Will Nemaska rebound?

I first started writing about Nemaska last year over on Seeking Alpha where I post under the same user name that I employ here, Joe Retail.  That was back when NMX was trading for about 15 cents on Canada's Venture exchange.  

http://seekingalpha.com/instablog/15663412-joe_retail/3902216-lithium-americas-and-nemaska-charts-and-insider-buying-have-me-bullish

I rode it for more than a 600% gain, but ultimately left a lot of upside on the table, exiting well before it hit its all time high up near $2 CDN.  That's okay, even when I wrote about getting off the Nemaska train I acknowledged that I was likely leaving too soon, that there was in all likelihood more upside.  I shared that with another SA blog post on April 21st, which was just before I started publishing my own blog here at Avoid The Bag.

http://seekingalpha.com/instablog/15663412-joe_retail/4875517-got-nemaska-train-yesterday

I admitted liking Nemaska even when I was selling, and in fact I still do....from a fundamental perspective.  I know, I can just hear both of my regular readers saying:

''FUNDAMENTALS'!?!?!  

''You're always writing that the fundamentals are already priced in, that's its old information that barely registers when you're making trading/investing decisions''.

And that is true, and ultimately its why I sold.  The lane that Nemaska was riding in on the investment freeway started going too fast for my liking, things were so good that everyone was moving in and I figured it was due for a correction....my timing could have been a lot better, but as I write so often, better to get out too soon than too late.

What do I like about Nemaska?  I have a patriotic streak to me, and I lived four years in la belle province de Québec, et franchement, Québec me manque.  Oooops, sorry.....latent French slipping out from my time living in French Canada.  I share the opinion that lithium is going to be hugely important, and a mine not only in Canada but also in my favorite province of Quebec, that's beyond awesome.

But as I've also written a few times before, a lesson from my late great father was not to fall in love with a speculative stock.  And with Nemaska not projecting an operating mine until 2018, there's still a lot of speculation left with Nemaska.  Everything so far has gone smoothly, but they're not yet in production.  As they get closer to to an actual working mine, a few snags and road blocks are probably to be expected.

Another concern is dilution.  Back in 2015 when I first bought in the number of issued and outstanding shares was around 190 million.  As of May 31st of this year that number had increased significantly, by about 45 million.  That's an increase of almost 25% to over 235 million.  

Also there's a chart you can find on line, several actually, which show the life cycle of a mine from start up to production.  The chart shows a rise, a fall and then another rise, with a trough in between. If Nemaska follows the pattern it should start on an marked uptrend sometime prior to full production in another two years or so. 

I don't think this chart pattern is one size fits all, but as a general guide I believe it can be useful. I would share it with you but I don't want to infringe on any copy written material.  You can google image search it and look at a few examples if you wish.

Nemaska, thanks to promotional efforts with Ellis Martin, The Midas Report, the Vegas Lithium investor show, and probably one or two others that I'm missing, it has had one helluva run.  And even though I am out right now I still check it from time to time.  The trough that the life cycle chart shows is the period when the hard work of building the mine is carried out, before it goes into actual production.  

We shall see how it plays out over the next couple of years.  In the meantime I'll keep looking for slow moving lanes on the investment speedway that look like they may start moving in the future.  

Is a reverse split ever a good thing? China Recycling Energy (CREG)

For every rule there is an exception, or so the story goes.  That is never more true than in the public markets.  No one single indicator, whether fundamental or technical, is right 100% all the time.  It couldn't be, the market couldn't function if it was.  

If, for example, insider selling was "always" bad and was guaranteed to lead to a falling share price, then pretty much everyone would start jumping ship whenever a company's stock reported insider sales.  But if everyone is selling, that means there's no buyers.  Its that old analogy I use all the time about a football game with both teams lining up on the same side of the ball, the game wouldn't work, and neither would the markets.

Which brings me to the subject of reverse splits.  Like insider selling, consolidations are generally considered to be negative events, and its easy to understand why.  Share consolidations are most often the result of a falling share price, and are usually employed so that a company can maintain its listing on an exchange like the Nasdaq or NYSE.  

A reverse split cures the deficiency in the share price, by multiplying the PPS by 10, or 20 or whatever ratio is decided upon.  But it only treats a symptom, not the actual disease.  A stock price falls because of a lack of investor confidence.  While consolidating the number of shares fixes, at least temporarily, the share price requirement to remain listed on a senior exchange, it does nothing in of itself to fix the investor sentiment which caused the share price to fall in the first place.

Shares of China Recycling Energy (CREG) were consolidated 10:1 on May 26th after having fallen all the way to 26 cents.  The reverse split had the effect of immediately raising the PPS over the Nasdaq's required level of $1.00 which, if maintained for 10 consecutive days, will put the company back in compliance with the rules of the exchange.  Which leaves two days as of this writing.

I think these two days could prove interesting.  I'll explain why at the end.

I have been holding CREG since the summer of 2013, for almost 3 years.  And while I did sell a small number of shares when it spiked up around $5 in that same year, I held onto the vast majority.  

How did CREG come to be on my radar?  

I found China Recycling when researching small cap holdings of the Carlyle Group.  Years ago, back around 2000, I had done the same thing, seeing what publicly traded companies Carlyle held.  For those unfamiliar Carlyle is a who's who of conservative politics, with luminaries such as Reagan National Security advisor Frank Carlucci and George H.W. Bush's Secretary of State James Baker having been listed as board members.  In fact George Bush the elder reportedly did consulting work for them after serving as President.

Back in 2000 or 2001 I came across a company called Equinix trading under the symbol EQIX which was held in one of Carlyle's funds.  I invested in it and did very well.  After taking a large gain it also did a reverse split, in 2002, at a ratio of 32:1.  I bought in again after that reverse split but I didn't have the fortitude to hold on and eventually bailed at a loss.  Seeing where EQIX is trading now, for obvious reasons, I regret my decision.

But that's enough ancient history, besides its painful to remember :-)

So what has caused CREG's share price to languish so incredibly?  It was trading (as mentioned) up around $5 as recently as 2013, and fell to less than 30 cents necessitating the 10:1 consolidation.  

Frankly....I don't know, I can only guess.  I know I don't write much about fundamentals on this blog, viewing it as old information which is already "priced in" to a company's market capitalization.  But for those who are big on fundamentals CREG's don't look bad at all.   Post reverse the company is earnings positive with EPS listed as $1.78 as per WSJ.com. That puts their PE ratio at less than 1.5 as per the same site.  (Wall Street Journal Quote for CREG)

The first word in their company name might explain the low valuation however, that being China. After stories like Sino-Forest investors are justifiably cautious about Chinese companies.  But frankly, I believe there is more to it than that.

I wouldn't be the first person to see a stock plummet, and then to blame it on manipulation, but that is what I am going to suggest as a possibility.  Short selling is a legitimate market activity, and CREG has not been immune.  According to Nasdaq's site the number of shares short was just over 250K as of May 13th 2016.  I am assuming that number to be accurate  and split adjusted, which would have put it around 2.5 million prior to the share consolidation.

That's not a huge number certainly, with 8.3 million shares listed as outstanding its only about 3% of the total. Last year however the number, (before the share consolidation) was up around 5 million. If you look at CREG's volumes over the past 2-3 years, that's a lot considering there were many days the stock didn't even trade 10,000 shares.  (Price/Volume History as per Yahoo Finance)

Another point I should mention about Carlyle, which is currently (as per Nasdaq's site) listed as CREG's largest institutional shareholder with a little over 500,000 shares as of March 31st 2016, or over 5,000,000 pre-split.  Carlyle used to own millions more, but over the past 2 years has been selling.  In the last 3 months Nasdaq reports them having sold a little over 7% of their then remaining holdings.  But the fact they have maintained what I consider a still sizable position has me encouraged.  They had a deal in place some time (1 year or more) ago to sell all their holdings, but apparently it fell through.

To be clear, I am not recommending an investment in CREG, I am just putting this out there for anyone interested in reading.  My history with this stock, after all, is hardly stellar....quite the opposite. But that old saying about a broken clock being right twice a day, well maybe its time for the hands on CREG's clock to come around to a bullish hour.

After the 10:1 reverse CREG behaved as might be expected, it tanked.  Remember what I wrote about a share consolidation treating a symptom and not the disease?  Just two days after the reverse the PPS fell all the way from $2.60 to $2.00...almost a 25% drop.  But since then its rebounded, hitting 2.60 again inter day on June 7th and closing at $2.59

So why do I think the trading over the next couple of days could prove interesting?

My thesis, for lack of a better word, is that CREG has been the target of smart money accumulation, by parties that are not just "smart" but that have incredibly deep pockets as well.  That's what I'm gambling on.  EQIX all those years back saw similar swings and an even bigger reverse split.  And look where it is now.

I use the word "gambling" on purpose, because that is exactly what it is.  If I was 100% certain that CREG was going to follow the same path as EQIX and be worth hundreds of dollars per share in the coming years, I wouldn't be writing about it on a blog.  No, I would be taking out the equity in my home, my cars, maxing out my line of credit....I'd be buying every share I could afford.  But I'm not sure.

But if my gamble does end up being right, then these next two days represent a crucial time for CREG's share price as it must close over $1.00 on each of June 8th and 9th to be back in compliance with the rules of the Nasdaq exchange and to avoid being relegated to the OTCBB.  With that reality in place, and with any remaining retail investors (who knows I might be the last one) being notoriously price sensitive, then the PPS falling anywhere close to that $1 mark could conceivably shake free a good number of whatever shares remain in retail "dumb money" hands.  

I think you can probably guess what my intention is if that happens.  

Eguana Technolgies mentioned in NY Times article about "FREE" energy

I wrote about Eguana Technolgies back on May 1st of this year already:

The Lure of Green Energy

The world is changing, but then that's nothing new.  Twenty years ago I in 1996 I was not writing a blog that's for sure.  Back then if someone was surfing they were near a beach, and the web wasn't something world wide, it was something spun by a spider.  Tech savvy individuals who were ahead of the "information age" curve, they were connecting at baud rate speeds of 28.8 kbps, and were excited about the advance to 33.6.    

Even cell phones back at that time, they were bulky analog things, my first one was commonly referred to as "the brick", with a battery that was thicker and heavier than any of the smart phones commonly used today, phone and battery together.  And smart phones which are everywhere now, they were thought to be too expensive when they first started hitting the market it 2006 and 2007.  

The world changes fast.

We have already seen an explosion in the market capitalization for junior mining companies engaged in the development of lithium projects.  The vast majority of them are not yet active, but that hasn't stopped investors from storming in and sending share prices up 100, 500, even 1,000 per cent in just a year or two.  

Those who get in front of the herd can make a lot of money.  The difficulty is in deciding where the herd is going to go next.  

As regular readers of this pathetic and nearly invisible little blog already know, I like to state my biases up front.  As I disclosed in the May 1st piece I wrote on Eguana, I am invested in this company so my opinions should be viewed in that light.  All my readers, all three of you, know that I don't put much stock in fundamental data.  I view all fundamentals as being old information, and as such I already consider it to be priced in.

What I consider essential when investing in speculative stocks, is to get in before the herd shows up. That comes with risks however, because although I may get in before the herd, there's always a chance that the sheep will ignore my little corner of the investment pasture and walk right on by.  

When I first wrote about Eguana it was trading at 15 cents on the TSX Venture exchange (symbol EGT.V).  This past Friday it closed at 28 cents, so its already fast approaching a double for me, but I still see the potential for a lot more upside.  Part of the reason is this recent mention by the NY Times.

A Suburban Experiment Aims for Free Energy

In that article is one little snippet mentioning Eguana:

"Half the test homes also have energy storage systems with LG batteries and Eguana inverters, which help manage the flow of electricity between the solar installation, home and grid, to allow researchers to test and compare how much value they add".

You may have heard the expression "when someone else blows your horn the sound travels twice as far" or something close to that.  I like the fact that's there's no mention of Eguana as a publicly traded company in this NY Times story, and at least so far, there has been no PR issued from Eguana touting the news.  

Does Eguana have the potential to attract investors the way junior mining companies engaged in lithium projects have?  Ultimately I don't know, but I do see it as a distinct possibility. Technically the chart is pointing heavily toward overbought right now, which in the short term could translate into a pull back.  But I have seen overbought stocks stay that way and continue climbing before.  Lithium mining caught the attention of investors, maybe battery storage systems and the concept of free energy can too.

Who knows?  Maybe in another ten or twenty years we'll be talking about paying electricity bills the same way we talk about old clunky cell phones and 28.8 baud rate modems now. 

Do note again that I consider Eguana to be highly speculative, and it is not a suitable investment for everyone.  There are no slam dunks in the markets, and certainly not with penny stocks.  It is my full intention to sell at some (as yet undetermined) point.  And I fully expect to sell too soon.  Just as with Nemaska when I disclosed selling I also expressed the opinion that I considered continued appreciation in the share price of NMX to be very likely, and that's exactly what happened.  

I sold Nemaska too soon, but a conversation with my brother helped ease the pain after leaving over 50 cents per share in profits on the table, he told me:  "Cry into the money you made on a 500% gain".

With the prospect of Eguana being part of a revolution that leads to electricity bills of just $10 or perhaps even $0, I like the chances for at least another 500% gain....and if I sell too soon, allowing those who end up with my shares a chance at big gains themselves, its all good.

You'll never go broke taking profits folks.  Cheers and good luck

The lure of speculative money losing companies - Big risks big rewards

It doesn't matter whether you're looking at an OTC penny stock or one that is listed on a more prominent exchange like the NASDAQ or Canada's big board TSX, the public markets are full of companies promising a bright future, combined with a history of losses and dilution.

When it comes to looking for monster gains, 100% or more in a matter of a year, a few months or in some cases just a matter of days....the bests bets are with speculative companies.  You could do very well over the long haul with a company that's included on a major index like the S&P 500, or the NASDAQ 100, but history tells us you're not going to double your money in one year or even in three.

But if you get into a bio tech that all of a sudden catches the attention of investors, or a Jr. Mining company in a hot sector like Lithium right now, or a company with a new technology...then sometimes it can seem like the sky is the limit.  That is unless or until the bag closes, and all too often its just a matter of when, not if.

So why does this happen?  Why do companies with the worst histories so often fly and then tank?  I am going to offer up my opinions on the matter, you can decide whether they have merit yourself.

Let's say there's a company that's been around 10 or more years, its never made a dime in profits and yet its paying big money with some directors and officers pulling in millions per year.  The only problem is the company is running low on funds.  So what happens?  

A firm providing investment banking services might be engaged and perhaps they will underwrite a secondary offering, buying 10 million shares at say $10 per share.  Great, now the company has just raised $100,000,000 less fees and has enough cash to keep the lights on and pay checks going out for another few years.  

But now there's an investment bank with 10,000,000 shares of some money losing company that they paid $100,000,000 for.  Do ya think they're going to be looking to sell them for less than what they paid?  Nope...neither do I.  They might engage other underwriters to participate, cutting them in.  

Now we have a stock that I will suggest is ready to be put "in play".  What do I mean by "in play"? Well, these investment banks have analysts, and its reasonable to expect their analysts to initiate coverage on Big Money Losing company.  Maybe one of the underwriters sponsors one of those investor dog and pony shows.  and now BML company is slated as a presenter.  Maybe they have a hot new technology, something unproven but really cutting edge.  Or maybe they could be merged with a Small Money Losing company, then analysts can start hyping things like economies of scale an synergies and BML and SML unite to form Massive Money Losing company, or MML.

Next thing you know MML is being touted on CNBC and by other media outlets, maybe some chop shops are alerted and they start pumping out emails hyping MML to their books.  Everyone is making money, the company, the underwriters, the chop shops.....its party time.  Picture the scene where the hookers come out in 'The Wolf of Wall Street'.  

And the poor retail schmucks who buy into all the excitement, paying maybe $20 or more per share?Oh well, it sucks to be them.  They can keep averaging down, and who knows....maybe at some future date Massive Money Losing company will come up with something that's profitable.  And if not?  Then the hedge funds can enjoy the downfall by shorting MML into oblivion.  

That, in my opinion, is the game boys and girls.  Play at your own risk, its a zero sum game....some get money and others get shares.  And its usually the retail herd holding the bag.  

The PR Ziopharm should put out in my opinion, refuting false claims

Does outright fraud bother you?

Some people learned about the fraud that was Bre-X and rather than being disgusted, they wish they could have profited from it.  Bre-X soared to unbelievable highs because soil samples were seeded with gold shavings from a wedding ring, it made investors, (even institutions) think this company had uncovered a massive gold strike.

Prolific ZIOP pumper RobCos has gone all over social media sites like Twitter with an equally false claim.  He's not putting shavings from a gold ring into a core soil sample, instead he's putting out false information about a person who is bravely fighting a battle with cancer, all in an effort to boost the PPS of Ziopharm in my opinion.

What is he claiming?  Here's what he put on Twitter:

 

rc

‏@pharmamaven

$ZIOP patient #1 stage 4 failed all other therapies MRI clean almost 1 yr out vs 3-5 mos expected OS. http://www.investorvillage.com/smbd.asp?@intercooleronli …

• RETWEET
  1
• LIKES
  4
• 

10:41 AM - 24 May 2016

And here is what he put up at Investorvillage: (click on the text to visit the actual post)

• Lets all remember what this is about - giving these poor people with mostly stage 4 GBM who failed previous surgeries and treatments including some with chemo and surgeries who are expected to live 3 to 5 months hope. Charles previous treatments all failed and he is off them now - his tumor always grew back faster than it has this time on the IL-12+V treatment and he is in a few weeks going to be one yr on the new therapy after everything else failed with no tumor regrowth on this therapy. God bless him. Lets all stop the negative posts for a day and say a prayer for all of the patients on this trial and everyone with cancer. Amen.

It would be incredible news, if any of it were true, and frankly I wish it was true.  But the facts say otherwise.

RobCos aka pharmamaven sourced his information from a website written by a Mr. Peacock called ''The Brain Chancery''.  RobCos claims that patient #1 failed all other therapies, which again I wish was true.  Here is what Mr. Peacock says on his website:

• I’m going to start taking Temodar again, which is the same exact stuff that I took at the beginning, for an entire year.  One great thing is that this time, I’m going to take a much lower dosage, and I have so much less tumor in there now that this makes sense.  It has a good chance of working.  And here’s a big reason why we think so:
• Temodar doesn’t always work for everybody, and sometimes it doesn’t work at all.  But as Dr. Hu pointed out: for that year that I was taking Temodar, my cancer did not spread or grow at all.  It only shrunk.

Obviously if a treatment resulted in a tumor shrinking, then it didn't fail.  There is still no cure for cancer, treatments heretofore have been geared toward increasing life span and improving quality of life.  Yes there are individuals who have been treated by various means who remain cancer free, the patient at Duke, cancer free for four years and profiled on 60 Minutes springs immediately to mind. But even her doctors are hesitant to use the word cure.

As for RobCos claim of a ''clean'' MRI almost 1 year out.  That is another fabrication, I wish Mr. Peacock did have a cancer free ''clean'' MRI, but thankfully at least his latest MRI showed no growth according to his blog, so that is positive.  A clean, cancer free MRI is my most sincere wish for him.

Does any of this really matter though?  I mean its just one shameless Internet poster, obviously the guy behind it is morally bankrupt.  But who is RobCos or Pharmaven anyway?  I mean if people are dumb enough to believe some internet pumper, then they get what they deserve....right?  Sure, and I guess shaving a wedding ring down to falsify core samples is fair game, and defrauding people out of their money à la Bernie Madoff is okay too.

RobCos has something of a following.  He moderates the investor forum for Ziopharm at InvestorVillage, with his posts regularily being recommended 30, 40 sometimes 50+ times by users. On twitter his account boasts over 1,500 followers.

I have little doubt that there are some sad individuals out there who have seen this bogus information, and have gotten quite excited and either took out a position in Ziopharm, or added to an existing one.

''Wow!!!  This company has treated a guy and his MRI is clean after almost a year after he failed every other treatment".

Now maybe Ziopharm doesn't care that there is an individual spreading false information about their company?  I don't know.  Their CEO reportedly made something like $15 million last year, with much of that compensation being stock based.  I know in the past Ziopharm put out a press release to confront false information on their company written on a blog, but in that instance the information they were refuting was negative.

Maybe they don't care about falsehoods being shared all over social media, so long as the information has a positive spin?

Here's the PR I think they should put out, or something along these lines:

ZIOPHARM Oncology, Inc. (Nasdaq:ZIOP) today issued the following statement regarding information shared on social media sites like Twitter by an individual with various user ID names including RobCos and pharmamaven.  

The statements made by this individual are misleading and wrong.  We have made no representations of having a patient in one of our trials with a clean MRI, or of having survived almost 1 year after failing other treatments.  

While our recent PR of May 18th cited favorable interim survival results it was noted in the release that these results are early and involve only a limited number of patients. While the company is encouraged by the results we wish to repudiate the claims made by this RobCos aka pharmamaven individual on various social media sites.

I would love to see it, but I won't be holding my breath.

Knowing when its time to leave the party.....

Back on May 22nd I put up a posting on timing the perfect entry into a stock:

Sunday morning musings on timing a perfect entry....

In that piece I offered up the opinion that, with all the tools at the disposal of the big players, that even if a retail investor times things perfectly, that he/she might still see a stock drop after buying in. Sometimes its not just a question of timing the market, but of ''time in'' the market.

If entering is the yin then exiting a stock is the yang.  And as hard as it is to pull the trigger and buy, I believe selling is even more difficult.  Especially if you've done well in buying near the lows, and have made big gains.  

I want to be perfectly clear here about one point.  In this posting I am referring strictly to speculative stocks.  I'm talking about companies that are NOT paying dividends, companies that have NOT achieved profitability.  I am referring to companies that have survived and are surviving by selling their stock.

This is contrarian investing at its core.  A contrarian buy involves making a purchase when things look bad, or when things are extremely quiet with thin volumes being the norm.  In other words, buying low.  A contrarian sell on the other hand involves unloading when the news is good, when there's lots of excitement and when volumes are robust.  Selling high in other words.

Why do I consider buying low easier than selling high?  Human nature.

Buying is easy when compared to selling, even when you're buying a stock that is depressed, one that is either out of favor or below the radar.  The reason is simple enough, its because of the belief that the price will climb.  For a contrarian, seeing Fear, Uncertainty and Doubt (FUD) is a good thing and it triggers greed.  It should naturally spur some research, which in my case includes an analysis of the chart.  But once the decision to buy is made, its just a matter of making an entry. 

However selling can be incredibly difficult, and to demonstrate why I will use an example, employing my favorite hypothetical stock ABC.

ABC Industries is a quiet little company, with its stock ABC trading for $1 with volumes typically less than 100,000, although there are occasional bigger volume days that get up in and around 1 million.  You look at the chart and form a bullish opinion, and the industry that ABC is involved in, you think it could become hot.  

You pick up 1,000 shares, a small position, thinking yourself lucky because you got in for $1.  In a week or two its traded down as low as 90 cents, and you kick yourself for not being more patient. But then it starts to move, back to $1 and then to $1.50...and then in a couple months its up around $3.  You note that the volume is still thin, occasionally getting up around 1 to 2 million, but there's over 100 million shares outstanding so you hold tight.  

Then things really heat up.  ABC starts flying, its been mentioned on a popular web cast, there's lots of news coming out on the company, newsletters and analyst recommendations making the rounds.  The PPS is up around $7 now, with price targets of $15 being put out by experts.  

Things keep heating up, when it hits $10 you think maybe you should sell, but it settles there and finds support, so you hang on.  Then more excitement comes, the company makes a big announcement, they've signed a deal with another company that is projected to mean huge sales.  The PPS responds and climbs to $13 a share and you start to think that the $15 target put out by the investment bank analyst might be seriously low.

$13 a share, you've turned $1,000 into $13,000 and now you regret not having bought more.  

Then something happens, the PPS starts falling, dropping all the way back to $11 in just a couple days.  Your $13,000 has turned into $11,000.  Its still an incredible gain for an initial investment of $1,000, but its not $13,000.  You resolve that when it gets back over $12 you will sell.  But instead of rebounding it falls further, in another few days its under $10.....You've forgotten that at $10 per share you've made $9,000 in profit, instead you're thinking of the $4,000 you ''lost'' by not selling the top.

And so it goes.....

While greed keeps retailers holding the bag even after they've made big gains there are other reasons too.  Retail investors are known to fall in love with their stocks, even those that are 100% speculative, relying on share based capital to finance operations and to meet payroll.  Every company press release and filing has been read as well as all the transcripts from conference calls. Interviews have been pored over, and you may even check out stock sites to garner a sense of the overall mood. Anyone who is down on your darling stock on a social media message board is exposed as ignorant, a short seller, or both.  

So what's the bottom line?  

You've likely come across someone who has lost money on a stock, and who has expressed that common refrain:  ''Its not a loss unless I sell''.  The rationale is that eventually the stock in question will recover and that the losses will disappear at some point and possibly turn into profit.  There is merit to that point of view, but with speculative stocks if you get roped in on a lot of hype....then you could be looking at a reverse split and even bigger losses later.

Well, just as a loss isn't a loss until you sell....likewise a gain isn't a gain until you sell.  One is called a paper loss, the other a paper gain.  Until you crystallize a gain by selling you're dealing with paper gains and paper can be very fragile.

Some will bemoan selling because of income tax considerations.  I can only comment on Canada's tax laws, I don't know what the rules are in the U.S.  In Canada the capital gains exclusion rate is 50%.  What that means is that 50% of a capital gain is tax free.  So using a $10,000 capital gain as an example, $5,000 of the gain is tax free, go on vacation to Mexico or pay off your credit card (I would strongly recommend the latter).  The remaining $5,000 has to be declared as income and will be taxed at your marginal rate.  If that rate is around 20% you will need to keep $1,000 back for tax purposes, if your rate is 40% then its $2,000.   Still some nice Do Ré Mi in your pocket.

Everything goes back to one of my late great father's favorite bromides:  You'll never go broke taking profits.  Another I like is attributed to numerous people like JP Getty, the story goes that when asked how he got so rich the multi-millionaire replies:  ''I always got out too soon''.

The name of this blog is Avoid The Bag, on reflection I think another good name would have been Escape The Bag.  After all, as a retail long investor to make money on any stock you first have to buy it, in other words you have to hold the bag.  Hopefully you will escape the bag, and take some extra cash with you when you go, that's called winning the game in my books.

And if the stock you just sold keeps climbing?  Oh well....that means those who bought the shares you sold now have the chance at gains themselves, if they sell.

Again, please note....this post was specific to speculative stocks, companies that have not achieved positive earnings.  If you are absolutely convinced that the big gains you've made are in a company that is going to be the next Microsoft or Amazon, then I wish you luck and hope it works out.  Those are the exceptions to the rule, but on rare occasions they do happen.

Good luck.

Desperate ZIOP pumper cites "clean" MRI for phase I trial patient

The English language is insufficient to register my disgust with a prolific contributor to various social media platforms who has been promoting ZIOP as a winning investment.  

Verbal sword play is to be expected at places like Stocktwits, Twitter or on message boards where stocks are discussed.  Longs will tout the positives, whether real or perceived, speculating on a bullish future. Bears will naturally do the opposite.  There's lots of name calling and penis waving as debates rage, and a lot of the time it can be fun.  Conflict is the essence of a lot of entertainment.

But it can go over the top, into Enron or Bernie Madoff style pumping where information which is completely erroneous is foisted on the Internet.  

I want to be perfectly clear about something here.  This is not a reflection on Ziopharm the company. No firm, publicly traded or otherwise, can control what some morons put out on the Internet, and to expect otherwise is unrealistic.  

Years ago a SeekingAlpha writer wrote a blog which it seems was published on Forbes.com as well, with information that Ziopharm claimed was inaccurate.  The posting was removed, and based on the available information it seems Ziopharm was claiming that the author's information about a Phase II study of their drug candidate Palifosfamide was misleading and wrong.

You can read their response here:  

http://www.globenewswire.com/news-release/2012/10/19/498408/10009112/en/ZIOPHARM-Issues-Statement-Regarding-Misleading-Blog.html

That is all well and good, ultimately investors need to have good and reliable information upon which to make investment decisions.  The fact that Palifosfamide ultimately failed doesn't matter, if Mr. Pearson was putting out inaccurate or misleading information it behooves the company to set the record straight.

But its a two way street.  You can't just seek to correct falsehoods that throw a negative light on your company, and then ignore an outright lie because it has a bullish positive tilt.  And this lie is so disgusting it boggles the mind.

Here's the tweet.

 

rc‏@pharmamaven

@AvoidTheBag $ZIOP patient #1 stage 4 failed all other therapies MRI clean almost 1yr vs 3-5 mos expected OS http://www.investorvillage.com/smbd.asp?mb=16353&mn=52416&pt=msg&mid=16038066 … $XON

10:46 AM - 24 May 2016

This is absolutely disgusting.  This patient #1 being referred to writes a blog himself, and he recently uploaded his MRI onto his site.  The only thing is the author of the blog makes no representation about having a "clean" MRI.  

You can check it out yourself:  https://thebrainchancery.com/2016/05/24/show-us-your-scans/

According to Ziopharm's own PR on the subject they say that: 

• "Recurrent glioblastoma is an aggressive cancer with one of the lowest 3-year survival rates, at 3%, among all cancers" 

This gentleman has been writing about his battle with cancer since April of 2012.  That's over 4 years ago. In September of 2015 he wrote about going on Temodar "AGAIN".  Noting that the previous time he'd done it his tumour shrank.  Temodar is a brand name for Temozolomide, the generic moniker.  

What did Ziopharm say about Temozolomide in their recent PR?

• For patients who have experienced multiple recurrences the prognosis is particularly poor, with a median overall survival (OS) of 6-7 months, while OS in patients that have failed temozolomide and bevacizumab, or equivalent salvage chemotherapy, is approximately 3-5 months. (*bolding and emphasis is mine)

This guy's story is an inspiration, and to totally misrepresent the facts to pump some stock is beyond reprehensible, in my opinion its criminal.  Saying all other therapies failed when this man's tumour shrank after chemo treatment with temozolomide is disgusting.

So who is the waste of skin "pharmaven"?  He posts on Stock Twits with the same user name and on other sites including Investor Village as RobCos.  Investor Village is ground zero for pumping Ziopharm.  Someone linked up one of my posts on there, and in just one hour there were over 100 page views coming from that site, then it was taken down.  What  a shock.  

RobCos of course is the chief pumper, cheerleader and moderator of the Investor Village forum. And Ziopharm in my opinion should distance itself publicly from this Enron style pumper.