Posted by: semiguy99 In reply to: bud750 who wrote msg# 48094 Date:8/19/2006 12:04:54 PM Post #of 48126
Bud, you are being really short sighted, so much so it's difficult to imagine you actually have accumulated enough money to ever buy 160,000 shares in anything.
Here's the justification for holding CSHD right now, it's taken directly from David Harrington's book on Holdem Poker. This book is taken as the gospel by most poker professionals:
Here is the situation:
1. You have CSHD trading at $1 per share. 2. You have a company and CEO that claims to have over $1.5B in assets, a book value of $12.81, and an implied market value of over $25.
Based on the above, the pot odds for this investment is 25:1, an incredible overlay. Of course, there is no guarantee that the book value is real or that the implied market value is either.
So, what Harrington and all the other great poker players do is develop a valuation for all the potential outcomes. In this case, they are:
1. This is a complete scam, $0 value per share. 2. This is a real deal, $25 value per share 3. This is a mostly real deal but the value is lower, maybe $5 per share.
Now, assign a probability of each of the above outcomes. A pessimistic estimate might be 90% x #1 + 5% x #2 and 5% x #3. In that case, stock value is 0+ 1.25+ .25, or $1.50. That makes the pot odds 1.5:1, probably a marginal bet but not a bad one at all.
A neutral estimate might be .5 x 0+ .25 x 25 + .25 x 5, or $7.50 per share. Pot odds are 7.5:1, a huge overlay.
A positive estimate, of course, would be something like .2 x 0 +.4 x 25 + .4 x 5, or $12 per share. Pot odds are 12:1, again, a huge overlay.
Go through this exercise in your mind, assign the probabilities for each, and make your bet. Stop trying to find a flaw in everything released by CSHD because you can find flaws in every public comment made by every public official in every company and government in the world.
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