Everything you hear about these exchanges are true. They are the wild west, they are illiquid, they are scummy, and they are scammy. These exchanges are also exceedingly honest. If you're looking at a stock and it stinks, you're going to go broke holding too long. If you're looking at a stock and it seems too good to be true, it is. Effectually, these exchanges contain the unfiltered truth behind every stock seen around us, because the leadership most likely hasn't been indoctrinated into the Wall Street culture, and therefore, infrequently understands how to maintain a ruse longer than a couple of capital raises.
Trading over-the-counter sharpens what should be an already innate skepticism toward the world for people who deploy their own money.
If I could prove that someone sponsored Monsanto's recent multi-million dollar insider buys then I'd be able to short without regard for price action, however, that's simply not the case. On the other hand, one has to make sense of the information given. Namely:
- Management has been completely caught off guard by the patent expiration of RoundUp;
- The tone of the most recent conference call sounded confused, and uncertain;
- The company remains heavily involved in anti-trust and patent litigations;
- The company has committed to buying back shares.
Those are some big cannon balls to dodge if one's going to buy shares. Item 1 goes to the case of single minded, institutionalized, management. Item 2 is purely a developed sense that I trust. Item 3 never looks good for future price action based on unreasonable expectation of stability. And Item 4 never happens except with the express purpose of trying to arrest share price declines, assuage analysts and large institutional holders, and/or goose CNBC into giving some Kramer Koverage.
You can't put all your faith into balance sheets anymore, the convolution of rules has made it next to impossible to stay ahead of all the ways to find the fraud they hide. On top of that, the government passed legislation all but requiring banks to irresponsibly under-state the loss risks they face.
This short post isn't meant to bag on MON in particular, there are plenty of other righteously overpriced doo doo equities out there (STI, RCL, COF ...). No, I would like to emphasize that folks should look past the ties, slick hair, SAT words, and seemingly good news in order to locate logic, knowing for certain that corporate executives care about one person alone, themselves.
Good luck.
Disclosure. I passionately dislike all stocks mentioned in this article, but own none of them long or short as of the time of this writing. I have traded them all short at various times over the past 3 months with varying success, and will likely continue to do so.
Disclosure. I passionately dislike all stocks mentioned in this article, but own none of them long or short as of the time of this writing. I have traded them all short at various times over the past 3 months with varying success, and will likely continue to do so.
