Crony capitalism is a stepping-stone to socialism. The term is used to describe the unholy, anti-citizen alliances between corporations and big government. These kinds of companies generally engage in massive lobbying efforts (read: backscratching) to coerce government into various taxpayer-funded schemes:
• by paying them directly through government purchases...
• by carving out market segments for them through regulation...
• and otherwise increasing profit margins by suppressing the free market.
With this as our context, let's examine The American Spectator's article entitled "What Do Nike, Best Buy, Levi Strauss and Target Have in Common?".
They all support EPA efforts to regulate greenhouse gases, even though that circumvents the citizens' right to have their elected representatives make U.S. laws. More on the Obama Administration overreach and his crony corporatists support at the National Legal and Policy Center blog today.
Heading over to the NLPC, we can discover the sordid details.
Earlier this month corporate climateers including Nike and 3M were given awards -- supposedly "the equivalent of an Oscar for the climate change mitigation world" -- for their efforts to reduce their carbon emissions... Nike also co-signed a letter to President Obama that called for U.S. leadership in an initiative to create and finance the Global Climate Fund, which was established at the UN climate talks in Cancun in early December.
Other members of [this group include] Levi Strauss & Co., Starbucks, Timberland, Best Buy, Ben & Jerry's, eBay, Gap Inc., The North Face, and Target Corporation. Mark them down as corporations who favor the circumvention of the peoples' right to have their elected representatives make U.S. laws.
Carbon dioxide is plant food. It can no more be a pollutant than water vapor or oxygen. The Marxist Left progressives believe, or want us to think they believe, that capping CO2 emissions can act as a thermostat on the climate.
The reality is quite different. Trying to control carbon dioxide is a money-making scam and it has been since the original IPCC reports that were issued by folks poised to make millions through inherent conflicts-of-interest.
Companies that feed this government-run monstrosity should be treated as the anti-free market pariahs they are.
Image: Fox News.
My guest on Hedge Fund Radio this week is penny stock trader and Internet entrepreneur, Tim Sykes. Every once in a while I run into a natural born trader, someone who crawls out of the crib quoting options spreads, price earnings multiples, and book values. His first spoken word was “Sell!” While other kids were practicing their ABC’s, Tim was pouring through prospectii.
During his college years, Tim skipped classes and turned a $12,415 Bar Mitzvah gift into $1.65 million by trading the market from his dorm room. By the time he graduated from Tulane in 2003, he was already running his own hedge fund. Barclays Bank rated it the number one short bias fund during 2003-2006.
Tim argues that if you cut through all the hype and manipulation in the penny stock market, it is clear that there are huge opportunities on the short side. Most of the companies trading there are frauds, and most will fail. Mini Enron’s and mini Madoff’s abound.
Defined as trading under $5 a share, these stocks are purchased mostly by individuals desperate for “get rich quick” success. Promoters buy lists of email addresses from major online publishers, sometimes paying millions of dollars, to launch a never ending onslaught of “pump and dump” schemes. Email barrages and Twitter spam have replaced the dinnertime telemarketing calls and junk mail of yore.
The SEC is so inundated with tips on Madoff copycats and competitors ratting out each other, they don’t have time to pursue gripes about $1,000 losses emanating from penny stock scams. It’s like expecting the FBI to pursue shoplifters of 99 cent items from Seven Eleven stores.
Some of the claims made by these bogus IPO’s boggle the imagination. Tim’s favorite was one company’s efforts to promote vitamins infused with stem cells. Another offered a solar spray that turned you house into an energy source. Then there was the BP Gulf oil spill that threw up innumerable crude eating forms of algae. As for my own experience, I’ll never forget the aquaculture farm in the middle of the Saudi Arabian desert. To separate out the obvious rip offs from the legitimate companies, Tim spends hours a day gleaning through voluminous SEC filings, some of which are blatant cut and paste jobs from earlier failed floatations.
Even though most of these companies are fake, prices can run away to the upside, wiping out the early short sellers. So some risk control discipline is required. When a stock truly rockets, “buy-ins” of shorts can also be a problem. A few hundred penny stocks are launched each year, but only about five a month catch on fire. And remember, Apple (AAPL), and True Religion (TRLG) jeans were once penny stocks.
To avoid being taken to the cleaners by unscrupulous con men, Tim offers some very basic advice. If it is too good to be true, it generally is. It also helps to read the SEC filings, which can be obtained online for free.
Tim claims to have a success rate with his short strategy of 75%, which has delivered a 56% return in 2010, proving he still has the golden touch. His problem is that the strategy is not scalable, and can only be executed with a small amount of money. No mega hedge fund for him.
That’s why Tim has turned to online education instead of ramping up a big hedge fund. Today, he is offering several subscription newsletters, trade alerts, chat rooms, along with a DVD course on making money in the penny stock market at his website at http://www.timothysykes.com/ .
To listen to my highly informative and entertaining interview with Time Sykes on Hedge Fund Radio, please click here at http://www.madhedgefundtrader.com/december-22-2010-time-sykes.html .
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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