'karlister' Part Deux: When the midnight Sun parches the badlands, the rains are sure to follow. It is likewise in the OTC terrain, where much of it blows with the wind, until the rains wash all of it away.
After making numerous comparisons in OTC stocks, I found that there is a direct correlation between # of shares {A/S} & PPS, so that the the "ceiling" of any stock price can be predicted by its total shares. IOW, if a Co. has 100 Million shares, the immediate ceiling will be in the medium term @ around $2.50-$4, then based upon whether the Co. can effectively execute, it has a chance of becoming a Big Board Co.{This is a GENERAL average, some will do better, while others will fall or even fail}, yet share count is the most reliable metric.
On the other end of the spectrum, is the Billion{s} share Co. that will always be traded in cent{s}, unless a R/S takes place, these penny enterprises are designed from the onset in a way where financing is built into the stock structure, this keeps principals
& management living off the carcass for a protracted period of time, without much effort & are a sign of management's intent from the get go to sell shares as a viable alternative. They usually end up in the dust bin, but can be kept on life support through promos & hype. If you look @ their business model, it's riddled with inefficiencies & large overhead costs that show up in the Co's operating expenses under: "Sales, General & Admin." You can see from the postings on this & other boards, that bloggers think that management is on THEIR side, when in fact, management has themselves as the only side.
Secondly, some investors tend to think that the GENERAL welfare of an industry is distilled back down to their stock, when in fact it's very much a case by case basis, where # of shares is a PRIMARY driver & determining factor, not to say that some benefit would in fact follow, but the % would be relatively small in comparison to less stock dependent Co's.
If you then follow through with this, you see {as posted on this & other boards}the alnost absolute belief in the Co.'s intentions, prognosis, plans & their own irrational exhuberance, which leads investors to "load up" on the stock into the millions of shares. So here is the quandry to be faced: Eventually reality hits them in the face, usually a little too late, they then try to bail out of an enormous position, but as is in the case w/ACOL, the average daily volume is about 4 million, so how do you sell several large posistions from different investors, when daily volume is far less then their entire holdings & with the distinct possibility that the Co. is unloading shares itself, all this without collapsing the PPS? The only way to protect one's self is to sell on up days in a measured way{not all @ once}, unfortunately, most investors pile in & buy MORE, it's the Achille's Heel of human nature. THE RAINS ARE COMING, the rains are coming. Trading involves risk. This is NOT intended as financial advice GLTA Play it as you see it. P.S. Karlister thanks for the well wishes. Yes it's true, I will no longer follow ACOL, it's too slow & too low priced to swing trade & most OTC stocks are only good just for that. Farewell
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