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Message Board Fools Prayer

'Our Broker, who art on Wall Street, hallowed be thy name. Thy margin call come, thy will be done, for buying on a CNBC mention. Give this daytrader, thy daily tips. And forgive us our market order, as we forgive those who post news hoaxes on Yahoo!. And lead us not, into Message Board temptations, but deliver us our Wall Street Journal. Amen.'

In the Beginning...

Official Project Stages:

In the beginning there was a Plan.

And then came the Assumptions. And the Assumptions were without form.

And darkness was upon the face of the Workers. And the Workers spoke among themselves, saying, 'This is a crock of shit and it stinks.'

And the Workers went unto their Supervisors and said, 'It is a pail of dung, and we cannot live with the smell.'

And the Supervisors went unto their Managers, saying, 'It is a container of excrement, and it is very strong, such that none may abide by it.'

And the Managers went unto their Directors, saying, 'It is a vessel of fertilizer, and none may abide it's strength.'

And the Directors spoke among themselves, saying to one another, 'It contains that which aids plant growth, and it is very strong.'

And the Directors went to the Vice Presidents, saying unto them, 'It promotes growth, and it is very powerful.'

And the Vice Presidents went to the President, saying unto him, 'This new Plan will actively promote the growth and vigor of the company with very powerful effects.'

And the President looked upon the Plan and saw that it was good.

And the Plan became Policy.

This is how shit happens.

12 Investment Commandments

Thou shalt not buy on---

(Or if you do, buy before everyone)

Economists define a bubble as a large increment of a stock's price that is present only because that price is expected to be even higher tomorrow without any sound fundamental reason. In other words, there is a bubble if a price is bolstered by the 'Greater Fool Theory', which is the practice of buying a stock at a foolish price on the belief you can soon find a Greater Fool to sell to at an even more foolish price. Suppose investors were well aware that certain stocks could not possibly achieve earnings high enough to justify current valuations, but those investors were nonetheless convinced that other investors would pay higher prices anyway. Then, we could safely say that there was a bubble.

So, stocks are not only priced on their earnings - They are priced on what investors believe they can sell them for. When everybody is in the market already, the last ones have bought high, who will buy from them?

Message Board Fools are a fundamental part of the bubble economy,... the fertilizer, if you will. It is the mission of the Message Board Fool to convince otherwise clear-thinking individuals to invest their retirement funds on companies with no earnings and no prospects for earnings. In this environment, news of increasing revenues is greeted with thunderous applause by 'investors' even though a company may be losing money on every sale. It's easy to increase revenues if you're in the business of selling figurative dollar bills for .95�

Some 'new economy' companies know very well they cannot be profitable (or at least profitable enough to justify their current valuations) and devise other valuation methods to justify their marketcap. The Internet sector is infamous for creating a false sense of value in tracking 'unique monthly visitors', 'page views', 'stickiness' and 'economic enterprise value'. This can be a valid way of comparing performance of companies within a sector, but it is meaningless in creating profitability.

A bubble economy cannot continue forever. Eventually, you have to at least pretend that you're interested in making money. But when high-tech companies start to act like 'old-economy' companies their stocks start to tumble. Once you start to play by the traditional rules, you can't expect the stock market to carry you anymore. Suddenly, you have to show some income. When you have no cash flow, you don't need a price-to-earnings ratio. But once you have some income which can be analyzed, you can't pull that off anymore. You go from being a 'prospect' to running a real business. The subscribers to the 'Greater Fool Theory' don't like that. It was easier to fool people when it was smoke and mirrors, and valuations were squishy with no historical comparisons from which to judge.

When you buy a shares of stock, you are purchasing a stake in a portion of the company's assets - tables, chairs, buildings, employees, inventory, etc. A company's stock price normally reflects the market's expectation of the future income the corporation can produce with these assets. Many high-tech companies have a market capitalization of billions of dollars, but hardly have any tangible assets, revenue or of course, profits.

The current stock market craze is reminiscent of the Dutch tulip madness of the seventeenth century - Hardy tulips originated from the Middle East and first found their way into Europe during the late 1600's. Over the ensuing years they became a status symbol, especially in the Netherlands. Anyone who was anyone had to own tulips. Soon any old tulip would not do. The stranger the petals, the more valuable the tulips became. As demand increased so did the price. People began to remortgage their houses just to buy a few bulbs. The more the price increased the more the people bought. Theft and fraud became commonplace as the tulips became more and more valuable. At one point tulip prices were doubling almost every day. People genuinely believed that this could go on and on making them richer and richer,... 'The Greater Fool Theory'. By 1634 tulip trading had become the only business in Holland. Nothing else mattered. Something had to give. When the demand ran out, prices plummeted. Rich people became poor overnight. The Dutch economy totally collapsed, resulting in the loss of its empire to the British and French, who during the same time had been busy building armies.