Thursday, November 21, 2013
Message to the BCSC, OSC and friends
PS Dave - private placements to non-accredited investors.
The Vancouver Criminal Mobsters' Association must be very happy that they're now going to be able to dump their worthless paper into the lap of some soon-to-be-divorced-and-bankrupt amateur-investor dentist from Trois Rivieres.
I assume this initiative is being pursued because the institutions have given up on Venture placements, the major Inwentash-level players are stuck under a mountain of illiquid junk, and the smaller accrediteds are all bankrupt or have left for greener pastures like broad market index ETFs.
Because the paper you're printing is shit, guys.
You've got a massive oversupply problem: instead of simply printing paper to pay for those 5% of explorecos who are serious at their work and might, in the aggregate, still be able to turn a profit for investors, you're also printing stacks of extra paper for the 95% of the Venture that is run by lifestyle clowns and hucksters.
In fact, the principle of compound interest suggests that the huckster proportion of paper will multiply over time til it becomes almost all the paper on the market, since it's so much more dilutive.
The best you can expect from this extension of private placements is to stave off the utter collapse of the venture market for another year or two. Because eventually every hayseed who buys into this crap will get zeroed out too, just like the instos and accrediteds, and then you'll have eliminated yet another dumping ground for your massive oversupply.
If the BCSC and OSC had simply done their jobs over the past five years, instead of belatedly getting around to addressing problems in just the past few months, then maybe there'd still be a market for this worthless shit paper.
Unless you first fix the underlying problem of total lack of demand due to rampant nearly-universal fraud, this initiative will not be in the best interest of the capital markets, investors, or the funding of legitimate enterprise generally.