Degen,
You ask "where is the downside to this stock?"
I think Tapco has it right when he says (I paraphrase): "There is no sure thing when it comes to the OTC," and he's right. Of course a lot can go wrong (even the unlikely and improbable, like a crazy war breaking out over there), but then again that is true with even the best stocks on the planet, take anyone of the banks or AIG, which had one of the highest credit ratings of any insurance company, including Berkshire.
Even Berkshire is not that safe anymore. It has trouble deploying all of its capital to get the kind of returns it got back in its heyday. So it bought a railroad. Warren can't even get out of Kraft, when he doesn't like the decisions Kraft makes, due to his huge position. And last but not least, while Warren's personal rule was to stay away from leverage, his position in Goldman Sachs, violates that rule, as Goldman routinely invests in leveraged derivatives. So even Warren violates his own rules. (He probably does so more now than ever, because he's getting to an age where, oddly, he can take on MORE risk, because he has all the money he will ever need and because he might be looking for a swan song. After all these years of conservative investing, he might be looking to leave with a bang).
They teach us in school that before we give someone investment advise, first and foremost, we must consider that person's risk tolerance. But short of using a lot of diversification (which is difficult to do if you want to be a stock picker, since you'd have to follow closely on several stocks), it is really kind of impossible to determine the risk of any stock because all you have is the history of its volatility, and history is certainly no guide to the future.
If I said heads you get $10,000.00 but tails you lose only $1, you would take that bet in a heart beat. But as I narrow the odds, to heads you get $10,000 and tails you lose $10,000, you might shy away from that bet, because even if in the long run you'll break even, in the short run your volatility could be very high, and hence a high risk. The question we must all ask ourselves is how narrow can we tighten the odds before we get to the point where we can't sleep at night? It'll be different for each person, including you vs. your spouse, for example.
That said, while I once swore off OTC stocks, I'm beginning to realize, having been in the private equity business, that if you want out-sized gains like that gotten by private equity, you have to invest in companies like the ones that private equity invests in.
Private equity investments by their nature are very illiquid. That's like saying volume is very low, and the time horizons are several years. The companies are also under-followed by analysts, and hence inherently mis-priced, as OTC stocks often are.
ERHC in many ways fits that description, but because you can buy it on the OTC, it is like the private equity investment for every man as opposed to the elite few or the big pension funds.
That said there is still a difference between private equity and ERHC. In private equity you have a general manager overseeing your investment and making it better and guiding the management of the company. We don't really have the ability to guide management or improve our investment with our collective wisdom, except through a message board. Also, OTC stocks can be run by unscrupulous characters, and their prices are often manipulated, which is not really the case in private equity.
However, one big advantage that the OTC and these message boards have over a private equity investment, is that you have a team of DD'ers working together, albeit with their own individual agendas, and they are driven by two incentives. DD for their own investment, but also DD for the investment of others in order to see more investors buy their stock. That means to one extent or another, the altruistic nature of almost top quality DDers, make for great salesmen (as well as detractors), and DD comes to this board free of charge, because the incentive for us to do DD (positive or negative) is aligned with the interests (to some extent) of others who may buy (or short) the stock.
That said, and having read many a board, the quality of posters here is very high.
I would also like to add, that sometimes picking a good investment is not what you know but who you know. For many a big time investor, it is knowing a hedge fund manager. But with a hedge fund manager, you can have a Bernie Madoff situation. With ERHC, you have all sorts of "hedge fund managers" on this board, although some better quality than others.
So it's not what you know, but that you know this group of folks.
So at the end of the day, and to answer your question, while this stock has downside risk, like any other investment would, it is the closest thing available to the everyday person as investments are to the elite, i.e. hedge fund and private equity investments.
Krombacher
p.s. PM me your e-mail address.
AI
Market Data 
Markets 
