As Light As Hydrogen

Okay let’s roll the promoted stocks scoreboard:

TickerDate of ArticlePrice @ ArticlePrice @ 3/18/13DeclineAnnualizedSplits
GTXO

5/27/2008

2.45

0.040

-98.4%

-50.8%

BONZ

10/22/2009

0.35

0.001

-99.7%

-73.0%

BONU

10/22/2009

0.89

0.001

-99.9%

-79.1%

UTOG

3/30/2011

1.55

0.000

-100.0%

-95.1%

OBJE

4/29/2011

116.00

0.167

-99.9%

-89.7%

1:40

LSTG

10/5/2011

1.12

0.010

-99.1%

-85.7%

AERN

10/5/2011

0.0770

0.0001

-99.9%

-93.4%

IRYS

3/15/2012

0.261

0.000

-100.0%

-100.0%

Dead
RCGP

3/22/2012

1.47

0.300

-79.6%

-55.1%

STVF

3/28/2012

3.24

0.420

-87.0%

-64.5%

CRCL

5/1/2012

2.22

0.026

-98.8%

-90.6%

ORYN

5/30/2012

0.93

0.110

-88.2%

-69.5%

BRFH

5/30/2012

1.16

0.515

-55.6%

-36.3%

LUXR

6/12/2012

1.59

0.009

-99.4%

-94.7%

IMSC

7/9/2012

1.5

0.900

-40.0%

-26.1%

DIDG

7/18/2012

0.65

0.042

-93.5%

-80.7%

GRPH

11/30/2012

0.8715

0.085

-90.3%

-83.5%

IMNG

12/4/2012

0.76

0.045

-94.1%

-88.9%

ECAU

1/24/2013

1.42

0.240

-83.1%

-78.8%

DPHS

6/3/2013

0.59

0.010

-98.3%

-99.4%

POLR

6/10/2013

5.75

0.070

-98.8%

-99.7%

NORX

6/11/2013

0.91

0.210

-76.9%

-85.2%

ARTH

7/11/2013

1.24

0.360

-71.0%

-83.6%

NAMG

7/25/2013

0.85

0.164

-80.7%

-92.2%

MDDD

12/9/2013

0.79

0.320

-59.5%

-96.4%

TGRO

12/30/2013

1.2

0.220

-81.7%

-100.0%

VEND

2/4/2014

4.34

4.900

12.9%

187.3%

3/18/2014

Median

-93.5%

-85.2%

Tonight’s loser-in-waiting is HydroPhi Technologies [HPTG].  This one can’t even get basic science right.  It claims to be able to split water into hydrogen and oxygen, and then recombine them to create energy.  Circular processes in general lose energy, otherwise we would have perpetual motion machines.

And behind the vapid analysis is an uber-loser.  His analyses never pan out over one year.  A clever speculator might make money occasionally, but not regularly, because the stocks he pumps are like this one.  Little revenues, negative earnings, negative net worth.  This is a recipe for disaster.

Think about it — if you had a miracle energy technology, would you merge your company with a failed internet advertising company “BigClix?”  I would think not.  You would keep your company private and enjoy the significant profits.

As it is, there are no profits, so where is this great energy technology?  This is a scam, and laws should be revised to allow prosecution of those who write such promotional garbage as we have seen.  It is no good to have the 4-point type disclaimers telling some of the truth, while the big type says “Buy, buy BUYYY!!!”  Also, as far as the web version of this promotion goes, the promoters pour in half a million.  As it says in the 4-point type:

Third Party Advertiser IMPORTANT NOTICE: Esquire Media Services Inc (EMS) has managed up to a $500,000 USD advertising production budget as of January 21, 2014 in an effort to build industry and investor awareness for HydroPhi Technology Group Inc (ticker symbol: HPTG). 

It’s easy to affect the price of a company that has bad fundamentals.  It’s overvalued to start; it will only be more overvalued at the crest of the promotion.  If you attract a bunch of people to the pump-and-dump who want to play the momentum, some may think they will be clever enough to scalp a quick profit along with the insiders.  Some of them win, and others lose.  Others believe the advertising, and stay to lose a ton.

Seth Klarman recently said, “It might not look like it now, but markets don’t exist simply to enrich people.”  This needs to be remembered by all.  Markets are for trading, and trading is a negative-sum game.  Those who buy & hold valuable businesses for a span — that is a positive-sum game, because the underlying asset is appreciating.

To close: don’t buy promoted stocks.  Never.  Those who are paid directly or indirectly to encourage you to buy are at best sub-agents for the seller — they aren’t on your side.  In buying promoted stocks, it’s like going to Vegas, minus the fun.  You will lose.  You will lose a lot.   The house edge is fixed — it’s only a question of how much you will lose.

Avoid promoted stocks.  As I often say: “Don’t buy what someone else wants to sell you, buy what you have researched and know has value.”