Saturday, May 18, 2013

When the price discovery function fails TSX.v Flops

"There are a number of ways to account for it, but this divergence between 'market prices' and real world supply and demand fundamentals is at the heart of a problem that is called 'the mispricing of risk.' "

No truer words have been spoken. This is one of the prime functions of the junior market. It's not supposed to be a rigged casino. It's funny that the TSX.v boss downplayed the current events citing that more people paid their fees than last year. Ok, sure they did but they can't raise money to do the work. We on the outside, can't get a consensus on the price because the game is rigged so we don't buy in. On top of that, anytime retail does invest or speculate then the price is driven down by machines and traders using loopholes to create fake shares or simply failing to delivery when a bid is made.

Again, I'm going to borrow some words. "These things run on momentum and bad behavior by some fairly powerful institutions and individuals. And there is a great deal of money to be made in the meanwhile, and a status quo to be protected.  Timing is problematic when trying to determine when a somewhat opaque control fraud is going to be forced to unwind.  They can remain pathological longer than you can remain solvent."

We only have to look at Ottawa to realize why these things are allowed. We have Duffy running for cover and our star journalist resigning from the senate under a fog of misconduct. So, what do we learn from this? As soon as you  get into a position like that you immediately fleece the system? I give the East some smack downs for voting for scandalous parties over and over. Do I have to point out that every time a party from the west gets in there's an airplane scandal? What are voters going to do? What will it take to get good government with no scandal or theft?

Perhaps the voters will take a page from BC and repeat the flip flops of the past by picking the best of the worst. Perhaps an NDP government. Lol.

But I digress. As an investor we don't have an option to vote. We can't even use our money to influence an outcome. What rule with they change next to allow the complete take over of the Venture by the banks?

It is true that brokers with deep pockets get big discounts to what the retail gets when a pp is offered. This is an unfair practice that has to stop. Those investors turn around and use those shares to abuse the share price. This is really noticeable when they want more shares to add leverage to the actions that will come at a later stage. We get punished hard for our support and this is another change that is required. I have not taken a pp because the offerings are not fair to me as a non-broker. The broker still gets a better offer.

What one poster said about this on the Venture Crisis Org site was that when everyone is going hat in hand for money that this really empowers the brokers to exploit them in extreme ways. So if you thought it was bad now just wait 2 quarters. There is a flip side to this. Companies will go private and they will be able to offer direct investment to the public under the old format. Us older dogs know this practice has been around for ever. I own private shares. I do not fear the safety of my money. Any private firm not willing to open it's books and grant full access is not worth investing in. Period.

If a small explorer offered to open its books to me I would go check the land and every detail of the financials and I would want to see the plan of action in the form of a prospectus.  You on the outside who do not know geology would be at a disadvantage. But, the company could point you to me and you could ask me what I thought. This is exactly what the TSX.v exists for and they have destroyed it. What we need to see is a revitalization of the old way of doing business with the modification of being able to list all the share holders.

If the old way was revamped using our modern technology the TSX could be bypassed completely. I would love to see some private company do a sophisticated attempts at it. Imagine what a company could do if the burn rate was substantially reduce from the office column and shifted into the work column. I would take mine the modeling and make that public but I would allow only the investors access to the controls. Unlike the guy who suggested doing it open access, I would not simply on the basis that bull boards are a verbal form of that consensus model and look where that gets you. A system like what I suggest would allow the presentation to range from worst to best. I think the time has come for this.

We need some software gurus who can invent this for us and put it online. Angel investor sites are good but this one would need the mining modeling stuff too.

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