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john302

03/14/09 12:58 AM

#23281 RE: bradford86 #23280

I checked out your website from your seeking alpha article and it looks like you really went all in (as in practically your whole portfolio) with the likes of Gold Horse, New Dragon Asia, etc. It's good to see a young guy so into the stock market, and you don't get the education you have without a good head on your shoulders. Unfortunately I think you may have a level of naivete as to how some of these things work.

I don't think going all in on these like you have is prudent, although you picked a better time than many IHUBers who thought they were getting a bargain a few months ago. Invariably, this is what's gonna happen if you insist on owning the China RM's: One of your holdings is gonna pop. Pumpers will appear out of nowhere, and you might be tempted to think the market is finally "realizing the true value" of your company. Don't think that for a second. Sell the pop and don't look back. It's coming right back down to where it started, or lower. When the China RM's (and other RM scams, all the same) pop, 99% of the time it is manipulation to market themselves for equity financing (dilution). It doesn't matter if they are on the Nas or not, look at what happened to FEED. Those companies went RM for the purpose of selling you shares, lots of them, for cheap. GHII and LTUS were brought to you by the long time penny pumper, lying diluters of GTEC (now GNPH) I wouldn't trust their numbers as far as you can throw them.

I remember I remember thought I had found something too, when in the last bear market a bunch of these China RM's came up in my stock screener as undervalued (I was about your age back then too). When the first one doubled, I got excited. Because it was still only trading at about a 9 PE, I decided to hold instead of cashing in. Wrong move. They decided to stop reporting for no apparent reason and is now a pinky ghost. Lost my gains and then some.
The next one went 6x up in price on a pump job. I didn't make the smae mistake and promptly sold, although it still wasn't overvalued, and had no history of dilution (oh, and said they werent interested in it, and were able to grow organically - BS). Sure enough, the CEO was going to all those investor conferences for one thing: PIPE money. Those who held on got crushed by dilution. It now trades at about a 3 PE.

I think your big board stock ideas are pretty decent, but you may have to get burned once or twice before you find out that these RM's aren't investments, they are gambles. And please please please don't make them your whole portfolio.

Couple articles you may find relevant to your holdings:

http://online.barrons.com/article/SB120312686968473233.html

http://seekingalpha.com/article/66772-7-chinese-companies-with-dubious-auditors

http://sharesleuth.com/2008/03/china_fire_security_group_inc_1.html

Tread with caution, kiddo. You already have few shareholder rights when investing in China. US listed China stocks give you essentially none, by the very nature of their structure.
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Penny Lane

03/14/09 5:23 PM

#23290 RE: bradford86 #23280

Why are you so focused on china stocks? Most of that VALUE you are seeing is FALSE - I don't know of one officer of a U.S. stock having been convicted of fraud while residing on chinese soil and NONE is under any threat to be convicted in the future - it's been an open season on these china stocks to type in any numbers they so desire in SEC filings.

Do you look at any U.S. VALUE plays? What's your take on ENHT? I added Friday as the seller moved down to .03.