NeoMedia Technologies, Inc (NEOM)

[ASTOCKCOLLAPSE N0W]

I did not say a 99.5% success rate. I said a 99.5% degree of accuracy in determining the potential for success of microcaps.

What that means is my first filter splits the candidates between potentials and dogs. 99.5% of the stocks that fit into the dog column ultimately prove to be poor investments. Occasionally I miss something and one or two companies that in actuality should have fallen in the potential category get miscategorized as a dog.

This is an important distinction and a tip that potentially will save you from taking unnecessary risks: I look for reasons not to invest as my first step.

Most of the gambling types have 5 or 10 thousand burning through their pocket and they're looking for reasons to dump it into a stock. Wrong wrong wrong! I've been there, done that and lost a ton of cash in the process. The prudent question one should ask oneself is "why shouldn't I invest in this company" not "why should I invest in this company".

Once this initial screen is applied - your investment potentials normally represent about 10%-15% of your original basket of stocks. So if your original group was 30 companies, you'll be left with 3 to 5 potentials to further scrutinize. Of that number - depending on your strategy - you will be lucky to find more than two companies that truly warrant an investment.

My particular strategy - at least the one that works best for my goals and temperament - focuses on deep values in growth industries. Most are either potential turnaround plays selling at or below intrinsic value or undiscovered companies in growth industries. This works for me because I attempt to minimize my downside risk and will accept less upside potential to accomplish this goal. Others may be more accepting of beta in search for greater alpha.

EDIT:

Here is a link to my Marketocracy portfolio. As you can see - I out performed 98.9% of the other funds on the site over a two year period.

http://marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=CfNiAoHpDmInJnImMa...