In addition to increased compliance costs, public companies are faced with ongoing obligation to find buyers for their shares. An OTCBB company with an effective float of one million shares and an average share price of $6.00/share should budget $1.2 million to maintain that share price for year. A Nasdaq or NYSE company with an effective float of 2 million shares and an average price of $15/share should budget about $4.0 to maintain their share price.

Three Solutions to Reducing Costs of Being a Public Company

1. Grant Thornton International, an accounting/business adviser to midsize firms, reports a steady rise in number of companies going private after passage of Sarbanes-Oxley. Most are OTCBB companies, with management buyouts as preferred means of taking these firms private. 2. Mergers of existing public companies have been standard alternative to taking company private. 3. Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] advises both U.S. public and private companies to move offshore and structure themselves as foreign corporations. As a Non-U.S. Company, their registration and compliance costs will drop below $500,000. If client companies follow Beowulf Investments Investor Relations program, their costs should be below $100,000/year.

The days for an American private company to go public as a status symbol are over. The SEC compliance costs will either force U.S. Domestic Companies to relocate offshore or preclude them from taking advantage of money raising benefits of being a public company. For U.S. companies, it comes down to a choice between reduced access to capital or reduced jobs in United States. I suspect that most CFOs will favor moving jobs offshore to going bankrupt.

To contact author: Visit Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit Global Village Investment Club Website: [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]

To breakeven on a US$100 taxable investment, you must earn US$10 in interest. State and Federal income taxes reduce your profit to US$6 for year. The US$106 will buy same amount of goods and services, as did US$100 a year earlier. That will be an actual breakeven, not a profitable investment.

Many limited-risk cash investments do not meet breakeven test. U.S. Passbook Bank Account interest rates are a prime example of an annual losing investment strategy against inflation and taxes.

Cash is a Position and a Good Measure of Risk/Reward

What you can earn with limited risk cash investments is a good guide to what ROI you should expect from high-risk investments. Here are a few current examples of limited risk cash positions.

1. Cash invested in a 401k Retirement Plan. It's in mutual funds operated by a major U.S. Insurance Company. The ROI is subject to deferred taxes. Current annual ROI is 22%

2. U.S. Dollar accounts in European Banks are paying between 11% and 15%. All these banks survived 1929 Crash and, later, 10,000+ bank failures of 1932.

3. Short selling OTCBB stocks has paid about a 32% tax free ROI for past decade. With a 98+% failure rate of OTCBB companies, there is less than a 2% risk of failure in such short sales. And there are ways to mitigate that risk to well under 2% risk. The potential reward is 100% and usually takes less than three years to achieve. However, you do need a significant cash reserve position to begin this investment game.

4. California Real Estate has shown a consistent 20% annual appreciation for past several years. When you put 20% down on a property, your annual ROI is 100%.

The GVIC ROI

The Global Village Investment Club (GVIC) risk is less than that of OTCBB short selling. If you assume GVIC member's profit is taken in 5.5 years, ROI is 100%/year.

Risk/Reward

You can usually determine risk of any investment by knowing failure rate of firms in that industry. Conservative investments like municipal bonds have low annual failure rates. Speculative Investments, like commodities and futures trading, have high failure rates. Once you know risk, you must adjust reward by inflation and taxes to find breakeven point for investment.

Many conservative investments are bad investments. Most high-risk investments are bad investments. If more investors viewed ROI as a favorable Risk/Reward ratio, there would be fewer wealthy people dying broke. And, there would be far fewer middle income people making terrible "bets" on stock markets.

To contact author: Visit Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit Global Village Investment Club Website: [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]