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Home / About Us / Message Message   Core Philosophy We believe that markets are frequently inefficient in their assessment of the fundamental speculative potential of high risk ventures, particularly those involved in resource or energy exploration. Inefficiencies arise through market mis-understanding of a play's potential, as well as simple lack of awareness for undervalued plays and excessive awareness for overvalued plays. The stocks we focus on rarely have intrinsic value in the form of cash flow generating capacity. Instead, they are ventures which marry human ingenuity, work and capital in an effort to demonstrate that real cash flow capacity exists in the form of an economic orebody, oil field or technology. When investors buy such a stock they are speculating on an uncertain outcome whose scale and associated success probability can be estimated on the basis of existing information. Our rational speculation model asserts that there is something called speculative value which rests on the risk-reward principle that fair speculative value prevails when the payout deliverable by a successful bet matches the underlying probability that the bet will be successful. Good value prevails when the payout would be better than the probability, and poor value prevails when the payout would be less than the probability. Using a gambling analogy, a fair bet is one with 10:1 odds that will pay 10:1, a poor bet is one that has 10:1 odds but will pay only 5:1, and a good bet is one that has 5:1 odds but will pay 10:1. Venture speculation is similar to gambling, but vastly superior in that the public market is an ongoing debate about the true scale and probability of a project's outcome. It is into this debate that inefficiencies often creep and create good speculative value. Our goal is to spot such inefficiencies for our subscribers, or make it easy for subscribers to identify such inefficiencies. What makes venture speculation superior to gambling is that because poor or good speculative value offers profit potential, the market tends to adjust upwards or downwards the price until it settles into fair value mode as speculators seek to exploit the poor or good speculative value. When this happens the longs or shorts make profits they can cash in even though the outcome of the "race" is not yet known. Furthermore new information such as drill results arrives all the time, changing both the scale and probability of the target outcome. These changes are reflected in the stock's price. Who ever heard of somebody cashing in their bet during the middle of a race because their horse surged ahead to lead the pack? But that is exactly what penny stock speculators get to do when their company pulls a good hole! This process has been enhanced by the arrival of the Internet, which provides a feedback and discovery mechanism for a vastly larger audience than has ever been possible. We also believe that the valuation potential of speculative ventures is linked to market cycles that in turn are related to fundamental cycles such as economic growth and commodity prices. More localized market cycles such as area plays spurred by major discoveries are also part of the speculation arena. The rational speculation model acknowledges that these market cycles generate peaks and valleys of irrational optimism and pessimism which can create poor or good speculative value across the board for speculative juniors. We like gold, base metal, diamond and other mineral exploration plays because they not only offer individual potential for big rewards, but they are capable of getting caught in a rising tide generated by a sectoral bull cycle like rising gold prices. We must emphasize that we are not "gold bugs" in the sense that we believe there is something more special about gold than any other metal. We don't care what the commodity is as long as either the individual play has potential to deliver an orebody at the prevailing commodity price or the commodity in question is clearly in an uptrend. Our approach is contrarian in the sense that we look for stocks that are unpopular and buy them on the speculation that they will become very popular. When stocks become popular we focus on selling strategies that maximize reward and minimize risk. We recommend a basket portfolio approach of at least six speculative ventures. Our bottom-fishing strategy is summed up in our "Bottom-Fishing Rules". We specialize in Canadian securities because the disclosure and regulatory requirements for TSX and TSXV listings are much better suited for speculative ventures than their American counterparts. In addition, TSX and TSXV listings are traded through order driven electronic trade execution systems that offer investors "what-you-see-is-what-you get" and "first-come-first serve" trade execution. Who is our target audience? Kaiser BottomFish Online targets several audiences ranging from novice investors eager to learn about speculation to industry professionals looking for a shell. The only common bond among these audiences is that they are willing to trade companies listed on Canada's TSX and TSXV exchanges. Companies are classified into one or more of five groups, each of which is geared to a certain segment of the target audience. Everybody pays US $250 per quarter on an automatic renewal basis or $800 on an annual basis for a KBFO membership. How you use your membership depends on your interests, needs and objectives much as would be the case with a health club membership. A one time one month trial membership is available for US $100. Featured stocks break down into the following categories, all of which are part of the Canadian venture capital spectrum. Bottom-Fish These are companies which meet John Kaiser's "bottom-fish" criteria, which include a "bottoming" chart pattern and the potential to mount a speculation cycle with a peak at least 500% above the bottom-fish accumulation range. A formal system exists to review, rank and close out bottom-fish. Only bottom-fish are the subject of buy, sell and hold recommendations. A bottom-fish ceases to be a "buy" once it rises above its bottom-fish accumulation range even though John Kaiser's analysis clearly indicates he believes the stock is going higher. You are not following the bottom-fishing strategy if you jump into a bottom-fish after it has launched a speculation cycle. The drawback of buying "bottom-fish" is that the timing of a speculation cycle is either uncertain or well down the road. Impatience is the greatest enemy of successful bottom-fishing. The TROCL Risk system has been developed to help bottom-fishers see a company's risk profile. Analytical coverage is geared toward optimizing the selling strategy as the stock works its way through a speculation cycle. Partial sells are issued in the context of the bottom-fishing strategy, which seeks to manage risk through a portfolio approach. A bottom-fish which launches a major speculation cycle may also end up classified as a "game-fish". We recommend that novice subscribers limit their speculation strategies to "bottom-fish" until they understand how easy it is to lose money trading "game-fish". Ex-Bottom-Fish These consist of former bottom-fish which have been closed out either through dud declarations or a series of "Spec Cycle Sell" recommendations. They remain in the system for historical purposes, the possibility of recycling as "shells", or as "game-fish" that continue to promise trading opportunities. The number of duds is linked to the market cycle, with the greatest number of duds arising from bottom-fish adopted during bull markets. Subscribers should avoid companies listed exclusively as "ex-bottom-fish". Game-Fish These are either former bottom-fish which John Kaiser has closed out too soon, or companies which he identified at a stage when they no longer met formal bottom-fish criteria but still had interesting speculative potential. We do not push a "bottom-fish" into "game-fish" status until it has become "ex-bottom-fish". Mr. Kaiser does not offer buy-sell recommendations for "game-fish", but does monitor their key projects for poor or good speculative value which he may evaluate in the context of the rational speculation model. "Game-fish" also often provide the context for understanding the potential of "bottom-fish" that have not yet made it onto the market's radar. Although we do not issue game-fish recommendations, subscribers may use "game-fish" coverage as a tool for identifying trading opportunities. The "Skyline" charts have been developed as a quick way for subscribers to recognize the strengths and weaknesses of "game-fish". "Game-fish" tend to be volatile and consequently provide considerably more entertainment to speculators than bottom-fish. The drawback of "game-fish" is that they are vulnerable to fundamental or market cycle related setbacks which can collapse the stock's speculation cycle and deliver significant losses. "Game-fish" are for subscribers who lack the patience for "bottom-fishing" and wish to apply the rational speculation model. Shell-Fish These are companies which are shells in the sense that they are still at an early life cycle stage and do not yet have a project capable of driving a speculation cycle. A typical shell is a company that has been reorganized with a rollback and had its structure rebuilt through debt settlements and cheap private placements. Often control of the shell is for sale to new groups with a fresh story. This type of stock was the focus of the Kaiser Bottom-Fishing Report during its earlier years, but is no longer the model for the adoption of a stock as a formal bottom-fish. Such stocks are included in Kaiser Bottomfish Online because they appeal to a specialized group of subscribers who have long followed the Kaiser Bottom-Fishing Report, and because they often abruptly mutate into very interesting game-fish. Apart from monitoring the structure and people network behind shells, John Kaiser does not provide analytical coverage of shells. Subscribers should ignore "shell-fish" unless they have a very sophisticated understanding of the mechanics of speculative markets. Diamond Stocks John Kaiser has been covering diamond exploration plays since 1992 when Chuck Fipke's Dia Met put Canada on the world's diamond map. In the process he has acquired in-depth knowledge of the diamond sector and is one of the few independent analysts who both understands diamond plays and follows them closely. He believes that within 20 years Canadian diamond mines will supply as much as 50% of the world's annual rough diamond revenue. Because diamond exploration can deliver extraordinary gains for junior companies, he has committed to follow this sector. Diamond stocks are especially well suited for analysis using the rational speculation model. Accordingly all serious diamond exploration companies are featured in Kaiser Bottomfish Online. The depth of coverage will vary among diamond stocks. Some diamond stocks are also listed as "bottom-fish", but none are listed as "game-fish". Our goal is to keep subscribers informed of developments in the diamond exploration sector. Diamond stock coverage is aimed at that subscriber segment interested in diamond plays and John Kaiser's expertise in this sector. |
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