I guess this didn’t come through as much as I wanted it too, but the idea was that the book would save the investor time, not that it would take 11 hours a day. Services, such as Briefing.com and Seeking Alpha dramatically cut down the time it takes to do your research and keep up with information. The time schedule in the back was for illustration purpose and in the chapter heading I mention “few hours”. I apologize that this was not better explained.

Secondly, while the method is highly fundamental, it is more again to growth investing, than value investing. Or really it combines the best of both. This is what Warren Buffet does best. For example, Burlington Northern was both value and growth.

Lastly, its amazing how many smaller companies can dominate their markets, such as IMAX, FIO, ARMH, SINA, P, CREE, WNR, LULU, GMCR, CMG and the list goes on. It is likely true, that small caps are harder to come by, but there is an amazing group of smaller companies that exhibit this special “monopolistic” trait that gives them a higher probability of success.

Thank you so much for your thoughts. It is a great guide for the active investor and my sole purpose is to help people help themselves.

Please check out our facebook page: http://www.facebook.com/monopolymethod for ongoing help to make you a better investor!

Unfortunately, there are a number of assumptions and figures in your piece that are grossly inaccurate.

1. None of the 130+ sessions are sponsored. To state that “each breakout session requires a sponsor” is 100% inaccurate. The Institute creates and drives all of the sessions. Some sponsors have private, invitation-only sessions, but those are clearly noted on the program. And in some cases we work with sponsors who help us with panels that are clearly appropriate for this event.
2. You are correct that the Global Conference is the Institute’s main fundraising source. It provides much of the funding of our research throughout the year. But your estimated costs of how much we raise by this event are so ridiculously high as to be laughable (we wish your figures were true). To put it politely, you don’t know what you’re talking about.

Again, we appreciate your noting the Global Conference’s growing importance, but this posting is not an accurate representation of the conference, its operations or its financing.

I did mention at the end of the article that these types of risky stocks are best played with funds you can afford to lose, as you noted. Play as many as you want. If you buy a bunch of small biotechs, you do not have a diversified portfolio–you just have a large portfolio of potential losers. While the risk is now spread among many companies, that doesn’t necessarily mean that it’s any lower than by buying just one.

I can’t say whether it’s better to own the same dollar amount of a basket of risky bets rather than one blue chip such as Pfizer. Pfizer has lost stock value over the past 10 years but the loss has been somewhat mitigated by its dividend, something which speculative stocks don’t pay. (Also, if you had used a stop/loss you would have been out of Pfizer a long time ago.)

Let’s say you’re playing this scenario with ten stocks in your junk basket and by some lucky chance one of your ponies actually does turn into a beautiful colt. In that case, its stock is going to have to appreciate 1000% just to make up for the other nine losses (assuming an equal $ amount).

I have no idea what is the actual percentage of success for these types of speculative stocks (it would take a lot of research to find that out) and I’m not going to go on the record touting a basket of high-risk plays versus a low-risk one without knowing the actual numbers. My goal in writing this blog was to show how by wearing rose-colored glasses when looking at the market could be highly detrimental to one’s financial health.

Thanks again, Miles, for the great comment!

Dr. K

What if the investor owned 10 one-trick ponies—a ‘stable’ of stocks? In essence, what’s accomplished is creating one diversified company with 10 divisions. In this case, you have dedicated and focused managements committed to their specialized high-potential product areas—but diversified in areas of business to mitigate risk.

For example, say someone has a $100,000 stock portfolio made up of normally about 10% in each holding. Well, I would argue that the owning ten 1% holdings, each in one-trick ponies, might be far better than owning just one stock of modest potential. In your example, would it be better to own 10 specialized tech nano-caps than 10% in Pfizer?

However, your admonition on one-trick ponies is generally true because those clinging, ga-ga holders tend to concentrate their investments on just one big bet—sort of risk squared.

I like one-trick ponies. One should expect that some will fall by the wayside, but some will earn staggering returns. One element necessary with a stable of one-trickers is an ability to hold stocks even after major gains have accrued. Having some rule like “taking out your cost” after a ___% return, helps you stay in. After all, sometimes a “pony” less than 58″ high at the withers tricks people and turns out to actually be a colt after all.

Thanks so much for your article references. They didn’t show up on my search since I was only searching for blank check companies. I wish I had them when I was researching the article, and I suggest my readers reference them for further information on SPACs and blank check companies.

Too bad the arbitrage situation is no longer available–what a great opportunity I missed! Although as you say, trading them might have not been easy and it’s tough to tell what the bid/ask spreads might have been.

BTW, can you shed any light on the different classes of stock that many SPACs seem to have? Some of them have been doing exceptionally well.

Thanks in advance. Your knowledge of this little known area is much appreciated.

Dr. Kris

http://thedealsleuth.wordpress.com/2009/01/28/spac-liquidation-arbitrage-how-to-profit-from-hedge-fund-redemptions/

As of today, the spreads have narrowed to single digit yields. Those SPACs that have actually completed acquisitions are down for the most part:

http://thedealsleuth.wordpress.com/2009/07/28/cash-shells-spacs-mathstar-petrosearch-and-cadus/