More Than Fundamentals By William Cate[http://home.earthlink.net/~beowulfinvestments/] [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]
Sound Fundamentals are vital to
long-term survival of any business. However, fact that your public company is making a profit doesn't mean that it will trade at a multi-dollar share price. I can list dozens of profitable public companies that trade in Canada and United States with share prices below US$1.00.
The assumption that investors will discover sound public companies, buy their shares and drive up public company's share price is an illusion. It doesn't happen. Market professionals know that it doesn't happen. You should assume that nobody will take an interest in your company based solely on fact that your company has sound fundamentals.
There's a stockbroker adage that holds that "Stock isn't bought; it's sold." It's company that must find buyers for its shares. How does company find share buyers? The company must have a plan that convinces buyers at current share price that there will be buyers at a higher share price. Remember that public investors are usually buying their shares with expectation of a near-term appreciation of share price that will allow them to sell their shares in your public company at a substantial profit.
Whatever you tell public should be true. While SEC ignores about 90% of public company hype by stock swindlers, you do risk SEC civil and criminal action if you lie to public. Whatever "forward looking" statements you use should be your company's future reality. It's wiser to promote your company's stock on simple achievable goals than grandiose schemes.
Announcing your "forward looking" statements in news releases is legally essential. However, don't expect public to buy your shares based upon a news release. It doesn't happen.
Paying with shares to spread word about your "forward looking" statements with your company's shares is ALWAYS a mistake. The stock promoters may create more buying than that needed to sell their shares. This might result in a higher share price, if your insiders and shareholders don't sell into promoters' hype. However, promoters' shares that entered Market will have to be resold in all following efforts by your company to spread word about your company's" forward looking" statements. If you persistently pay promoters shares to hype your stock, eventually there will be too many shares that must be purchased before your company can expect an upward move in its share price. At that point, your public company has failed.
