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OTC Journal Members:
Away- This is not Your Kind of Market
|After spending many years
in Wall Street and making and losing millions of dollars I want to tell
you this: It was never my thinking that made the big money for me. It was
always my sitting. Got that? My sitting tight!
Excerpt From "Reminiscences
of a Stock Operator" by Edwin Lefevre
Those words were taken from a book
I am currently reading. This classic tome is highly recommended by notables
like Marty Zweig, Kenneth Fisher, and Worth Magazine.
Reminiscences of a Stock Operator
was first published in 1923, and takes place around the turn
of century. I have read about 25% of the book, and I feel as if I am reading
about today's market. The book recounts the experiences of Larry Livingston,
a professional trader from the age of 16 who made and lost millions in
the stock market. I recommend it highly. It's a fascinating book. Akin
to baseball at the turn of the century, the technology, the playing fields,
and amount of money have changed, but the fundamentals for success remain
It seems Livingston made and lost
millions as a speculator in the markets until he finally figured out the
true secret of accumulating wealth. He made $300,000 shorting rail road
stocks after the San Francisco earthquake, but gave it all back betting
against the ensuing economic recovery after the disaster (sound familiar?).
$300,000 in 1901 probably equates to something like $30 million in today's
After years of making and losing
millions, Livingston finally determined he made the most money by sitting
through tough markets and allowing your holdings to mature.
We are in a unique market environment
right now. 1900 is acting like a magnet for the NASDAQ. We can't make any
progress in either direction, and volume is extremely light.
If you want the negatives, just read
the newspaper. Skyrocketing oil prices, increasing interest rates, and
horrors associated with the war in Iraq and the Israeli/Palestinian conflict
dominate the headlines.
On the plus side, many of the companies
I speak with on a daily basis are delivering very exciting corporate developments.
I have been involved in the microcap world for nearly 17 years, and I have
never had so many small companies anticipating such dramatic growth rates.
Of the seven companies on the "current
profiles" list for the OTC Journal, all could grow substantially
this year, at least five will have double digit growth rates, and two or
three could deliver 300% to 400% growth.
The market was red hot from March
of 2003 to January of 2004. Against that thinking, all the major equity
indexes are down for the year. No sectors have been exempt from the sell
If you believe as I do that this
is a correction in an ongoing bull market, you should be accumulating your
favorite stocks on dips. It is an excellent market environment to wait
for pullbacks. American Water Star delivered that kind of opportunity
this past week.
However, if you believe March of
2003 to January of 2004 was a correction in an ongoing Bear Market, you
should sell all your stocks and keep your cash on the sidelines.
In either case, avoid the temptation
to "overtrade" with your money. Stocks are not breaking out or breaking
down. Trading for a quick profit in this market environment is futile.
You will simply churn up your own capital for little or no gains.
There were plenty of trading opportunities
last year, and I believe we will have plenty of breakouts when this correction
is over. In the interim, hold your positions and accumulate more on dips.
The only stocks I have sold in the last two months were in companies who's
corporate results were unacceptable. Price was not a factor in my decision.
Aside from that, I have paid little attention to the level stocks are trading
or to my brokerage statements. I believe the good growth companies will
trade up when market conditions improve. I don't know exactly when that
will be, but I will be ready when some of these stocks are more fully valued.
On Monday, look for an edition covering corporate results from the March
quarter for several of the companies I follow.
In the interim, I am planning to
visit several of the companies I cover in order to get a first hand look
at operations. I was at American Water Star Thursday, and couldn't
be more excited about the future of the company. During the first week
of June, I will be visiting NeWave, NetWork Installation, and Family
Room. I visited with VirTra Systems in April, and expect great
things out of them.
If these companies grow and prosper
you will eventually make money in the stocks. While we're slugging through
this tough and indecisive market, don't churn your own account. Accumulate
dips and have faith. American Water Star is a great example. They
just delivered 73 truckloads of their exciting new beverage to Wal-Mart
Superstores. Free demos start on Monday. Early reports say the product
is already selling well. So far, they are only in 1400 stores. If the beverage
sells well, they will likely be in all the Wal-Marts and the Sam's
Club, which could easily equate to $100 million in annual sales. I've
tried their beverage and love it. Why would anyone sell the stock at this
Here's a press release from one of
the aforementioned companies that should deliver double digit growth and
Room Entertainment (OTC BB: FMLY) Expects to be Cash Flow Positive Next
Fiscal 2005 begins July 1st for Family
Room, and the company was out today predicting it would turn cash flow
positive from operations for the first time in its history.
Family Room is clearly in
the throes of a major paradigm shift. The level of projects they are producing
in 2004 far outstrip anything they have done to date. Early this year they
produced Justin Timberlake's first movie, and his name is sure to
bring a big demographic to the film's audience. Two Oscar winners: Kevin
Spacey and Morgan Freeman costar in the film.
As disclosed in today's press release,
Room will produce four more major films throughout the remainder of
2004. They are doing two more Steven Seagal movies, 88 minutes
starring Al Pacino, and collecting an outstanding cash fee from
the remake of the AmityVille Horror.
The Pacino movie represents
a major breakthrough for Family Room. Until now, the company has
collected its producer fees during the making of its films, and some minimal
For the first time in Family Room's
history, they will receive of percentage of box office receipts on 88
minutes once the film exceeds certain thresholds. They have never
received this kind of back end revenue on any past productions. This is
a major breakthrough for the company, and is symptomatic of a growing reputation
for getting the films financed and produced.
In light of this new calendar of
business, the management of Family Room is formally projecting the
company will turn cash flow positive from operations in fiscal 2005. The
funds will flow from producer fees only- there is no expectation of back
end royalties in their forecast. The company will probably take all the
right downs possible in the March and June quarters to set the stage for
Potential windfalls from this year's
productions will come in 2005 from the box office. That's what makes the
company a great speculation. There are about 60 million shares issued and
outstanding, meaning the market is only placing a $6 million value on the
company. A mere $1 million windfall would equate to $.16 per share in earnings,
more than price the stock is now trading at. They expect to be profitable
in fiscal 2005.
I don't know what the catalyst will
be, but sooner or later................ Accumulate.
Here is the complete text of the
|Press Release Source:
Family Room Entertainment Corporation
Friday May 21, 4:30 pm ET
Family Room Entertainment
Anticipates Positive Cash Flow for Fiscal 2005
WIRE)--May 21, 2004--Family Room Entertainment Corporation (OTCBB:FMLY
- News) is excited to announce that it anticipates being "cash-flow" positive
for the Fiscal Year Ending June 30, 2005.
Family Room's assumption
is based on the producer fees it is to receive from four scheduled projects
slated to film in early fiscal 2005: MERCENARY, starring Steven Seagal;
SUBMERGED, also starring Steven Seagal; 88 MINUTES staring Al Pacino; and
AMITYVILLE, which Dimension and MGM are scheduled produce this summer.
Family Room anticipates
the producer fees expected to be generated by the four films that are already
scheduled to go into production in fiscal 2005 will allow the company to
be cash flow positive for the first time in corporate history. Additional
monies could accrue to the company in fiscal 2005 and 2006 based on the
financial success of these movies in marketplace (i.e. "contingent compensation").
Family Room also has additional motion pictures in development, which the
company anticipates will also be produced in fiscal 2005, such additional
productions could add additional revenue to Family Room's bottom line.
Family Room is also expecting
to set a precedent with the motion picture 88 MINUTES in terms of its contingent
compensation. Although the final terms for Family Room on this project
are still in negotiations, the company expects to receive "box office bonuses,"
with such amounts to be immediately due and payable to the company when
certain pre-negotiated box office thresholds are reported in the entertainment
trade paper Daily Variety. Family Room is hopeful that all future movies
similar to 88 MINUTES will provide for box office bonuses.
Family Room Entertainment
Corporation, with its subsidiaries, Emmett Furla Films Productions, Emmett
Furla Films Distribution and EFF Independent, is a publicly held company
trading on the NASDAQ Bulletin Board under the symbol "FMLY." Family Room
Entertainment develops, produces and performs production related services
for the entertainment industry. Family Room Entertainment's aim is to create
and produce high quality motion pictures with high profile talent that
can be distributed to a worldwide audience. FMLY derives its income from
producer fees, consulting and service fees as well as its participation
in the profits of the various pictures it produces.
The FMLY co-founders,
Randall Emmett and George Furla, believe that they have the expertise and
contacts within the entertainment industry, specifically in the competitive
production and distribution arenas, to profitably acquire content, package
product by adding value to the content with top quality talent and produce
motion pictures which are in the moderate to higher level budgets, which
can be distributed to a mass worldwide audience. However, there is no assurance
that any motion picture, which has not yet been released, will be released,
that a change in the scheduled release dates of any such films will not
occur or, if such motion picture is released, it will be successful.
Safe Harbor: Statements
contained in this news release, which is not historical facts, are forward-looking
statements as that are defined in the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements are subject to risks and uncertainties,
which could cause results to differ materially from those, projected
This news release contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 (the "ACT"). In particular, when used in
the preceding discussion, the words "plan," "confident that," "believe,"
"expect," "intend to" and similar conditional expressions are intended
to identify forward- looking statements within the meaning of the ACT and
are subject to risks and uncertainties, and actual results could differ
materially from those expressed in any forward-looking statements. Such
risks and uncertainties include, but are not limited to, market conditions,
competitive factors, the ability to successfully complete additional financings
and other risks.
Family Room Entertainment Corporation
Dal Walton, 310-659-9411, ext. 127 (Investor Relations)
Source: Family Room
Charts Provided Courtesy