Stop Shorting Penny Stocks Randomly, This Isn’t CNBC, I Want You To Profit!

I’m seeing a lot of comments/emails from people re-shorting these pump and dumps waaaay late in the game, just because they missed profiting from the initial dump. Here’s a tip—STOP!

Yes, these companies are all crap (okay, okay 99.9%, but this is the last time I’ll ever qualify that), but you gotta understand crap companies can and do rise faster than quality companies for several reasons:

a.) there’s no pesky actual businesses to get in the way of hyping / putting out fraudulent / exaggerated press releases so investors must only be convinced of the dream, not the execution of the dream, which is helpful considering the harsh reality / inevitable failure of these companies

b.) no pesky morals or ethics instilled in those who manage such companies / promote such stocks  

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Lie Detector For Talking Heads: Grave Consequences For TV Interviews

You guys know I’ve been on my “nearly everyone in this industry is full of BS / the financial media is an unfunny joke” crusade for a while now, but with regards to a product that actually does something about it–or claims to–unsuprisingly, I’ve been outscooped by the world’s top financial blogger Barry Ritholtz.

RealScoop uses their special voice analysis technology to measure the believeability of what people say in videos–yeah that’s right, useless talking heads, corporate scumbags execs: get scared. Cute, right? A lie detector and a big scary guy patting a baseball bat standing beside them would def. work better, but baby steps…

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Why I Just Shorted Eden Bioscience Corp (EDEN): TheStreet.com’s Factually Inaccurate Pump And Dump!

As I mentioned in this post, this near 100% runup is entirely due to THIS laughable Thestreet.com article mentioning this failure of a company as a “below-the-radar company that produces Messenger, a highly effective and revolutionary agricultural product.”

I could easily rip the company apart for its $23,000 in revenue in their latest quarter down from $189,000 just a few quarters ago—wow, their product must be really great! Even funnier is their yearly results—revenue of $350k vs. $4 million a few years back. Or before this miraculous article, EDEN was a $3 million company that was forced to do a 1-3 reverse split just two months ago in order to stay listed on the Nasdaq

But I shorted 1,000 shares at $2.55–that’s all I could find, trust me, I wish I could borrow 50k–because I prefer to go to the heart of the matter, the fact that EDEN SOLD OFF THIS “REVOLUTIONARY” TECHNOLOGY AS IS DETAILED IN THEIR ANNUAL REPORT!

From that beautiful annual report, filed on March 28, 2008:

“On February 28, 2007, under the terms of the Asset Purchase Agreement, we sold our Harpin Protein Technology to PHC for $1,396,824 in cash, net of transaction costs incurred after January 1, 2007 totaling $103,176, a promissory note in the principal amount of $700,751 payable on December 31, 2007 and the assumption by PHC of certain of the liabilities relating to or arising out of our Harpin Protein Technology…”

That’s right, EDEN isn’t even in the home and garden business anymore, they’re just a licensee! Gotta quote some more of this fine work of literature  

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On CNOA, CNBC Aids And Abets Penny Stock Promoters

Let me start by saying I have no problem whatsoever with penny stock promotion—these tiny / failing / fraudulent companies need all the exposure / hype they can get or else they’ll never raise any capital and fail / be exposed as the frauds that they are soon rather than later. But I do take offense when entertainment outlets like CNBC try to pass themselves off as credible researchers. As I’ve posted HERE and HERE, their bumbling has hurt too many investors and they’ve helped make people afraid of penny stocks—which I cannot permit.

Now, one of their wannabe journalists / entertainers, Sri Jegarajah, has written the single most naïve penny stock article I’ve ever read, “Wild About Rice” in which Sri mistakes paid-for stock promotion for credible research forcing me to explain the rules of the game to all the poor schmucks who mistakenly view CNBC as a credible source.

Besides quoting CNOA’s CEO (we all know how useless that is, what’s he gonna admit the company’s a pump and dump scheme?), and a Seeking Alpha article—whose writers are no more qualified than bums begging for change on the street, Sri proudly quotes Source Advisors, forgetting (not realizing?) to mention they’ve been paid $25,000 “by a third party” (pump and dumper, cough, cough) to publish their BS report. And, as if to repent for his sins, Sri closes out the article quoting Patrick Murphy of Murphy Analytics who was only paid $1,000 for his efforts (scroll down to the bottom and be better than Sri, aka read the disclaimer).  

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Why Traders Should Ignore Corporate Mergers And The Financial Media Circus

Thanks to this high profile acquisition news of Blockbuster and Circuit City, the financial media circus is working overtime today. CNBC, Fox Biz, Reuters, WSJ, WWE, Marketwatch, AP, Minyanville, TheStreet.com, Portfolio, Bizjournals, Techticker, Motley Fool, SmartMoney.com, Barrons, Businessweek, RealMoney, Forbes, FT, CNNMoney, Briefing.com and of course the Richmond Times-Dispatch have each written articles about it. No joke, seriously, check out the Yahoo! Finance news list—it’s reminiscent of my media logo collage.

Within hours, we now have quotes from higher and lower-ups from both companies, competitors of both companies, industry observers, industry non-observers, economists, ANALysts , marketers, talking heads, journalists—everybody’s giving their useless opinion as to what this news means for consumers, competitors, investors, traders, the industry, other industries, society and the universe. Not to even mention all message board and blog buzz from those too unskilled to even gain entrance to the media circus (true gutter trash / waste of webspace)

Here’s my take:  

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The Second CNBC Stock Pump In As Many Days

I’m always ripping on Inspectd.com for being too simplistic/dangerous/giving chart reading a bad name…here’s a perfect example why, GTE, the latest Jim-Cramer/The Rock CNBC/WWE pump…yup, it’s been a whole 2 days since the last one…hurtful to naive investors…unethical…great for speculators…wake the f%#@ up SEC!

Chart shows a clear breakout, but it’s already off its high cuz this ain’t big-time breakout-type news. Sure, shorts are scared—as they should be—Jim/Dwayne/Cramer/Johnson’s no dummie for picking a solidly uptrending stock near its highs…but c’mon, can you smell the fakeout cookin’?

UPDATE: Now TITN breaks out to a new high thanks to a CNBC ention–damn, stock promotion is a happening biz, Lebed, you must be making some good $, right? Maybe CNBC should think about getting reimbursed by these companies, just put a lil disclaimer that no naive investor would ever see…c’mon Ge, you know you wanna, get those annual profits up from $300mil to $400mil, you can do it, you can do it all night loooooooooong!

Disclaimer: I have no position in either stock, I’ve tried playing The Rock’s picks from both sides, some stay up, some reverse, no edge, not much predictability, no thanks…I just think it’s wrong how the WWE frames it, creates a lot of unnecessary bad blood, ya dig

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Why Bess Levin Is The Only Financial Commentator You Should Ever Listen To

Big Picture Barry Ritholtz likes getting quoted in the press…trust me, I know the feeling, I also went through that phase…but what good does it do? Everything the senile-old-man-esque financial press covers has soooo many variables, sooooo many moving parts, sooooooo many time lags involved and most importantly, can be framed any number of ways. It’s all just one big guessing game where you HAVE NO EDGE WHATSOEVER, so luck and leverage aside, you can NEVER increase your wealth substantially.

You know my take, small investors and traders need to stop worrying about the news/macro/popular issues and learn to profit from more niche-oriented/inefficient hence predictable stuff like PennyStocking! That’s where the big % returns lie–no leverage needed–and if you really want financial gossip, don’t turn to CNBC, just visit Dealbreaker for some Bess Levin commentary…at least she’s funny.

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Hey SEC, Punish Stock Manipulators Like CNBC Not Small-Time Traders

There’ll come a time when the SEC will do away with absurdities like the pattern day trader rule in favor of holding accountable entertainment-masquerading-as-reality outfits (WWE, CNBC, WSJ etc.) and their pseudo-champions (The Rock, Cramer, Journalists, etc.) for the damage their charade causes…but it is not this day.

For now, you must learn to profit from the circus that is the financial media industry…case in point, the CNBC-caused morning spike in (AGEN). After a brief TV mention and naively optimistic online article, thousands of CNBC-faithful bought in, thinking the cancer news (on which the stock was only up 20% on the day beforehand, aka not big news) was big-time.

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CNBC Has No Young Viewers, My Readers Are All Young, Hmmmmm

Catching up on some somewhat-useless headlines…while CNBC’s ratings were up 20% as whole, their numbers for everybody not getting social security were down 20%. Where did those viewers go…obviously not to Fox Biz–not with their 10k daily viewers…sorry guys…and probably not to BloombergTV–that channel works better than Nyquil aka should never be watched while operating heavy machinery.

My guess: those “young people” stopped caring about finance because IT BORES THEM!

Insiders don’t realize it–they need to star on a reality TV show–outsiders understand nothing! It’s okay in bull markets because at least viewers are making money, but when bear markets hit, then they’re just confused AND poor…not a good combo at all.  

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