
primary goal for the high fashion documentary is superior quality.
ModelDorm.net benefits package -- which includes room, board and even cash
compensation in the high fashion model's 6-month contract. ModelDorm.net
allows the models to live their lives without intervention. The five women in the
High Fashion Model house can come and go as they please. No one tells them
what to do at all. The models just go on with their lives and accept that they're
being watched.
As with the high fashion models, the streaming video and audio technology
"RealityCast" is just as cutting edging and first class quality. "RealityCast"
approach will set new standards for the world of reality live Internet
broadcasting.
"The delivery technology, the level of presentation and content will be of the
hallmark of quality. This is what stands South Beach Live Inc. and products
such as ModelDorm.net apart from the rest," said Jay Cullimore of HTX
Technologies. "With the ability to stream full motion live audio and video, will
truly give the customer web based entertainment worth the money. One
example of this is not automatically opening new browser windows that link you
to undesired sites making it necessary close the browser just to escape, which
is a nasty practice and degrades the experience."
"RealityCast" describes the streaming live video with audio documenting real life
entertainment. "RealityCast" is significant due to full motion video streaming and
audio content, not downloading files, but live real-time streaming.
Full motion streaming media is the latest in technology generally reserved for
corporate video conferencing Intranets. With RealityCast, any viewer using a
standard PC and a 56k or DSL connection has the ability to view multiple
cameras at the broadcast location. Other "live webcasting" sites typically use
very low frame rate that look like flash card viewing without sound. These sites
may claim to have streaming video, but are actually download only. Even with a
56k modem, a 5-minute video will take a considerably long time to load.
Multiple camera viewing is a key element of the system, allowing the customer
`channels' to view on demand. This technique was traditionally very expensive
especially for the equipment and bandwidth costs. Our system has been design
to reduce these overall costs of equipment, installation and setup by designing
the system with those goals in mind.
The system is designed from the back-end to front-end including an
e-commerce cart for merchandise, broadcast servers and VOD access controls.
The system even includes the latest technologies in night vision for very low or
no light conditions. About Diversified Technologies Group, Inc.
Diversified Technologies Group, Inc. is developing interests in several
technology areas related to communications, computing and the Internet.
This news release includes forward-looking statements related to Diversified
Technologies Group, Inc. that involve risks and uncertainties, including, but not
limited to, quarterly fluctuations in results, the management of growth, market
acceptance of certain products and other risks. These forward-looking
statements are made in reliance on the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995. For further information about these
factors that could affect Diversified Technologies Group, Inc.'s future results see
the company's filings with the Securities and Exchange Commission (the
"Commission"). Prospective investors are cautioned that forward-looking
statements are not guarantees of future performance. Actual results may differ
materially from management expectations.
© 2001 BusinessWire
David Weed
aka the Bird of Prey
www.warp-drive.com
Whoa! What is this?
www.survivordorm.net
Check out the stuff at the bottom of the page!
Could this really be OUR DTGI?!
anyone with more info would be greatly appreciated.
David Weed
aka the Bird of Prey
www.warp-drive.com
Having completed my Due Diligence...
Does anyone have any info on pending acquisitions?
What sort of acquisitions is the company seeking?
What has been their history with acquisitions?
Of course, I am only seeking information that is fully and freely available to any investor.
I noticed a rather quick jump in the bid/ask just after I purchased. With only 240,000 OS it won't take much to move this price up. Can we expect something important in the next report that is due out very shortly?
David Weed
aka the Bird of Prey
www.warp-drive.com
Scammers & Spammers
Do Scammers and Spammers share more than seven common letters?
Having discussed (and often cussed) the tactics of investment message board scammers for some time, and having been following the spam issue almost since it's inception, I have spotted some similarities in the methods of scam artists and the methods of spammers.
One of the first things you might notice is the attempt to hide behind false identities. Both parties wish to hide their true names in order to avoid the ramifications of their actions, some of which though not illegal are certainly very likely to invoke a negative response. As a result both scammers and spammers require the same investigative tools to ferret them out.
If you never go hunting one of these types you'll never see one of the most interesting correlation's between them. They tend to nest. What I mean by that is, you will often find more than one scammer and/or spammer operating from the same building. Sometimes they even use the same office connection.
If you think about it, this is logical. Both scammers and spammers have similar goals. Namely to influence as many as possible to do (or not do) something. They also need to remain anonymous to the masses lest they damage their credibility. Some might say that so many folks know what spam is and delete it that it doesn't work anymore. Credibility isn't an issue. Until you consider the number of newbies coming to the Internet every day, and that even a .5% response on a 10 or 20 million send email will generate more than enough to cover the cost to send. Why else would they keep doing it?
I'll grant you that a stock scam on a message board is more work than sending 20 million emails. But is apparently just as effective. One need only to look at the number of multiple aliases on a single message board to see that this type of scam is quite popular today. Given the difficulty of tracking these folks and the lack of cooperation from the MB services, it seems unlikely that things will get better before they get worse.
One interesting possibility that we may discover is how many times the scammers and the spammers are one in the same.
As always, keep your eyes and ears open. You never know what you'll find!
David Weed
aka the Bird of Prey
www.warp-drive.com
Imagine busy to the tenth power. I have hardly had time to read much less post. Things are really taking off.
later
David Weed
aka the Bird of Prey
www.warp-drive.com
This was posted over on RB in the AVBC thread by Buckwheat131.
I thought it merited inclusion here.
A little primer on convertibles and how companies and regulators are dealing manipulation:
http://www.sfglaw.com/html/junk_equity.html
JUNK EQUITY DEALS CAN HARM STOCK
While a "floorless convertible" offering can help a struggling company, the floating conversion feature is potentially ruinous.
By Robert C. Friese and Jahan P. Raissi
as published in The National Law Journal, February 15, 1999
In the 1980s, troubled companies often turned to junk bonds as a source of last-resort financing. More recently, small, struggling public companies that cannot raise capital through traditional means have turned to a relatively new type of security, which, depending on one's point of view, has been called a "floorless convertible," "toxic convertible," "death spiral convertible" or simply "junk equity." Although these securities can be a boon to a struggling company, they can also be the final nail in its coffin if not structured properly.
Abuses of these securities are causing substantial losses to the investing public and great harm to many companies that rely on them for financing.
Although the possible permutations are many, floorless convertibles typically take the form of privately place preferred equity or debentures that are convertible to common stock after a fixed period of time. The conversion price is generally discounted 15% to 30% from the market price of the common stock at the time of conversion.
What distinguishes these securities is that the conversion ratio is tied to, and varies with, the market price of the underlying common stock --- hence the name "floorless" convertibles. The lower the market price of the common stock at conversion, the greater the number of common shares the company must issue to holders of the floorless convertibles.
Like many other seemingly good ideas that often don't work in practice, the concept of floorless convertibles is theoretically sound. Given honest, nonmanipulative market activity in the underlying common stock, when properly structured the capital raised in an offering of floorless convertibles can allow a struggling company to realize greater shareholder value.
Unfortunately, the history of these offerings has shown that the results are often ruinous for companies and their shareholders. This has become a serious problem since this type of security has grown to an annual billion-dollar-plus cottage industry for certain of its promoters.
The source of most of the recent problems with floorless convertibles has been the floating conversion feature. If the market price of an issuer's common stock declines, the floating conversion feature can result in an unexpectedly large number of common shares being issued at conversion.
The release of large quantities of common stock into the market can significantly depress the market price of the common stock and can necessitate an even greater issuance of common stock in subsequent conversions. This phenomenon can create a downward spiral in the market price of the common stock as greater numbers of shares are sold into the public market.
Moreover, the issuance of large blocks of new common stock severely dilutes existing shareholders. The floating conversion feature also provides the unscrupulous with an incentive to depress the market price of the company's common stock.
Even for legitimate investors, there is an incentive to try to lock in profit by selling the issuer's common stock short, covering with shares obtained in the conversion. Often, the cumulative effect of market manipulation, short-selling and the food of common stock onto the market has been to put a company and its stock into the "death spiral."
High-Tech Targets
Some companies in the high-technology sector recently have been using floorless convertibles. Shares of these companies often are thinly traded, making them especially susceptible to price drops when the converted shares reach the market or when they are faced with sustained short sales.
Though floorless convertibles can be used by seasoned companies in turnaround situations as well as by new companies, the common denominator in such offerings is the issuer's lack of a source of conventional financing. Without the ability to tap into traditional debt or equity funding, issuers resort to floorless convertible offerings and often have little bargaining strength to avoid or blunt some of their more dangerous features.
The appeal of these instruments to their purchasers is easy to understand. The floating conversion ration and discount to market provide protection against a drop in the price of the common stock and usually all by assure the holders a profit.
To try to lock in a profit, the holders of the floorless convertibles sometimes will sell the issuer's common stock short and, thereafter, will cover with the converted common stock.
Alternatively, a holder may simply convert in to common stock at a discount to market and sell the stock to public investors, often pursuant to a registration statement on Form S-3, at a guaranteed profit. An emerging body of largely professional investors actively solicits companies for this type of private placement.
The Threat of Manipulation
Floorless convertibles pose serious dangers for issuers, even when the securities are held by legitimate investors. In the wrong hands, floorless convertibles are a stock manipulator's dream. If the holder of a floorless convertible sells the common stock of the issuer short, the market price of the security is driven lower and, at conversion, it will provide the holder with more common shares. The holder can use the shares received in the conversion to cover its short position and still may have shares to sell in the open market.
Sales in the open market may further depress the market price and increase the number of common shares received in subsequent conversions. The further the market price of the common stock declines, or can be driven down, the greater the profit.
In some cases, the manipulation of the issuer's common stock is overt. Traders have observed large buy orders immediately countered with several sell orders at prices below the immediately preceding buy order.
"Marking the close" – in which sell orders are place at the close of the market to create a downtick and a bearish impression – is one technique that has been used. Another technique involves massive short sales in situations in which almost no shares are available for borrowing, suggesting manipulative "naked" short selling.
In some of the most extreme instances, share prices of companies issuing such convertibles have been driven down by more than 90% for brief periods. On the heels of these price collapses, companies are presented with notices of conversion.
As the market price of the issuer's stock collapses, existing shareholders are hit with the one-two punch of a downward spiraling stock price and large-scale dilution of their holdings. Issuing companies sometimes face the delisting of their shares, permanently damaged capital structures and an inability to raise additional financing.
This turn of events can occur even in the absence of overt market manipulation. This flows from the holder's ability to lock in a profit by selling the issuer's common stock short and covering the position with shares obtained in the conversion.
In addition, professional short-sellers have caught on to the fact that the price of shares of companies that resort to floorless convertible financing will usually fall, and they seek out such companies as short-selling opportunities. Holders of floorless convertibles and market makers or others willing to short the stock sometimes enter into stock-loan arrangements, allowing the prospective short-sellers to borrow the stock needed for short sales.
Theoretical Limit
The shorting of shares is not illegal, but when done with manipulative intent or by brokerage firms or individuals without the ability to deliver the underlying common shares, shorting can become illegal and manipulative. The theoretical limit on such manipulation should be the "borrowability" of the issuer's shares, which is often nonexistent in thinly traded stocks, even from brokerage firms with large "short boxes."
Yet the fact that there may be no shares available to borrow does not seem to have limited the sort of shorting activity that has driven down the shares of many companies relying on this financing vehicle. This raises obvious questions of manipulation and enforcement of what are primarily self-regulatory organization (SRO) rules limiting most naked short-selling.
Regulatory Agencies
Securities regulators are beginning to pay closer attention to these instruments. The concern of the National Association of Securities Dealers (NASD) has been reported in recent months. The responses under consideration by the NASD run from informational campaigns to rules limiting the dilution of existing shareholders.
On Jan. 21, the NASD issued an interpretive release explaining the application of existing NASD rules to an offering of floorless convertibles by Nasdaq-listed issuers. The NASD release identified six NASD rules and categories of rules that may be implicated in such an offering: the shareholder approval rules, the voting rights rules, the bid price requirement, the listing of additional shares rules, the change in control rules and the discretionary authority rules.
Perhaps the most significant of the interpretations concerns the shareholder approval rules. Under certain circumstances, these rules require shareholder approval before the issue of common stock, or securities convertible to common stock, equal to 20% or more of the common stock outstanding before the issuance.
The release explains that, in applying the shareholder-approval rules, the NASD staff will look to the maximum number of common shares that could potentially be issued to determine whether the 20% threshold has been met. Thus, regardless of what is likely or anticipated, if, theoretically, the floorless convertibles could be converted into an amount of common stock equal to or greater than 20% of the outstanding common stock at the time the convertibles are issued, ****shareholder approval will be required before the floorless convertibles can be issued****.
Similarly, both the Division of Corporation Finance and the Division of Enforcement of the Securities and Exchange Commission have been watching the developments surrounding floorless convertibles. The Division of Enforcement is investigating a number of floorless convertible offerings and the subsequent conversions and activity in the underlying common stock, some of which involve potential manipulative activity by entities and individuals abroad.
Issuers' Concerns
From an issuer's point of view, the regulatory concerns connected with an offering of floorless convertibles center chiefly on the private placement of the convertibles, the registration and resale of the common stock after conversion and the disclosure obligations arising from the offerings.
For investors, increased regulatory scrutiny is raising concerns. Litigation by shareholders is also on the increase. Although this may seem to be a logical area for shareholder litigation against alleged stock manipulators, manipulation cases are hard to prove and, to date, have not brought the plaintiffs' securities bar into action in a meaningful way.
One theory included in some cases brought recently asserts liability for short-swing profits under § 16(b) of the Securities Exchange Act of 1934. A sometimes-overlooked consequence of the floating conversion feature is that, if the price of the common stock falls far enough and the number of shares received in a conversion balloons, the holder may unexpectedly become subject to the short-swing profit provisions of § 16 and the reporting requirement of § 13.
Several disputes have arisen between issuers and the holders of the convertible securities. Faced with the prospect of extreme dilution of existing shareholders or of making a substantial cash payment when such cash may be unavailable, some issuers have simply refused to convert the preferred shares or to bring effective the registration of the underlying common shares.
Although this may give rise to possible contract-based claims by the holders of the securities, the few courts that have dealt with the issue have not been consistent in their responses. The responses have been largely driven by the specific facts, but the alternatives seem to be to uphold and enforce the literal reading of the certificate of designation, or to deny mandatory injunctive relief to the holder of the convertibles (based on availability of the legal remedy of damages or ambiguity in contract language).
Litigation commenced by the holders of floorless convertibles to compel conversion has met with accusations from the issuing companies alleging manipulation and bad faith on the part of the holders. Some issuers also have filed suits alleging manipulation against holders of floorless convertibles to prevent conversion.
It is too early to tell whether the volume of litigation will grow or what judicially created rules will emerge from these cases. On the one hand, the holders of the securities have a fairly straightforward contract claim for conversion and registration of the common shares. On the other hand, an issuer that can demonstrate manipulative activity or other illegal activity on the part of the holders of these securities should fare well in halting or limiting a conversion or registration. The few cases that have surfaced to date have either settled or remain unresolved on the merits.
What Should Be Done?
With at least hundreds of these offerings taking place – and apparently more than a billion dollars being raised annually – it would seem that some regulatory or legislative restrictions are needed. The NASD's recent interpretive release is a step in the right direction, but it is too early to gauge what impact it may have. In the meantime, the harm that can be done invites aggressive enforcement of the anti-fraud and anti-manipulation provisions of the federal securities laws and SRO rules.
Given the evidentiary difficulties a manipulation case presents and the absence of a private right of action for aiding and abetting since the Central Bank case, and because some of the questionable conduct occurs through brokerage firms and other regulated entities, the most effective enforcement mechanisms probably rest with the SEC and SROs. To date, no enforcement actions have surfaced, and none of the market participants who profit from these securities has stepped forward to help limit the abuses connected with these offerings.
Issuers' Awareness
In the interim, the best precautions against the harmful aspects of floorless convertible securities lies in the awareness on the part of the issuers and their counsel of where the danger lie. In general, if these securities can be avoided, they should be.
If such an offering is the only alternative, issuers should use contractual restrictions to mitigate the potential hazards of these securities. For example, the floorless convertible holder's ability to sell short or to enter stock-loan arrangements should be carefully and tightly restricted – and probably prohibited altogether, if possible.
In addition, negotiating a minimum holding period before the common shares may be registered and resold is useful, as is restricting the right to convert (or the number of shares that may be converted) if the stock price drops below a certain point. A floor on the number of shares obtainable in a conversion, or a manageable cash payout alternative to a stock conversion, may also be useful to limit the harm these instruments can cause.
Finally, issuers need to perform the due diligence necessary to ascertain what type of investors they are dealing with before issuing these securities, including pursuing references to their experience (and that of the issuers) in such prior investments.
Beyond contractual provisions, the issuer may sometimes have the ability to deny the right to convert or to defer registration of the underlying common shares. Although both alternatives present obvious litigation risks, ****the obligation of the issuer to disclose fully all material facts before bringing a registration statement effective may justify deferring conversion,***** registration or both, especially when manipulative activity appears to be having a substantial impact on the issuer's common stock and, perhaps, on the company's listing status and ability to survive.
The floorless convertible security may in some instances be the only way a company can continue in business, and under such circumstances it may protect existing shareholders from a substantial or total loss of their investments. Thus, as a financing tool, this instrument has potential value and utility to some companies and their shareholders.
When investors in floorless convertibles are essentially guaranteed a profit, however, it has usually meant that existing shareholders pay the price through massive dilution and a collapsed stock price.
Unless and until tighter rules are in place, the only recourse for companies in need of such financing will be to understand thoroughly what they are getting into and to negotiate contractual provisions sufficient to blunt some of the more harmful features of these securities.
This article is reprinted with permission from the February 15, 1999 edition of The National Law Journal. © 1999 NLP IP Company.
Law News Network website at http://www.lawnewsnetwork.com.
David Weed
aka the Bird of Prey
www.warp-drive.com
On Birds of Prey...
I've noticed a trend lately concerning my cybermoniker. So I thought I'd present a few bits of factual evidence concerning birds of prey.
Most raptors are not carrion eaters by preference. With the notable exception of the vulture class. Although many raptors will not shy away from an easy meal regardless of it's breathing status at the time, they will take the freshest meat available.
Peregrine Falcons have the strange predilection towards taking their prey in midair. They are the masters of the midair collision. They have even been known to attack other raptors in this manner.
While Dragon's are mythological beasts and therefore not subject to most of the accepted behavioral studies, legend has it that they preferred live meals...young and tender virgins were considered a staple of their diet. Although the occasional foolhardy nobleman seeking a fortune would often quell the pangs of hunger. I know of no depictions of these marvelous creatures partaking of anything other than their own fresh kill.
That's enough for now. Remember the famous last words of Sir Elmer of Fudd...
Be vewy vewy qwiet...I'm hunting fo' dwagon's!
David Weed
aka the Bird of Prey
www.warp-drive.com
Smouch,
Gary *always* produces good thought invoking articles. I figure that he hears so much praise that if I pile any more on him he'll have to hire folks to carry around a newly enlarged cranial structure! Just kidding, I know Gary has his feet firmly planted in the ground...It's me you'll have to worry about!
Yes, I am having fun at the idiot's expense over on AVBC. There are just so many of them I don't know who to tweak next!
As for those defense techniques...they have been honed through years of practice. It also helps to have a little Wagner in the background when taking on the advanced intellect of the CAB (Character Assassination Board).
Stay loose and hang tight!
David Weed
aka the Bird of Prey
www.warp-drive.com
Survival Skills:
Defenses against Character Assassination.
If you have ever taken the unpopular position of pointing out the hardcore actual facts about a topic to any group on a message board, you have likely been the target of a Character Assassination attempt by those that were benefiting from the misrepresentation going on.
You don't, however have to succumb to the viscous assault directed at your online persona. There are a number of tools that not only can thwart your attackers, but also can even help further spreading of the truth you've exposed. These tools are not limited to investment related boards, they have been in use on many topics in my over twenty years of posting. At the end of this article I will include an example of these tools in action. Feel free to use it whenever you need to protect yourself.
Tool Number One: KNOW YOUR OPPONENT
This is both the simplest and most difficult tool to employ. The most common mistake is to color your opponent's comments with your own reactions. Review your opponent's posts without reacting to them. You should be able to see each of the weaknesses in the argument being made. Usually the biggest weakness is the absolute absence of fact. Everything will be innuendo and insinuation. From this the audience is supposed to infer the 'truth'. Be ready to take the position apart point by point.
Tool Number Two: STATE YOUR CASE UNEMOTIONALLY
Remove all passion, emotion, rhetoric and/or personal information from your post. DO NOT directly attack your opponent. DO NOT restate ANY of your opponent's points. Simply present your factual evidence. Your opportunity to take your opponent's position apart will come soon enough.
Tool Number Three: LET EVERYONE KNOW WHAT IS COMING
If you have done your homework for step one you can get very specific here. However the example below, though generic in nature will cover almost every possible opponent's tactics in character assassination. Politely apologize for the board having to put up with the nonsense that your opponent will dish out, but don't refer to your opponent directly. What will amaze you is how your opponent will deliver almost as if they take this post and check off each item one by one. As they do so it discredits them in the eyes of many and adds to your credibility.
Tool Number Four: THE NON-DENIAL DENIAL
This is the most critical step. Your opponent will invariably try to stop your factual presentation by appearing to deny without actually saying, "it isn't true". As an example I refer to the movie "All the President's Men" because one of history's most famous Non-denial Denials is issued by President Nixon when the Watergate Story is first broken. It is also in this film that the term Non-denial Denial is first used outside of a newsrooms inner sanctum. Essentially, what you are looking for is a statement like this…
"If you are inferring that I have done something wrong you are sadly mistaken."
On the surface this reads as a denial, but closer inspection reveals that what is really being said is this…
"You've got me but I'm not going to admit it."
I highly recommend you watch "All the President's Men" as they cover this topic quite well.
On a side note, one peculiar quirk of Message boards is that the NDD is often accompanied by an attempt to deflect your assertion of fact back to you as an attempt at some illegal or unethical behavior on your part. Be sure to point this out when you see it.
Tool Number Five: KEEP THE AUDIENCE INFORMED
As your opponent posts, respond unemotionally by pointing out the errors in logic, factual misrepresentation, the Non-denial Denials, and the personal attacks made by your opponent. NEVER respond directly to your opponent. Always talk to the Audience when pointing out your opponent's mistakes. At the end of your post you may (once you're more experienced) choose to bait your opponent into issuing another post for you to pick apart.
Tool Number Six: REPEAT AS NECESSARY
Remember an argument is intended to be a series of connected statements that lead to a conclusion satisfactory to those involved. Your opponent has likely forgot this, If they ever learned it at all. Don't fall into the trap of responding directly to them, that increases their credibility and undermines yours. It isn't easy to follow that sometimes but the effort to maintain that position pays big dividends.
In conclusion,
I wish you all good fortune in dealing with character assassins. They have a great deal invested in their positions and will stop at nothing to prevent the truth from being told. It doesn't help matters that so many sheep are more than willing not only to be fleeced, but to unwittingly aid in the fleecing new sheep. Our task is a thankless one. Furthering the efforts to improve critical thinking in others though will develop our own thinking processes.
This is an example of the post you might use in tool #3.
Ladies and Gentlemen...
I apologize for what is about to ensue. It appears that my logic has correctly deduced the situation. Since my detractors have no reasonable argument to combat my assertions, they launch the personal assaults upon my character, sanity, morals and intellect. Heck they may even begin to explore sexual inadequacy references or possibly attempt to question what my preference is.
I had hoped that I was mistaken in my assertion, however the proof is in the pudding. Left with the option of fessing up or attempting character assassination the Guilty will always choose assassination. For those of you that will read all of the upcoming vitriol please notice that an out right unequivocal denial will not be issued. As anyone who has ever seen 'All the Presidents Men' will remember, one of the key elements in the breaking of the Watergate Story was Nixon's *Non-denial Denial*.
As these are presented I will point them out. Of course they can outright lie and issue a bona fide denial. But that may expose them to prosecution for quite a few things should the truth turn out otherwise.
David Weed
aka the Bird of Prey
www.warp-drive.com
Hello All,
I've been following the goings on here for several days now and thought I'd offer a single observation. While it won't likely allay your concerns, it might just get your thinkers working again.
Your primary conern appears to be the results from the Chinasoft acquisition.
Although Gary uses the term inside information, it might be more accurate to use unpublished information instead. As for why this information is unpublished consider the following.
Although the acquisition was announced just over a year ago the actual mechanics of that acquisition may not have completed until late last year or even within the last month. Further, considering the closed nature of the Chinese, it may still not actually be fully integrated with CBQI at the time of this writing. Gary has provided all information that he is legally bound to provide in the position of IR. UNderstand that regardless of the company the IR will never ever be free to release everything he knows to the general public. Much of the information available to an IR must remain private in order to protect the company from its competitors. Only information commonly available to the public may the IR release. The IR can help in making arrangements for shareholders to visit company facilities or to ( if relevant ) actually speak with company executives. However be aware that an IR would not last very long if he allowed the CEO to get harassed with petitioners wanting *unpublished* information.
We would all love to have complete certainty that our investment will increase 100 fold in a short time. Unfortunately the real world functions outside of that ideal. If you are uncomfortable with the risks inherent in owning this or any other OTC-BB stock then you should close your position and place your money elsewhere.
Even though you are shareholders, you don't get to run the company. That is the CEO's job. Granted if enough of you are able to get together you can vote to replace the CEO in a public company, but it can also be said that if a frog had wings he wouldn't bump his behind on the ground.
You pay your money and you take your chances, hopefully you've done your homework and you've found an investment you are comfortable with.
I wish you all good luck,
Bird of Prey
Hello tufcat333,
We converse on many topics here. Sometimes political, sometimes whimsical. Much of it centers around how people interact on message boards, especially investment boards. Also we discuss the essays on investing presented by the chairman or sometime on his other essays.
The only real big rule here is respect. Respect the other persons right to their opinion. No personal attacks, and do your homework, know what you are talking about. Cause if you don't someone that does is bound to correct you.
That said, Glad to have you here. Browse the posts, Chime in. Dazzle us with your own brand of prose.
Bird of Prey
Have you requested proper credit and offerd to exchange links? I've found this to be a great promotional tool for my site. We've got lots o' stuff that gets plagiarized.
Bird of Prey
Gary,
Thanks for the info. I think I understand why you are making this available to me. I hope that it won't be necessary. This stuff is interesting though.
BTW, Shipped $1400 today. Have about half that much tomorrow. Business is really picking up.
birdofprey
Bird of Prey
If it is of any comfort to you...
I have experienced many of the same things and have reached similar conclusions. Further, as you know I never simply take anyones word for anything, especially on the internet! Heck, for all I know even Einstein could be wrong!
I have done the homework regarding your opinions as stated in your compositions. I have found very little to even quibble with. The General Premise of each appears correct. Above all however each of your articles has one common element that set them apart, that places them in my *must read* files and that keeps me reviewing them. That element is one I consider to be more important than anything else in anything that I read...
IT MAKES YOU THINK!
And that is why you catch so much flak, Gary. most folks resent it when you make them use their brain. I am an exception though in that I love using my brain. It is something I hope I will continue to be able to do for many years to come.
Later,
Bird of Prey
I am membermarking him now!
This reads almost word for word my typical trading strategy save for one thing.
I use it to write covered calls. It isn't as glamourous as day trading, but it involves much less stress and takes really very little time. I usually make four or five trades a month and have been averaging about a 10% return per month. It is real easy to sleep at night and I don't pull my hair out, that is if I had any hair to pull out!
Bird of Prey
It also makes it easy for those of us that have suffered a brain lock and can't remember some of the things you've told us! :)
Bird of Prey
Gary,
Great work on the *blue box* update. Everyone that reads here should bookmark this board if for no other reason than to find the articles mentioned in the *blue box*!
Thanks for asking me to help monitor this board. I will be diligent in maintaining the high standards that both you and IHub have established here. With the help of our existing members I am sure we can keep this board a great place to read and post.
birdofprey
NO *might* about it...
I am going to insist that he begin copyrighting his material!
I love his style and his down to earth approach to investing. His prose is easy to read and comprehend. He should get credit for his work. When I quote him, he always does and will continue to do so.
Birdofprey
MegaMacroEconomics lesson :)
I have been following what is called the spending wave theory for several years now. Having been born at the tail end of the baby boom I have always been looking for a way to get ahead of my more fortunate boomers (the ones born before me).
The chart and it's accompanied essay speak volumes. If it's right I am sitting very pretty as far as my investment program is concerned.
The basis of this theory is that the stockmarket will follow the birth rate if the birth rate is shifted forward by 46.5 years to reflect the peak earning and spending of individuals.
check it out at:
http://www.mutuals.com/pub/learning/trends/trends04_spending.asp
birdofprey
Just a thought...
If the brokers can (and obviously are) doing this (selling short) with 144 certs...
What are they doing with all of those trillions of shares held in the street name in millions of customers accounts? Could they have shorted those too?
Could it be that *they* decide when the market (or a stock) has gone up enough... then *they* take their profit by starting to short against all of those long shares?
Then when *they* have forced things down and used the margin calls to wipe out everyone...the whole process begins again.
"The world runs on a river of money...I'm just trying to get to the bank of the river to dip my ladel in."
Look at a 100 year chart of the DJ30 and apply the above. Start throwing in a little historical perspective in and tell me what you see.
birdofprey
I have but one question...
Where can I find this Guy? I have some newly minted state quarters to sell him!
Birdofprey