Replies to post #519 on Lotus Pharmaceuticals Inc (LTUS)

[michaelstl]

I agree with everything that you said. I am a retired investment banker and have seen this happen before, again and again. Remember, John Templeton made great profits from penny stocks!
This China sector could produce fantastic returns over the long term. The problem is that you need staying power! You also have to have the guts to buy these stocks when they are down and destroyed like they are now. Sure they can drop further but you want to buy them in weakness. The Chinese Government is certainly going to support this sector because it is very important to the health of their population. I feel that you will see some positive statements develop in the not to distant future that will confirm this feeling. With this particular stock I just want to see this land appraisal dealt with.

[saur9681]

Great points. It's hard to imagine that this entire Chinese Microcap space will just fade away. Dave Gentry of RedChip had a good point when he said, "Faber stated that “many of these companies have questionable financials,” yet there are literally five or six out of a universe of approximately 350 that have gone public since 2003 in which there has been found any financial malfeasance. That is not even 2% of the universe of stocks to which they refer." This guilt by association bias has hurt the sector for most of 2010 and early on in 2011.

Here's an excerpt from Jason Zweig, one of the commentators for the revised edition of "The Intelligent Investor". It's fitting for this situation:

"And today's headlines are full of fearful facts and unresolved risks: "Investors don't like uncertainty," a market strategist is intoning right now on financial TV or in today's newspaper. But investors have never liked uncertainty-and yet is is the most fundamental and enduring condition of the investing world. It always has been, and it always will be. At heart, "uncertainty" and "investing" are synonyms. In the real world, no one has ever been given the ability to see that any particular time is the best time to buy stocks. Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow."

If you look at on the bright side of this industry, there are so many catalysts for its future growth. Value1008 had a good point about patience and how these stocks could go even lower. As hard as it is to believe, it's definitely possible. Think of it as an opportunity. In times like this, take the opportunity to strategically increase your position in these positions as they can offer you an even greater value and margin of safety.