(Editor's note: This is an
Op-ed piece by guest columnist, Thom Calandra, who is also an
angel investor in Vator.) Thom can be reached on his Vator profile, by
TIBURON, Calif. -- There are only seven people in the world of airline queues and hotel lobbies who will listen to a truly innovative idea. OK, maybe there are eight on a good day.
I like to look at "the market" for new ideas as one for innovation and not for CUSIP-branded paper that deadlines at 4 p.m. Eastern. That market-- the one for stories -- takes place each day in the stock market. And, right now, the floors of the various exchanges around the world are distorted as all heck. I mean, if you are an investor in small companies with big ideas, you are getting trashed, down 30 percent, 40 percent in the past six weeks alone.
The market of stories, AKA the stock market, is going through an almost invisible belt-tightening, and it is practically squeezing the life out of anyone, like myself, who believes in tiny companies with heady plans but small balance sheets. For those looking to double or triple the value of their holdings in a year or less, today, tomorrow, the next day are the best windows I've seen in many years for diving in, if you believe in the ‘ideas' that mark a potentially great small company.
So, yes, I'm back!
I'm putting on the hat of investment guru after my fall, but I'm not dispensing specific tips in this piece. (Let me consult my attorney on that one!) As some readers probably know, I settled my legal case with the SEC almost four years ago and paid a pretty dime, too. Instead, here is what is compelling about what is going on today in "the market," the market for innovation. Most of these insights come from keeping in touch with Vator, a gathering place for smart cookies, and a privately-held company in which we, as in ‘the family and I,' own a small stake:
-- News Corp. will squander its most valuable part of Dow Jones, its online properties, in particular MarketWatch.com, unless it turns its financial broadcast properties into one seamless, entirely interactive and online media experience for investors.
-- Citizen journalism, community journalism, whatever you want to call it, is a crock. Sorry folks. Is it better than what 90 percent of the established media report to us as news? Sure, some of it is. But most of the new-media reporting, like the old-media reporting, is old news. Refried beans. Fishwrap. You're better off reading the obits once a week than you are reading what the big papers and networks, and the Internet, tells us is NEWS.
-- The prices of gold, platinum and copper, among other commodities, will double in the next year, and double again within three years.
-- Very little has changed since the peak of the Melt UP, a phrase I used often in my old days of dispensing investment ideas. We are still melting UP in some areas, most notably petroleum prices, lumber, metals and personally, my landscaping and teeth-cleaning fees.
-- Investors still cannot reach their stock brokers on the phone. Most Americans do not know how to buy a pure commodity. Or a bond. Most Euopeans and Asians do. Most Americans are still still paying too much in fees to undeserving financial managers.
-- Most of us have no idea when a stock is too expensive and when it is too cheap. Avian flu developers and pandemic-related life science companies are dirt cheap right now.
-- There is no such thing as smart money. There is only long-term money and short-term money. Find the folks who are willing to back an investment for five years, or more, and you'll find the closest thing to smart money.
-- Penny stocks -- as in developing companies that trade for $50 million of market capitalzation and less -- are the most likely way to earn enough to pay state and federal taxes, book a return worthy of a venture capitalist, fund your next generation's inheritance and retire to Tahiti. Also the most risky way. Just do your homework, which is something very few American investors, like their children in school I guess, want to do each evening.
-- Angel investing will create and destroy trillions of dollars of wealth in the next several years, rewarding those who do their homework and punishing those that do not. For example, Web 2.0 is a scam. There is no Web 2.0 or 3.0. It is all seat of the pants. The lap toppers creating successful next-generation technology and media companies are the same people who spawned Internet companies in the mid-1990s. They are flying by the seat of their pants, mashing up ideas that traditionally did not and might still not go together. Maybe one in four of the new breed will make money, and perhaps one in 10 will dominate their market segment.
-- Right now, I own three 'angel' investments, me and my family that is. We own tiny stakes in music and video mash-up FlipTrack.com, in angel networking channel Vator.TV and in Robert M. Friedland's nickel, platinum and gold mining interests in Africa. They are privately held. The good news is they are not liquid, so we are stuck, and the price is fixed, so no up and down in the old portfolio. The bad news is that they are not liquid.
-- The media, not just the financial media but all media, are not doing their primary job, the one we all learned in J-school: report news, as in new stuff, new ideas, new events, new people. It's a crime really that most of the media, even new media, report old news and views. The pack mirrors what the human race is all about: very few of us are cool enough, smart enough, brave enough, to be out in front, leading the parade.
-- Nearly all professional investors talk their own book and are not the best sources of information about a company. Ditto for CEOs, and CFOs. And most but not all venture capitalists. One of the few honorable and reliable barometers of value in the market today is the private equity profession. They have to get it right. Another are hedge funds, but only those that do not talk about their investments and truly understand the leaders in their specialty investment areas, understand them well enough to have home telephone numbers and personal e-mail addresses. Everyone else, with the possible exception of one or two very perceptive newsletter writers, is full of beeswax.
-- In the four years I have gone missing (writing my novel Pablo By Numbers and developing ThomCalandra.com), very little has changed in the market for innovation. Vator.tv is one of those changes for the good: an airport queue for folks looking for other folks with new ideas. Follow the ideas and you'll make the big bucks.
-- Finally, there are more hidden gems in the stock market and in the market for innovation today than in the fattest pipe of kimberlite a geologist can find in South America. There are hundreds and hundreds of life science and technology companies, for instance, that are selling for pennies that should be selling for quarters. A handful of energy companies as well. Find out who the buyers are today, and talk to them.
I'm one of them, and so far I am dead-in-the-water WRONG. I am a buyer of avian flu, of energy management companies and of cancer diagnostic and stroke treatment developers. They are all dirt cheap. They are all doing good deeds for their industries and their social circles, with the exception of making money. I paid more for their shares than they are selling for now. I do not mind a single bit. In fact, I welcome the destruction of wealth in these "names." It means I can buy more at cheaper prices.
(Editor's note: This is an Op-ed piece by contributing columnist, Thom Calandra, who is also an angel investor in Vator.) Thom can be reached on his Vator profile, by clicking here.