Oh, it’s just an OTC!
How many times have small investors heard this line as an excuse for the tricks used in the OTC market? It has gotten so blatant that people actually confess to being ex-market makers, financiers and promoters that manipulate the system to avoid proper disclosure. Touting and pumping they move to the chat sites to do their damage control. When these types are discovered by posting TMI (too much information), they then attack and feel extremely comfortable that the SEC will not look into anything because “Oh, it’s just an OTC!”
Every company is searching for the product or discovery that will be as essential to the general public. From the simplistic innovated coat hanger to the necessity of electricity. How many times have we heard about a start up company with cure for cancer or AIDS, or a new gas saving product, or new ore extracting product that will revolutionize the industry? Of course these indispensable discoveries and products will change our everyday lives. One has to ask… "just how many of these stories are actually true?" even though “Oh, it’s just an OTC!”
Thus this excuse makes the OTC an even more a deceptive encyclopedia where a lot of these types of stories reign. Most of the time these ideas are merely the catalysts for the companies to be perfect stock printing presses. Wherever they can, they sell the idea and thus along with the story comes the selling of the stock. Since the idea or story is not good enough for banks, easy and creative financing vessels are sought such as; convertible preferred stock or other convertible vessels. But the public has been programmed to accept this type of financing because “Oh, it’s just an OTC!”
The public rarely reading filings and thus are investing blindly. The few that do take the time typically have no clue as to what they are reading. The OTCs in order to be listed must pay all the expenses of reporting just like the bigger markets. There are OTC's in which the filings look better than a lot of the bigger markets even though the bigger markets can get full coverage in the financial world. OTC’s filings are about the only public media that is available because CNBC or any other media won’t talk about OTC's and the excuse given most of the time is “Oh, it’s just an OTC!”
However, unlike the bigger markets there is no ECN or Internet for the OTC's and most traders have to make calls to make fills. Forces in the market can easily manipulate supply and demand of the OTCs and do so on a daily basis. How often have you not gotten an order filled on either side and the excuse is “Oh, it’s just an OTC!”
Recently, DarynFLeming wrote several articles on OTC's. Most know this is WallStreetWest and numerous other promotion sites that gets compensated and sells into the profiles. But his article focuses on not going long in the OTC. One excuse is that OTC companies have minimal assets and no revenue or earnings and lots of them have little or no money. Of course do not bring up the big board stocks for example RHAT that has not shown a positive EPS in years but hey their revenues are increasing! And you can’t figure a lot of the fundamental based formulas like (debt/income ratio, price/earnings, etc.) on MKL, BEM, ATF, AVE, CERS, BTY, CSWC, CEPH, BSY, or even the Dow Jones Company (NYSE:DJ)! That this logic works on OTC's, but does not apply to stocks that are on the bigger markets even though they do not have solid earnings and are over $50.00 a share is ludicrous. Of course many of these big issues rarely have a lot cash either. But these are based on supply and demand and they can get full media coverage. But poor assets, earnings, etc. is a solid excuse for the OTCs because you know… “Oh, it’s just an OTC!”
You should realize by now that the market hates long term investors in the OTC's. Most articles about the OTC are so blatantly biased and insulting to people’s intelligence that it is not even funny. It seems all these articles about the OTC focus on “Hey do not invest! Play or trade it short term”, that way the manipulators wont get hung in an OTC and end up losing money because they shorted it and the flipping investors won't sell so they can cover no matter now much they bash it. Of course the bashing always seems to focus on the excuse of “Oh, it’s just an OTC!”
Maybe one day the SEC and the NASD will open their eyes to the market over all and the pumping analysts, stock manipulators, and bashers which go hand in hand with the out of control shorting in the market. Supply and demand is not the primary function. It is how much can I sell of what I do not own to make as much money as possible and if I get hung I can always bash the fire out of it mainly because “Oh, it’s just an OTC!”
It’s not fair because I should be able to rip, scalp and make money on them. You should wonder why this little term is a solid excuse for anything considering what is in the bigger markets. C’mon in reality that’s what the OTC's are for, Manipulation for profit. So my opinion shifts to manipulation every time I hear the excuse “Oh, it’s just an OTC!”
:=) Gary Swancey
