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[QUOTE]Originally posted by tic_toc: [QB] FYI...GLTA http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B71593D86%2DEAFA%2D4172%2D8089%2D3964E0BC115D%7D Stupid Investment of the Week By Chuck Jaffe, MarketWatch Last Update: 11:09 AM ET July 2, 2005 E-mail it | Print | Discuss | Alert | Reprint | BOSTON (MarketWatch) -- Last week, I was asked by someone on an airplane for "the one stock that would really pick my portfolio up right now." Free! Sign up here to receive our Mutual Funds Weekly e-Newsletter! TRADING CENTER INFORMATION FOR ACHI: Create an alert for ACHI Add ACHI to my portfolio More cool charts on ACHI Discuss ACHI NEWS FOR ACHI Stupid Investment of the Week More news for ACHI TRACK THESE TOPICS My Portfolio Alerts Company: Americhip Intl Corp Add Create Column: Chuck Jaffe Create Company: Nomad International Inc Add Create Get breaking news sent directly to your in-box Create a Portfolio | Create an Alert I don't give those kinds of recommendations, largely because I don't know. In fact, it's a safe bet that if someone knew the next stock that was going to take off, they'd be buying it now instead of telling someone on an airplane, or over a computer. So when I got the e-mail on Thursday touting AmeriChip International Inc. (ACHI: news, chart, profile) , it was easy to see why instead of being offered a perfect opportunity to make a fast buck, I was really being handed a Stupid Investment of the Week. Stupid Investment of the Week highlights the problems and flaws that make an investment less-than-ideal for the average investor, in the hope that spotlighting trouble in one situation will make it easier to identify elsewhere. While obviously not a purchase recommendation, neither is this column intended as an automatic sell signal, as there may be times when unloading a problem investment merely compounds trouble. In the case of a penny stock like AmeriChip, however, an investor with profits would be well-advised to consider taking them. It would be easy to say that penny stocks are not an investment realm for the "average investor," but they clearly are the domain of the little guy. While there are institutional investors who get behind penny stocks, the big guys tend to be providing large chunks of venture capital hoping they catch the company that starts small and hits it big. Individual investors, however, frequently provide a lot of the liquidity behind these companies, and that is why penny stocks so often are used in the kind of e-mail campaign that attracted my attention to AmeriChip. The e-mail, of course, was anonymous, but it was part of a series that have been circulating in recent weeks, each featuring a different penny stock issue. Each also gives you just a bit of news and comes to the following "conclusion" (grammar and emphasis provided by the sender): "The Examples Above Show The Awesome, Earning Potential of Little Known Companies That Explode Onto Investor's Radar Screens; Many of You Are Already Familiar with This. Is (enter ticker symbol) Poised and Positioned to Do that For You? Then You May Feel the Time Has Come to Act. ... And Please Watch this One Trade!" Well, if you watched the last couple trade -- stocks like Nomad International (NDIN: news, chart, profile) , you'd know that most of the recent stocks touted haven't come close to the target price touted in the e-mail. In fact, they have moved by just a few hairs -- enough so that the sender of the e-mail presumably can dump shares at a profit -- and then they have fallen back. AmeriChip is likely to follow suit, although the stock gained about 15 percent on Thursday, presumably on the strength of the e-mail campaign. It ended the day trading for an even three cents per share. The Plymouth, Mich. company has developed technology that helps manufacturing companies produce parts without producing the chips and bits that can tangle the machines, making the process slower and more dangerous. Theoretically, it's the kind of technology that has almost unlimited applications, because so many companies have to make machine parts, and the AmeriChip technology could save those manufacturers oodles of money. Realistically, however, that kind of potential is a long way off, something the e-mails didn't actually say. AmeriChip lost more than $500,000 during the three months ended Feb. 28, and total revenues amounted to less than $35,000. That's actually an improvement from a year ago, when revenues were $0. According to its most recent SEC filings -- something the average investor probably won't look into and that the e-mail failed to mention -- the company's accumulated losses to date are about $6 million, and that the losses "indicate that the Company may be unable to continue as a going concern for a reasonable period of time." That said, further in the documents is a disclosure that AmeriChip has an agreement in place that should give it the financing to stick around for awhile to see if it can turn its technology into real profits. Every time an ultra-cheap stock winds up earning SIOTW honors, some investors will talk about how a stock like this is worth a flyer "because you only have a little bit of money invested." The bottom line is that while the investor is risking just pennies per share, it won't feel any better if they suffer massive losses. Invest $1,000 in a penny stock or a blue chip and a 50 percent loss feels exactly the same; the difference is that it is more likely to occur in the penny stock. The email report ignores that. The unidentified sender did say in the fine print that it was paid $3,000 to put out the report, "which is for entertainment and advertising purposes only and should not be used for investment advice." AmeriChip officials did not return phone calls on Thursday. It is unclear whether the company paid for the distribution of the release. Many stock promoters simply pick an issue they think they can move; they hardly need management's blessing to pump up a security. In the end, the people most likely to make money on AmeriChip are the ones hoping some investor will decide that "the time has come to act" on one of these e-mail tips. Everyone else who gets involved has a severe risk of losing a bundle, even if it is half-a-penny at a time. That's why something that looks like a little portfolio pick-me-up may wind up being a real downer for people who make a run at it. Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers. [/QB][/QUOTE]
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