To OTC Journal Members:
 

For OTC Journal Members There Will Be Two SuperBowls

This Sunday the St. Louis Rams will square off against the New England Patriots in the most watched television event of the year. The Superbowl is the single most hyped sporting event, and hopefully this year it will be a good game. Hundreds of millions of viewers world wide will have their televisions tuned in to this event.

The St. Louis Rams are favored by two touchdowns, and most odds makers give the Patriots no chance. The SuperBowl has a well deserved reputation for being a blowout, with the outcome decided by the end of the first half. It's like the Presidential election. The media decides the outcome with only about 10% of the score being counted. Hopefully this year's SuperBowl will prove as close and entertaining as the last Presidential Election. Maybe the Supreme Court will have to decide the winner.

SuperBowl fans know the commercials can be the most exciting part of the telecast. Advertisers go all out in a creative competition as they have the opportunity to get their message to largest imaginable audience.

Fans of the OTC Journal will have the opportunity to watch one SuperBowl this weekend, and play in one next week. As we continue to remind you, our next profile will come out toward the end of next week, and we believe this stock will be the SuperBowl of small cap stocks for our members.

The stock will begin trading sometime between Wednesday and Friday, and check our home page frequently for an update. As soon as the stock opens for trading we will hit the send button on the mail server. It will take about six hours for the newsletter to deploy, and as always there can be technology delays on the Internet.

However, the banner on our home page will update you automatically, and you will be able to simply click on it to read the profile when the stock opens for trading. Hopefully we will be able to provide a more precise time frame in an edition early next week.
 

Small And MicroCap Stocks Avoid Wall Street Carnage This Week

The latest GDP and Unemployment figures came out stronger than expected this week, leading investors to believe the end of the recession is right on schedule.

However, this good news was overshadowed by scandal related selling early in the week. The Dow and Nasdaq were clobbered early in the week, slipping below 9700 and 1900 respectively.

The thinking on Wall Street was dominated by the belief that the Enron accounting scandal was just the tip of the iceberg, and other company's financial statements would come under increased scrutiny. 

Behemoth multi national Tyco (NYSE: TYC) was annihilated early in the week on fears they have been cooking the books. It was disclosed one of their directors received a $20 million payment for arranging an acquisition. Many feel this was a blatant conflict of interest.

Telecommunications giant Global Crossing (NYSE: GX) filed bankruptcy this week. Chairman Gary Winnick has taken $600 million off the table personally in the last five years. Quite a reward for failure.

Anadarko Petroleum (NYSE: APC) announced a $1.7 billion non cash charge to earnings in order to correct previous accounting issues. The stock fell nearly 8% on the news.

ImClone Systems (NASDAQ: IMCL) is being investigated by the SEC and the Justice Department. The company is accused of misleading investors on the highly touted colon cancer drug Erbitux. CEO Samuel Waksal told investors on a conference call that he was "stunned'' at the FDA's decision to refuse the cancer drug application for Erbitux. However a copy of the FDA's rejection letter was obtained by The Cancer Letter. It suggests Waksal and his brother Harlan knew, or should have known, that the FDA had serious concerns about the way the company conducted a key clinical trial. Harlan Waksal filed a Form 144 with the SEC on Dec. 6 to sell $52 million worth of ImClone stock.

Wall Street is afraid earnings and accounting scandals will dominate financial news for some time to come. Arthur Andersen generated $50 million in accounting fees from Enron last year, and companies like Enron have a lot of muscle with their auditors. In order to win the business, the consulting arm comes up with the tax avoidance scheme and earnings enhancement method, and the auditing division implements the strategy. 

Like a weight lifter taking steroids, large cap companies are addicted to beefing up their financial performance at any cost. And just like the weightlifter taking steroids, this performance enhancement is not only toxic long term, it is also illegal.

In the small and micro cap arena there is significant risk associated with failed corporate performance. However, these smaller companies do not have the fiscal muscle to make their auditors bend the rules to enhance financial performance. You won't see many small company scandals associated with accounting irregularities. Their auditors take a much more conservative approach, as the auditor is more concerned with covering his own butt than collecting the reduced fees.

During this past week, while Wall Street was annihilating several of its large cap favorites, Cross Media (AMEX: XMM) and Energy Power (OTC BB: EYPSF) both traded up. Small stocks still remain a preferred and level playing field for individual investors. 

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All statements and expressions are the sole  opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

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