Monday, July 16, 2007

LFB- Down again...is there any hope

The value of LFB basket shows only one tendency...downwards (compare with our blog http://lemurinvest.blogspot.com) . Is there any bottom line motivating the company owners of HCL, BNT, RDX and AIC to comment this situation because our figures don’t reflect their reality or is this situation just a sign that the whole market place will blow up soon?

We are notorious optimists …;-)…and don't share such a black vision either LWI - our WSE index which is as IPO on the WSE board- wouldn't be in the green as you also can easily take from our blog.

The problem is the composition of the basket as it come out. HCL, RDX, AIC and BNT are heavy weights. Either they have a lousy reporting or important share holders who dump their shares (do they know more than we do?) or there is no free float. We should have lanced puts for these titles…. SLM and AMA on the offer hand are going through SPO’s which are watering their share values.

But no problem for the share holder of LFB. Even if the basket dropped its value for more than 12% since its creation you still get a minimum dividend of 2% per month and if you buy at 9 $L as the title is right now, your dividend effectively rise to even 3% per month!

And there is still hope that AIC, BNT, RDX, HCL, SLM and AMA will develop nicely so that you will get the maximum dividend of 7% per month.

Should we be pessimists then?

Greetz

Casper Trebuchet
LEM, CEO

House of derivatives (LFB, LWI)

3 comments:

James Michael Wilcox said...

Glad to see LWI on the board...but will shareholders let the price come up?

The only solution I think that can really stabilize the WSE is if Luke puts in an "all or nothing" option so that if you have a block of 1000 shares or more you can flag the AoN so people can't pick apart your order.

I see it all the time with some of the stocks I own where someone will buy or sell 1 share to coax the price in the hopes that it will start interest in a stock that has been stagnant.

In a comment a few weeks ago I mentioned how I moved FED from .50 to 20.00 in one day. I simply decided I wanted to own a majority of the company so I dropped about $950.00 USD into lindens and proceeded to buy up the shares of fed that were below $4.00. When the stock hit $4, other people started buying until it hit about 10, then the sellers came in driving the stock down again to about $2-3 so again I started buying up shares this time again buying up to $4 but the batch after that was near 7 where again i waited or maybe bought 1 share to boost the price.

This again created interest in the stock because novice investors saw dollar signs - they saw potential profit. On that day I accumulated a 17% stake in FED of which I am the largest shareholder (except for Ford the owner).

So I guess my point is that the WSE is completely supply and demand driven in that if you create the illusion of demand and you remove supply of the stock you can control the price. Out of the 1,000,000 total shares of FED 181,000 are traded on the open market. That's only an 18% float.

Then you have to look at the size of the blocks being sold. Usually they are only a couple hundred shares. That's peanuts. You just can't make money on these stocks if you are buying 50 or 100 shares. Especially when you have companies with 40 million shares outstanding...

There are some serious investors like myself who are putting in real money that isn't just the weekly stipend from LL.

The WSE investors need to learn how to hold onto stocks and sell to the highest bidder instead of undercutting the lowest seller.

Luke could also do this by using my All or Nothing idea as well as putting a time limit on the limit orders.

I realize this is a long comment, but I thought I would lay out what I have seen happening in the exchange. I invest in real stocks as well and you can read about that at my blog The Proficient Investor.

LEM Invest said...

will WSE or any other stock exchange ever get mature in SL?

may be in the future but then under completly other conditions. The forbidden words are rules and restrictions which would have to be applied...and Sl is still a game.

But I think you are right, improvements as you suggest will definitively bring the stock markets to a higher level.

The same could be said about LWI. Its really hard to find 25 companies which are only slightly transperant, have a meaninful accounting of some sort, have a market cap of >1.5 million $L, free float of >20%, a skilled management and even a meaningful business moodel. Its a general problem. I also have to add LEM of course in this negative list.

But if it is not possible to have a meaningful index how could a stock market exchange survive on the long run? I try to see this in a pragmatic way. WSE and all the others stock markets are basically games but they attract other gamblers as the market as a whole is growing.

Logically this will bring in more new-comers but also professionals who have the needed experience, skills, momentum, money etc... Togehter they will bring these markets on a higher level and closer to what we have in RL.

I guess I'm an optimiste, but in that way I also see LWI as a kind of pionieer. LWI can be seen as a mirror of the development of the markets. it may even force the users and owners of the stock exchanges to be attentive, either to conduct reforms to make the markets more attractive and transparent or to promote it in order to bring in new gamblers..

I guess I'm an optimiste...

And the free float problematic is huge. Your example can easily be transposed to other cases...as I known.

Anyway, I would support your request for an all to nothing idea. Did you already made a request towards one of the stock exchanges?

We suggest to meet in SL to discuss this in more detail..;-)..as I also have an interest for more stabiltiy and prof in the markets.

Casp

LEM Invest said...

will WSE or any other stock exchange ever get mature in SL?

may be in the future but then under completly other conditions. The forbidden words are rules and restrictions which would have to be applied...and Sl is still a game.

But I think you are right, improvements as you suggest will definitively bring the stock markets to a higher level.

The same could be said about LWI. Its really hard to find 25 companies which are only slightly transperant, have a meaninful accounting of some sort, have a market cap of >1.5 million $L, free float of >20%, a skilled management and even a meaningful business moodel. Its a general problem. I also have to add LEM of course in this negative list.

But if it is not possible to have a meaningful index how could a stock market exchange survive on the long run? I try to see this in a pragmatic way. WSE and all the others stock markets are basically games but they attract other gamblers as the market as a whole is growing.

Logically this will bring in more new-comers but also professionals who have the needed experience, skills, momentum, money etc... Togehter they will bring these markets on a higher level and closer to what we have in RL.

I guess I'm an optimiste, but in that way I also see LWI as a kind of pionieer. LWI can be seen as a mirror of the development of the markets. it may even force the users and owners of the stock exchanges to be attentive, either to conduct reforms to make the markets more attractive and transparent or to promote it in order to bring in new gamblers..

I guess I'm an optimiste...

And the free float problematic is huge. Your example can easily be transposed to other cases...as I known.

Anyway, I would support your request for an all to nothing idea. Did you already made a request towards one of the stock exchanges?

We suggest to meet in SL to discuss this in more detail..;-)..as I also have an interest for more stabiltiy and prof in the markets.

Casp