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  • steeleeb53 steeleeb53 Apr 21, 2011 10:42 AM Flag

    dude asks where is breakout ?

     

    What a great post!

    Just so you'll know, I've been a "credentialed" asset-manager for 25 years. It's fun to yank the chain on these trolls that cruise message boards. I'm also a musician and the same thing happens on the musicians' boards.

    Once again, that was a great post. The newbies need to know that they can't depend on all the "advice" they receive by anonymous posters on a message board.

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    • Steeleb53: Best example I can think of off the top of my head to illustrate how important it is to evaluate booth the information and the source of the information is: the message boards for Zenn Motors Company, a Canadian stock. There are thousands of other examples, but ZNNMF.PK probably says it all: Bad information that was not creditable and an unrelieable source of information.

      In short (no pun intended) the company claimed for years that it would make a small electric vehicle powered by an ultracapcitor instead of a battery. In later years they announced they would no longer market the EV, just the EV power train that they would license and sell to OEMs. The ultracapacitor in question was to be manuafactured by a company in Texas: EEStor. EEStor is a private company that does not issue stock and the only way an investor could take advantage of the new ultracapacitor (called an EESU, I believe) would be to invest in Zenn Motors. EEStor has always been quite secretive and rarely issued PR info or anything else. Zenn was much more prolific in their PR announcements and said month after month and year after year that the arrival of the EESU was imminent or something similar. The EESU was the bait and Zenn wiggled it continuously before its potential and established investors. Zenn owned a certain percentage of EEStor. I don't remember the exact number, but I believe it was somewhere around 10%.

      The EESU was touted as not just an improvement of the already existing ultracapacitor, it was supposed to be a revolutionary new ultracapacitor that would transcend and remake the existing world market for energy storage devices and make batteries obsolete. No claim for the EESU was too exhorbitant. Everything and anything would be possible with this revolutionary new type of Ultracapacitor. Using the system of 1-10 evaluation for the information itself I would now rate that as a 1 to 2, 2 being most charitable. Evaluating the SOURCE of the information it turns out that there were essentially 3 sources of information: the CEO of Zenn Motors and the 2 Electrical Engineers who started EEStor. It turns out that any in depth review brings up some challanges to the reliability of these sources. I would refer anyone interested to the Zenn Motors message boards archive.

      Now having said all of this I need to make one of those "full disclosure" statements. I violated my own advice about evaluating Message Board information when it comes to Zenn. I invested in this turkey! Everyone has investments they regret, many can be chalked up to bad timing or even bad luck. I chalk my Zenn investment up to stupidity. I just did not do a 1-10 evaluation on the information itself and on the sources of my information. In other words I did not do Due Diligence. Newbies are not the only ones that need to be careful. In retrospect I would give the sources of information about Zenn Motors no higher than a 2 to 3 as far as the Zenn and EEStor officials are concerned.

      One interesting aspect of the Message Board in respect to Zenn is that in the archived Message Board notes you will find highly technical postings by electrical engineers and physicists questioning the plausability and possibility of the physics required for the EEStor claims to be true. I, like many other gullible investor, ignored this good advice and dived into the swamp of Zenn Motors. Big, BIG Mistake. Bottom line: I did not do DD. All I can do now is to try and learn from that mistake and not repeat it. The only encouragement I have for myself is that my experience has been that I learn far, far more from my mistakes than I do from my successes. Good Luck and good fortune to all.

      • 1 Reply to okiedokiedo
      • <sigh>
        What a long thread to have finally got to some "meat" in the discourse.

        I too, have been an EWZ investor for the better part of five years...it was the place to be in 2009; its returns of 110% or so helped me re-gain much of the 2007-8 losses in my portfolio.

        But lately, I have been frustrated about its inability to bust through $80. The fundamentals still seem good, though an oil bubble bursting could really deflate the stock, I would think.

        There was a period last year, where I saw a see-saw pattern in the price of EWZ, ranging from low 60's to mid-70s. I finally bought more shares when it got to low 60s, and was pleasantly rewarded. The range is much tighter this year though, so I'm wondering how much longer to keep holding.

    • Thanks for the reply. I am certainly not credentialed as an asset manager or an investor. I have been investing in stocks and options for about 30 years or so and I do, obviously, read the message boards. I have found over the years that I have to continuously remind myself, almost daily, that many (now MOST) posts on the message board are not posted with the idea of exchanging information with the view of assisting investors and potential investors about stocks and options. Many years ago I had the priviledge and honor of being trained as a Counter Intelligence Agent in the US Army. All jokes aside concerning the oxymoron of Army Intelligence I believe, on retrospection, that it was a valuable experience for me. Now to the point: we were trained to evaluate each piece of information using a dual number system of 1-10. The first system evaluated the information itself based on our ability to corroborate the information and to compare that information with existing ancillary information already verified. The question was: Did it make sense? Was it possible? How likely is it that this information would be true in view of what we already knew to be true, etc. The second part of the numerical evaluation was a 1-10 scale evaluating the liklihood that the provider (source) of the new information could be relied on to provide accurate information. So for every new piece of information you would have a double rating. Example: Joe Smho the bookie says that the moon is made of green cheese. Liklihood compared to known info = 0/10 Veracity liklihood for Joe = 2/10 Combined value of information = 1/10. We would base our action/response/plan on the combined assessment and a 1/10 would mean we would not take any action that gave credence to the information. You get the idea. No further examples are needed. I still believe it is a good system to use in evaluating any type of information: political, sports, financial and scientific. Always ask yourself: FIRST: Is the information possible and likely in view of present knowledge of the subject? SECOND: Is the information possible and likely in view of you evaluation as to the reliability of the SOURCE of the information? (What is the reliability of the Source...can you trust this Source to give accurate information?)

      If I were to limit myself to only one method of evaluating information I would choose the second one because I believe it is the most valuable of the two: How much do you trust the SOURCE of the information... how well do you know your SOURCE of information. Investments decisions in the stock and option markets are commonly made with not just insufficient information about our source(s) of information they are often made with no knowledge about the source at all. Message boards are the best example of that judgment error I can think of so that the bottom line is to investors: Message boards are only one aspect of evaluating a stock or option investment and they should never play the majority part of your decision making process unless you can substantiate the information elsewhere and validate the source of the information. Sorry for being so verbose about it. I guess I am just like a lot of others out there in that I am frustrated with all the energy it takes when perusing the Message Boards to find that rare Rose among the Thorns. Good Luck and Due Diligence to all... even those who are sharpening their collective axes even as they finish this last sentence in my post.

 
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