Are you okay with volatility? Really? You sure?

One of the things that bedevils all investors is volatility. Usually, we are trying to figure out how to take advantage of it. Investors, particularly value investors, are always claiming to not care about it. It's casually dismissed as noise. It usually is. Still, it's hard to call it noise when your portfolio drops 20%.

I hate volatility. I dread it except when I'm long and it's to the upside. I think that there are a lot out people out there who would agree with me. I expect volatility, and try to use it get lower my cost basis. I also use it to get out of positions, losing and winning ones.

What to do when you see a list of hurting companies

The Business Insider recently posted a list of 10 big companies veering towards bankruptcy. Not surprisingly consumer discretionary companies dominate the list. Without a doubt, all of these companies have serious problems. Should you go out and short these companies? No. Absolutely not.

I'm not saying that none of these companies will file for bankruptcy, but I suspect that more will avoid that fate than suffer it. I think that a lot of these companies would make solid takeover targets. I'm pretty sure that someone would want to buy Sprint-Nextel or Interpublic Group. These companies have large customer bases and brands that have real value. While someone could let them fall into bankruptcy and then harvest the good organs, I think that doing that would cause undue harm to the brand.

So should you do with a list like this? I recommend that you use it as an opportunity to learn more about why businesses rise and fall. Try to find out what you could have noticed months ago and would've allowed you to short the stock months ago. You can also use lists like this to find good companies. Find out who these companies' competitors are. Maybe they've taken market share from the companies teetering on the brink of bankruptcy. They might be good investments.

A more speculative approach would be to examine each company and determine which one would most likely survive and then go long. The stock is probably trading at or near its 52-week low. Don't commit too much of your capital to the position, after all, this company might go bankrupt.

Revisiting E-Trade

As readers of this blog know, I've been stalking E*Trade for some time. I first wrote about this stock back in November of 2007. It looked like a baby being thrown out with the bathwater. By my reckoning, there was still a vibrant brokerage business underneath the mortgage missteps. The stock has been a lot of places since then, all of them much lower than when I first started establishing a position.

It now seems that others have rallied to my cause. There are articles all over the web that E*Trade is going to get a bid from one of it's healthier competitors like Schwab or TD Ameritrade. Why? The same reasons I outlined nearly two years ago. The brokerage business is really sound(over 2 million accounts) and growing. They are slowly but steadily reigning in the mortgage mess at E*Trade Bank. Some are predicting that by year's end, someone will buy it. I can't dictate a timeline like that, but I would have to agree. Why wouldn't you want to acquire on the cheap (people have speculated a price of $3 or $4 per share) one of the most recognizable names in online stock brokerages?

This morning, I took a position in the October 2 calls. I got in a a price of 10 cents per call. At one point this morning, it was 5 cents. At another point, they were going for 15 cents. The volume in these calls has exploded recently, so a lot of people are expecting something to happen soon.

My plan for this trade is simple. I'm going to cash out as soon as the call is in the money. That means I'm betting that within the next 3 1/2 weeks, the stock will pick up about a quarter.

Only time will tell.

Still more on CCTR

China Crescent Enterprises is like a girl I dated that hurt me, but I'm still fascinated by her. I can't help but be astonished by how cheap the company's being valued. I read the press releases and I'm leery. They're just way too positive. I am willing to miss out on a 100+ bagger here until I get a better sense of the company. I'm waiting for signs that an uplisting is afoot. What are those signs?

One, in order to list on the AMEX or NASDAQ, you need a share price of $3 and $4 respectively. So OTC companies will usually do a reverse split in order to meet those thresholds. Secondly, if the company incorporates in the U.S., that's a pretty good indicator that they're considering an uplisting. Third, are they going to be presenting at major investment conferences like Rodman & Renshaw? Once plans have been announced, follow along to make sure that the plan is executed. It's actually very rare for a stock to go from the OTC or OTCBB to one of the big exchanges. Lots of companies claim that it's going to happen, but it usually doesn't materialize.

Invest like it's 1966

I'm currently reading F Wall Street by Joe Ponzio. I high recommend this book, especially to those who are interested in learning more about value investing. The book is dedicated to teaching readers to value the underlying business that a stock represents.

I just finished a chapter called "Invest Like It's 1966." The chapter focuses on the story of Rose, a client of Mr. Ponzio's who became widowed in 1966 and had to feed herself and put her son through medical school. She started with a $10,000 insurance check. She lived on the income from her investments, but was still able to amass a portfolio worth $1.5 million by 2008. How did she do it? Well, she had help from her brother who ran his own business. No doubt, his guidance on which stocks to buy and what prices to pay was helpful. In fact, she claims that she didn't know very much about investing. I think that it was her ignorance that was her saving grace.

Rose didn't have the Internet when she started investing. She got her prices from the newspaper the next day. She wasn't bombarded with a lot of information and noise about the stock market. There was no CNBC or Bloomberg. Instead, she focused on what was most important: safety and buying great businesses at good prices.

This is one aspect of investing with which I struggle. I don't ignore the noise as much as I should. In fact, I probably generate noise with this blog. I'm going to commit myself to paying less attention to the financial media. I think that it'll be good for my mind and my portfolio.

Marc Faber: Long-term Bear, short-term bull

Marc Faber isn't the first person to trash the greenback. Interestingly enough, he still likes U.S. stocks, however. He particularly likes commodity stocks. I agree with him that the FCX, NEM, and XOM are good values. I can't say that I have his same tolerance for risk regarding buying the airlines.

I agree with him wholeheartedly that Ken Fisher is wrong in saying that the U.S. isn't carrying enough debt.

I'm looking elsewhere for value

Right now, I don't see a lot of value in the U.S. market. The S & P 500 is up over 50% from the March 9th low. Many people are clamoring that the a new bull market is afoot. As regular readers of this blog know, I don't believe that. To this end, I've been stockpiling cash, waiting for another downturn. I haven't liquidated any positions, I'm just going to add to them.

I'm starting to look to other markets for values. This is difficult as many major markets have rebounded nicely this year. One of the websites that's been very helpful is ADR Universe. ADR Universe has a good overview of foreign stocks trading in the U.S., as well as closed-end funds. The information is tagged by both country and industry, so finding what your looking for is very simple.

If you would prefer to buy stocks directly rather than go the ADR route, then I suggest that you read, The World is Your Oyster by Jeff Opdyke of the Wall Street Journal. Mr. Opdyke has written a very personable book about his experience investing in international markets. He maintains several brokerage accounts in markets spanning the globe. He makes very solid recommendations about choosing a broker and what to expect. I recommend that you read it prior to committing any of your money.

Another author that I would recommend is Jim Rogers. His books, Investment Biker, Adventure Capitalist, and A Bull in China are fun reads that also give you a hands-on perspective on the perils and pleasures of investing outside the United States.

Also, check out the Emerging Markets Century by Antoine Van Agtmael. Mr. Van Agtmael gives a good overview of the tremendous growth and increasing sophistication of emerging markets. He also provides detailed information about the new class of blue chip companies.

I'm not cashing out, but I'm not buying either

I've written about how I think that this is a sucker's rally several times. I'm stacking cash and waiting for some new bargains to emerge. When I look 52-week lows, there's not a whole to show for it. In fact, I ran MSN's 52-week low power search and two names came up, Tamura Corp.(TMURF) and Volkswagen AG (VLKAF). Neither of these companies interests me. In the meatime, I'll be happy to pile up some cash. In fact, I may take a break from following the market for a few days. That way, I won't be tempted to do something stupid out of boredom.

Is it too late to buy CMTP?

I first wrote about China Digital Communications back on July 20th, 2009. Back then it was trading at ridiculously cheap valuations at a price $2.85 per share. It's still pretty cheap. Check out this piece from TheStreet.com by Rick Pearson. He went to Shenzen and interviewed management and came away convinced that the stock is still trading at a major discount.
The stock has appreciated by nearly 2/3 since I recommended it. As was the case with MNI, I am contemplating taking the money and running.

I agree with Pearson that the company is still undervalued. They are doing everything they can to attract institutional investors and that will be very good for the stock. Still, why not take a little off the table? This is the tug of war that everyone goes through with deciding whether or not to sell a stock. You can follow rules like those suggested in this Kiplinger's article.

They are helpful, but very general. However, if they were specific, that wouldn't work either. The bottom line is that you really have to know what you own and what your risk tolerance is. Neither of these tasks is nearly as simple as it sounds,

Lot of people thought that they had a good handle on Enron, Fannie Mae,Citigroup and lots of other companies that seemed like one-decision, solid blue chip stocks. Even when they acknowledge that they didn't know (remember how people used to say that Goldman was one big hedge fund), they had blind faith as long as the numbers continued to look good.

Risk tolerance is no easier to get a grip on as it has a tendency to mirror market fluctuations. When the market is in an upswing, most people say that they are very risk tolerant. However, during a bear market, most people (including institutional investors who ought to know better) run for the hills.

So what am I going to do? I'm going to hold on to CMTP. Why? I look at it as a long-term holding. Once I double my money, I'll sell half and play with house money the rest of the way. Until then, I'll let it ride.

I'm getting nervous about this rally

I wrote about how to play this rally by buying junk stocks. I specifically mentioned McClatchy (MNI). When I recommend the stock back on August 11th, the stock finished that day at $2.06. It's up about 33% since then. The stock has worked well as a trade, but I would suggest exiting it now. The company has had a nice earnings surprise and has aggressively cut costs, but the song remains the same. Unless you know something novel about the newspaper business in general and McClatchy specifically, you should be happy with a sizable gain that you can now put into cash. Enough is enough. I'm pushing away from the table. There's probably still money to be made in this stock, but I'm fine with it going to someone else.

MNI is a good metaphor for the market's performance YTD. The stock bottomed in March and has been on a tear ever since. However, if you look at the fundamentals, there has been very little in the sense of real change or improvement in the company. I realize that the stock market is a leading indicator, but the market must be looking a decade forward in order to justify the performance of McClatchy and other similarly challenged businesses.

I just don't feel comfortable holding this stock anymore. I've made my money and now I'm moving on to something safer.

Barry Ritholtz knows what he's talking about

Barry Ritholtz gave a very solid interview to TechTicker recently. It is very reasonable and incorporates a long-term view of the markets. Among other things, he cautions against declaring the death of buy and hold investing.

The market hasn't moved in eight years. That means that you might have another chance to buy great companies for the same fire sale prices they had right after 9/11. That sounds pretty good to me.

Take advantage of this opportunity. It won't come around again for a while, if ever. Look at the 52-week lows list.

Bet on Oil?

In the October 2009 issue of Esquire includes some stock tips from Ken Kurson. Off and on throughout the years, Mr. Kurson has written a column called "The Portfoilo" in which he shares his thinking about the markets and he usually gives you a few ticker symbols to consider.
This month, Mr. Kurson focused on oil stocks and how to place your bets on the future on energy. He referenced a small global macro hedge fund called CommonWealth Opportunity capital. Here's a copy of their August letter to shareholders.
Ken Kurson sees oil going higher. He recommends a diversified approach to cashing in on this. He wants you to buy a basket featuring low risk, medium, high risk, and downright speculative stocks that will benefit from oil's upward move. I happen to agree with him so I'm recommending some picks that fit this category.

Low Risk (integrated oil giants): XOM or BP. He recommends them in the article and I agree. No one executes better. These guys don't make too many costly mistakes (see COP and CHK's bad natural gas bets). They're not going to make you rich, but there will be steady capital appreciation and a hearty dividend paid over the next few years.

Medium Risk( oil services): He likes RIG or OIH. I like Noble (NE) better because their cheaper on a PEG basis. I also like HAL or SLB. They are the consummate oil middlemen.

Higher Risk (oil sands explorers): Suncor (SU) is his pick. I'll take Canadian Natural Resources (CNQ). They smartly reduced their exposure to natural gas in 2008. It's cheaper and so I think will benefit more from the rise in the price of traditional crude. Plus, I think that PetroChina's (PTR) recent M & A activity makes it a potential target. Also, Nexen (NXY) might be a possibility.

Highest Risk (Russian ETFs): I can think of something much riskier. It's not really an appropriate long term selection, but more appropriate as a trade. If you really want to make a fortune, play the leveraged ETFs. Try ERX on for size. It's the Energy Bull 3x ETF. Need more risk, than trade the options.

As you can see, there are many ways to skin the oil bull cat.

By the way, I loved Kanye West's outburst at last night's Video Music Awards. I wish that more people in the financial world, say regulators and members of the media, has stones like his.

10 Bubbles?

Clutterstock has named these areas a bubbles in the making. Are they right? What bubbles other than the ten mentioned here, do you think are forming or about to burst? Let me offer my own ten suggestions.

1. The Treasury Bubble

2. The outrage at the evils of corporate America Bubble

3. The Social Media Bubble

4. The Meredith Whitney Bubble.

5. The Dollar Bubble

6. The Blog Bubble

7. The Return of Deflation Bubble

8. The private equity/hedge fund bubble

9. The Obama as Savior Bubble

10. The China is a Bubble Bubble

There's no direct way to short most of these things on my list, but you can still profit from just avoiding them.

Meet the Dumbest Dot-com in the World

This post is a follow up to yesterday's about the early stages of the Internet bubble collapse. Meet the Dumbest Dot-com in the World is both sad and hilarious. It should make you pause before you even think about investing in a company with no revenues or an "innovative" business model that seems way too smart for the little people.

AllAdvantage billed itself as an "infomediary"(by the way, I would also be leery of made up words like that). It's easy to dismiss the company now, but back in the day, it had really smart VCs like Softbank ponying up big money in order to fund it. The IPO was one of the last Internet highfliers of Frank Quattrone, then probably the brightest star in technology investment banking at Credit Suisse First Boston.

AllAdvantage wasn't a complete disaster though. They were an early creator of viral marketing campaigns. They were a behavioral marketing pioneer.

If you've got a lot of time on your hands and want to marvel and how naive people were at the turn of the century, then read this business description taken from it IPO filing.

The Dot.con Era

It may seem pretty strange that so many years after the fact, I'm sifting through the wreckage of the dot-com era for lessons. It's largely because of the Michael Lewis-edited volume, Panic. The writings in this volume are so so prescient and smart. Two pieces that I've recently read are an excerpt from Dot.con: The Greatest Story Ever Sold by John Cassidy and "Meet the Dumbest Dot-Com in the World" by Mark Gimein. Even though these pieces were written back in the early part of the decade, they hold timeless wisdom about evaluating business models and much-needed perspective. Don't assume that we've learned everything that we could from this era. In fact, I assume we haven't. If we had, then we wouldn't be in the current mess.

The Dot Con excerpt recounts the early months of the bursting of the Internet bubble: March and April 2000. Reading books or magazine stories from this era is like walking through a cemetery or looking at a class photo from elementary school.
You either are feeling saddened and/or validated by a demise or just simply wondering what the hell happened to that kid from the back row.

It's amazing and almost laughable that companies like eToys, drkoop.com and women.com were considered viable businesses. Some of these companies did survive, mainly by being bought by stronger companies. For instance, women.com got folded into iVillage.com. It's not just the companies that seem like apparitions from the past. Do you remember Albert Vilar? He has a great quote in the book regarding a negative piece in which a Barron's writer claims that many of the top Internet names are running out of cash. He says, "I didn't set my performance record, which is about the best in the business, with any help from Barron's." I shall refrain from making a joke about this.

The real lesson I got from this piece is that it's very hard to call a crash, even when it's happening. Of course people were starting to throw in the towel, most people weren't. Many people thought that the market was going to bounce back and that this was simply a correction. This may seem like naivete, but it's exactly the sort of complacency and overconfidence that sets in when stock prices have climbed for so long. Besides if you remember correctly, in October 1998, the market experienced a correction and then bounced back to continue its ascent. Why on earth wouldn't people believe that the same thing was happening?

In tomorrow's post, I'll discuss the lessons learned from Mark Gimein's story on downfall of AllAdvantage.

Craigslist

Over the weekend, I read this excellent profile of Craig's List by Wired writer Gary Wolf. It's amazing just how powerful the site is despite its resistance to innovation. I don't think that there is any obvious investing lesson here. It is interesting to note how the site continues to be the leader in so many categories while steadfastly refusal to incorporate many of the innovations of the web that surfaced in the last ten years. What really sticks out to me about the company is that they are very much in touch with what their users want. Apparently, their users don't want all the bells and whistles. I think that giving customers what they want, while seemingly obvious, is actually a point that needs constant emphasis.

You cannot invest like Harvard and Yale: Part II

I wrote about this back in 2007 after I read a Smart Money article ( written by James B. Stewart) about copying the investment methods of these two endowments. I'm bringing it up again because Kiplinger's is now pushing the same naive advice. I thought that I would re-examine the idea and give it a bit more attention than I did two years ago.

To be completely fair, the Kiplinger's article does acknowledge that an individual cannot completely duplicate the strategies of these two endowments. The author, Andrew Tanzer, notes

Unlike the rest of us, the funds pay no taxes and never perish. Moreover, the endowments have huge staffs and access to investments, such as private-equity partnerships and hedge funds, that are unavailable to the common folk.

These are two really big differences. Taxes significantly eat into investment returns. Mortality and life expectancy play a big part in asset allocation, risk tolerance, and the investment instruments.

Furthermore, let's look at some of the ETFs that the Kiplinger's article recommends you use in order to replicate the strategies of Harvard and Yale. First of all, an ETF or a stock is not the same as investing in the physical asset. Investing in a REIT or REIT ETF is not the same as owning real estate. Owning a commodity ETF is not the same as owning an oil& & gas partnership in Oklahoma or a grain elevator in Iowa.

If you haven't read Pioneering Portfolio Management or Unconventional Success by David Swensen, please do. These books illustrate well the tremendous advantages that major institutional investors like big college endowments enjoy. Harvard and Yale have access to the creme de la creme of alternative investments. They can pick and choose exactly where they place their money. Their staffs have incredible access to the top managers as well as knowledge of their strategies. They can perform the type of due dilligence that you and I can only dream of. Harvard invests a good amount of money in timberland. They also have a lumberjack on staff.Hell, David Swensen even turned down Eddie Lampert years ago. Why? He wasn't forthcoming enough about how he was going to invest their money. That's how picky they can be.

Let's say that you did qualify as an accredited investor and could technically invest alongside Harvard and Yale. Many of the biggest and best venture capital, hedge, and private equity funds are closed to new investors. That is, unless you have a relationship that can get you in the door.

However, let's not diminish the importance of size and reputation. Yale and Harvard have billions to throw around. They also have two of the most impressive brands on the earth. They can give instantly credibility to any manager out there. You don't think they use this leverage to secure the most favorable terms that they can?

Think about it like this. Harvard and Yale are like a rich, handsome, well-endowed, smart tycoon that all the prettiest women in the world want to date. He can perform complete background checks, DNA, and psychological testing on any potential beaus. He literally has to have bodyguards in order to fight off these women. It must be nice.

So don't worry about trying to copy Harvard of Yale. You can't. You have to find an investment approach that works well for your personality,financial situation, and goals.

10 More Investment Mistakes

Back in 2007, I wrote a post about the top 10 investing mistakes that I've made. I'm happy to admit that I've stopped making some of them, but I still make far more of them than I'd like. It's important to remember that investing is a process that involves not only learning new lessons, but re-learning old one. With that in mind, I took a hard look at myself and determined costly mistakes that I still make. Hopefully I can eliminate one or two of these habits and raise my returns by a percentage or two.

1. Using a market instead of a limit order. I usually do this because I'm overeager to establish a position. I need to learn patience.

2. Not scaling into a position, either when buying or selling. This is form the same reasons mentioned above.

3. Selling winners and keeping losers. Wishful thinking doesn't produce winning investments.

4. Investing without a goal or plan. The way you invest for a taxable account should be different than how you approach growing your 401(k).

5. Ignoring asset allocation. Stocks have outperformed bonds over the last 200 years, but bonds have outperformed stocks for some really long periods during that time. While I feel that your portfolio should have an equity bias, don't ignore bonds, especially when they're cheap relative to stocks. Valuation is really important. Also, don't forget to re-evaluate and re-balance your portfolio periodically.

6. Not having a plan for selling. I know that Buffett says that his ideal holding time for a stock is forever. It just isn't mine.

7. Buying on a hunch or impulse. In my experience, this ends in losses more often than not. Then again, it could be that my hunches are generally terrible.

8. Expecting an immediate gain from a purchase. It can take a while for the rest of the market to come to the same conclusion as you. Give them a little time.

9. Comparing your results to those of others. Comparisons are never kind. Don't do it.

10. Not stepping away from the market periodically. There are a lot of things that become clearer once you get some distance between you and the ticker.

Most of these erros are the result of a lack of discipline and a lack of patience. These are two of the hardest things to develop, but getting better at them will yield significant gains for your portfolio.

10 investing lessons from Michael Lewis

I've recently started reading Panic: The Story of Modern Financial Insanity. Michael Lewis has edited a compilation of magazine pieces about various financial meltdowns, from the crash of '87 to our present subprime fiasco.

There are a lot of good pieces in the book, but I gravitated to the pieces by Lewis himself. In particular, I loved a piece he did for the New York Times Magazine back in October 2002. It's called "In Defense of the Boom." Before you dismiss it as glib sophistry, please read it. It might be the most dispassionate, well-reasoned, even-handed summary of the benefits and deficiencies of the Internet Bubble. Even though it was written nearly six years ago, it's still a really relevant piece, actually, it's more prophetic than relevant.

The same boosterism and asleep-at-the-wheel regulatory bodies and media were just as present in 1997 as they were in 2007. Though the Internet boom had it's poster boy in the form of Henry Blodget, this era has yet to name one (Bernie Madoff and Angelo Mozillo are probably ranked 1 and 2 for this dubious honor). In hindsight, we often pillory booms as some sort of amorphous collective haze that obscured everyone's vision. Lewis paints a different, more nuanced picture. Booms are a byproduct of an intensely competitive, self-interested people and system (capitalism). He accurately points out that wealth is not so much destroyed as transferred (I think Gordon Gekko, made a similar point in Wall Street, but I digress).

Anyway, read the piece and make your own calls about it. However, I took away five points from it that I think could benefit every investor. These points aren't necessarily new or original, but they are easily forgotten.

1. Booms and busts have always been with us and always will be with us. You can't repeal the law of supply and demand or eliminate the business cycle.

2. Booms produce benefits that can't accurately be quantified and who's beneficial nature may not be apparent for years.

3. Brokerage analysts are useless.

4. The people who ought to know better(institutional investors and smart financial journalists for example) are no better equipped emotionally than retail investors to recognize and/or avoid a bubble.

5. The media is very adept and creating heroes and than tearing them down. Jeff Bezos was Time's Person of the Year in 1999.

6. The Internet is a new technology, but is still like all other previously new technologies. It's pros and cons will be overstated.

7. Human nature will never change.

8. Good or bad, even profitable, depends largely upon perspective. As Obi-Wan Kenobi famously said, "many of the truths we cling to depend greatly on our point of view”

9. Failure is useful. Even if you don't learn from it, someone will.

10. The business of America is business. As Michael Lewis, so eloquently points out in the article:

There's plenty to criticize about American financial life, but the problems are less with rule-breaking than with the game itself. Even in the most fastidious of times it is boorishly single-minded. It elevates the desire to make money over other, nobler desires. It's more than a little nuts for a man who has a billion dollars to devote his life to making another billion, but that's what some of our most exalted citizens do, over and over again. That's who we are; that's how we seem to like to spend our time. Americans are incapable of hating the rich; certainly they will always prefer them to the poor. The boom and everything that went with it -- the hype, the hope, the mad scramble for a piece of the action, the ever escalating definition of ''rich,'' the grotesque ratcheting up of executive pay -- is much closer to our hearts than the bust and everything that goes with it.

These are all great lessons that will hopefully allow to keep your head during the next boom. They might not be able to keep you from being swept up in it, but they might help you bail with some money in your pocket before the ride comes to its inevitable end.

China Crescent Enterprises earnings announcement

Yesterday, CCTR announced that a record $1.1 million in earnings on revenue of $17 million for the first 6 months of this year. Today and tomorrow, they will broadcast two webcast detailing their expansion into Africa and information about a new business totalling $30 million.

I'm still investigating the implications of Newmarket Technology's (NWMT.PK) majority ownership of CCTR. I gleaned this bit of information from a letter to NWMT shareholders written by CEO Philip Verges:

China Crescent Enterprises, Inc., a regional subsidiary in which NewMarket is the majority shareholder, recently filed a preliminary information statement. The purpose of the information statement was to inform China Crescent shareholders of a planned recapitalization. NewMarket plans to reverse split the common stock of China Crescent in addition to the possible conversion of a portion of NewMarket’s preferred China Crescent stock into China Crescent common stock.

One objective of the planned recapitalization is to support a dividend distribution of China Crescent stock to the shareholders of NewMarket. NewMarket management is currently working with China Crescent management to develop a plan that would include the conversion of a portion of NewMarket’s preferred ownership into common stock and the dividend of that common stock to the shareholders of NewMarket. Such a dividend distribution might require an increase of authorized China Crescent stock, and as such, the preliminary information statement included a plan to increase the authorized stock.

The rough translation of those two paragraphs is "we really want to give our shareholders a dividend in the form of CCTR stock. To this end, we're going to dilute the hell out of CCTR."

Given this, I would recommend that you keep your money on the sidelines for now. It's still unclear what the intentions of Newmarket Technology towards China Crescent.