LSR's Underdog, Natalie Green, incites and informs readers with OTCBB commentary and editorial. 

A Note From Natalie:  "In this column I plan to provide you with the most thought provoking editorial /commentary about the OTCBB that is on the Internet. I am not a "basher", but I may say some things with which the masses will not agree.  This is not an attempt to shed negativity, but rather an attempt to push you to consider the not so obvious. I will tell you the way it is, no matter what!  What you do with the information is up to you - ignore it or profit from it." 

 "People are smart, but they tend to make big errors, and they do it in groups"   -Robert Shiller, New York Times, April 30, 2000

Long Term Investing vs. Short Term Trading
By: Natalie Green

The uncertainty of the market is always present, whether we are in good times or bad. No one knows exactly where the market, especially an individual stock, is headed in a day, a week or a month from now (although Leonard Mauck comes the closest I have ever seen). That is why I have always been a supporter of daytrading or swing trading, especially the OTCBB. It is my personal opinion that the OTCBB is not for long term investing.

Sure, there is the possibility that someone could stand to make a very large fortune picking up one of the hundreds of sub penny stocks and waiting for the company to hit it big and wham, they are rich. There is also the possibility an asteroid could strike earth tomorrow, but I am not going to place a bet on it.

The truth of the matter is that the majority of OTCBB companies are not going to be successful in their business plan. Do not misinterpret that to mean that the OTCBB should not exist. I am a strong proponent that the OTCBB provides a legitimate source of capital for development stage companies to make a go of it. Unfortunately the majority just wont succeed.

If you think that you found that diamond in the rough, chances are, you didn't. If you plan on holding an OTCBB stock "long term", I would suggest you do some SERIOUS research. And by research, I do not mean go read the message boards. Most importantly, do not get suckered into losing a lot of your hard earned money.

Investing is a risky business, whether it is in the OTCBB or the broader markets. What is guaranteed in the markets is that stocks will go up and stocks will go down. Mainstream media will have you believe "daytrading" was a fad of the bull market. However, daytrading (and swing trading) were here before the bull market and will be here long after the bear market. If you think there is still not an influx of short-term traders in this market, I challenge you to look at the invasion of brokers catering to them. Even the most prominent of full service brokers are offering services directed to the short-term trader.

All investing calls for thick skin, and probably short term trading more than long term trading. The most important thing is to invest what you can stomach to lose. Current times are proving now more than ever, no one is insulated from perils of Wall Street.

"Take windfall profits when you have them." -Wall Street Adage

Bulls and Bears Make Money - Sheep Get Sheared
By:  Natalie Green

In yesterday's First Look commentary, Leonard Mauck made a comment I have attempted to convey for quite some time now. In his commentary, Mauck said, "If the Naz was the OTCBB, one would call the type of activity we have recently seen in the tech sector, a pump and dump." Mauck was referring to the blatant attempts by Wall Street analysts to convince the investing public to "buy".

In the OTCBB "pump and dump" is slung around like mud in the pigsty. Most commonly it used to describe a situation where "promoters" are paid, usually by the company, to provide exposure to a stock. Widely followed promoters can move stocks quickly, and often they come down just as fast. Promoters are thought by many to sell the shares they receive as compensation during the initial spike. Thereby, the phrase - pump and dump.

Companies hire promoters to inform the investing public about their company. Companies want exposure, they want the public to know who they are and what they do. That is the promoters' job - get the word out. Mainstream media does not provide OTCBB companies with exposure unless it is to unveil a scam, (admittedly, it does happen more in the OTCBB).
On the broader exchanges, promoters are referred to as analysts. But their objective is the same as the promoter's. Both, as some unfortunate people did not realize, are there to serve the company.

The difference between the two is strictly perception.
Their objective is to generate interest in a particular stock. With interest usually comes buying, followed by a higher share price. This is also the shareholders ultimate objective, a higher share price. With everyone having the same the objective, how can perceptions of each be so different?

Obviously there are dishonest promoters, and possibly more in the OTCBB than analysts in the broader markets. However, rarely, if ever, does someone do something without a particular motivation behind it. In current market conditions, more and more scrutiny is being applied to analysts' motivations. Even mainstream media such as Time and CNBC are applying pressure on analysts "picks" (many argue not enough pressure).

Ultimately, the investor must take more responsibility for their decisions. All the reforms and new legislation in the world cannot save someone from themselves. Sure, it would be nice if we could gather all of our investment research from one click of the mouse, unfortunately that is not a reality. Someone's recommendation, whether promoter or analyst, does not constitute "due diligence".

"I do not regard a broker as a member of the human race." -Honore De Balza (1799-1850)

Buyer Beware - Information Is Only As Good As The Source.
By:  Natalie Green

The OTCBB, no matter where the broader markets are, always present tremendous money making opportunities. The problem so many investors have is "picking" the right stock. There are a deluge of web sites that lend themselves to help you in this forum. But buyer beware, many of these sites will sink you in the latest Titanic of a stock. Basically, it all depends on how you use a web site whether it will benefit or damage you in the end.

The OTCBB doesn't receive much mainstream press, so the internet has spawned its own assembly of coverage for the OTCBB. Unfortunately, so much of the coverage is by pick sites.

While many pick sites are the kiss of death for an unwitting investor, others can be a wealth of information. Certainly, I would not recommend following any pick site blindly. But I would recommend keeping tabs to determine which stocks may be moving on pure momentum. Stocks that move strictly on pumping will come crashing back down, hard.

The point to keep in mind is that generally "pick sites" are not there to perform a service to you, the investor. They are in fact there performing a service to the company. The company pays a fee to the pick site, and the web sites' job is to bring attention to that stock, commonly referred to as "pumping" or "touting".

"Profiling", as the web sites themselves call it, has received a very bad name over the years. And for the most part, not undeservingly. But there are a few sites, such as LSR, that are NOT pump sites. LSR brings investors stocks based strictly on their potential to move, not because a company paid them to do so.

The important difference between the two types of sites to the investor can be the difference between making money and losing money.

The bottom line is this:   the OTCBB is a unique venue in which one can participate, and with that participation can come the potential for huge money making opportunities, as well as the danger of being led to slaughter. Use the vast amount of information out there to your advantage. Don't turn a blind eye to pick sites because of the poor reputation the segment has built, rather use them as yet another tool in your investing toolbox.

 "I have probably purchased fifty "hot tips" in my career, maybe even more. When I put them all together, I know I am a net loser."  -Charles Schwab

The Blame Game - Market Makers
By:  Natalie Green, Long and Short Reports Staff Writer

The message boards are alive with criticism and blame for everyone from the shorters, to the bashers, to the market makers (MM) about why their precious stock is down in the dumps. But let's take a closer look at these fall guys. We will start with one of everyone's favorite - market maker manipulation.

The "MM manipulation" rhetoric is running rampant at a fairly annoying rate. Many investors are even trying to rally troops behind the idea of getting rid of market makers on the OTCBB. But before you join the craze, let's examine the market makers role and then you can you judge for yourself if you want to trade in a market without MMs.

First of all, technically the OTCBB is not a market but rather a quotation service, an electronic bulletin board. It is a computer network owned by the National Association of Securities Dealers (NASD). Neither NASD nor Nasdaq have a relationship with the companies quoted on the OTCBB, a fundamental difference between this venue and the major exchanges. So the OTCBB is strictly a quotation medium. Who posts those quotes? Market Makers. Without MMs there would be no OTCBB.

I can hear the naysayers now - "but the MMs short stocks into nothing, into bankruptcy, that is corruption and we need to get rid of them." That sounds like pure nonsense to me. Simply for the fact that the MMs objective is the same as anyone else's involved in the markets, make money. If the MM were to manipulate a stock into oblivion, the MMs lose a viable source of income for years to come from their market making activities as opposed to a short-term gain from shorting the shares out of existence.

Furthermore, if a market maker could short or manipulate a company out of existence, then there wasn't much of a business to begin with. The stock is a direct reflection of the company. Certainly there are undervalued and overvalued stocks, but as we witnessed during the 2000 bust, eventually they all find their equilibrium.

Is there market maker manipulation? Probably. However, it is not in the force and magnitude the flocks would have you believe.

The bottom line is that the OTCBB as we know it will not exist without MMs. Investors will continue to blame the MMs, but before you go pecking out that letter to authorities petitioning for no more market makers, think about the market without them. Who do you think buys up that boatload of stock when the company dishes out the reverse split or bankruptcy announcement?

We will save the "shorters" and "bashers" for another time.

"In the final analysis, true value will win out." Burton G Malkiel, Wall Street Journal; April 14, 2000