To OTC Journal Members:
 

The Stock Market- No Place For the Faint of Heart

As our current profile Diomed (AMEX: DIO) continues to slide towards the $4 level, down from the $9 high set just 10 short days ago, we are reminded that the stock market is not the easy profit panacea it was pre March of 2000. In fact, the market is not for the faint of heart or those who cannot afford risk.

The relentless smear campaign on the stock continues, and short sellers are winning for now. In this era of mistrust spawned by the Enron disaster and Arthur Anderson indictments, the media is in a shark like feeding frenzy for anything that could be remotely controversial. Short sellers are using the media to help scare investors into selling this stock, and it is working. Our congratulations. The execution of your game plan is impressive.

Like a football team down by two touchdowns after the first quarter, supporters of the company have been outplayed, but the game is far from over. In fact, it is not just a game; it is an entire season which will last for years. The best team will win in the long run, and the only thing that will matter is Diomed's corporate performance.

We still believe there will be one high profile article, probably in Barrons, which will yield the all time low. The article will focus on everything but the company, and short sellers will be screaming I told you so from the mountain tops. This will be the ultimate buying opportunity for those that can filter the rumor, innuendo, and exaggeration from the truth. Look for it this weekend. We hope it comes out. The anticipation of its publication is giving short sellers courage. Just like investors on the long side, short sellers need an exit strategy, and high profile negative publicity is just what the doctor ordered.

Visit Diomed's message board at the Yahoo! quote site. A few detractors are screaming with glee as the stock drops, but there's not much fact about the company. We find it very entertaining.

In the interim, we believe the stock is now trading at a virtually risk free entry level. Extremes can be opportunities, as we proved last year with Energy Power (OTC BB: EYPSF).
 

Energy Power Systems (OTC BB: EYPSF)- A Case in Point

Energy Power was our most featured company in 2001. We launched our coverage of the company on February 10, 2001 at $2.90. The stock finished the year at $4.55 for a net gain of 57%, a mammoth windfall in these market conditions. This performance is even more outstanding when one considers the NASDAQ was down about 21% for the year.

In 2001 we published 36 editions either featuring or mentioning the company, and our coverage generated significant profits for many of our members. The chart reveals that a 57% return was not the whole story. Look at the chart and imagine the profits you could have generated simply by trading this stock at the extremes. 

Throughout 2001 Energy Power had six major swings where the bottom fell out of the stock rapidly. Each of those drops was followed up by a dramatic surge to the upside. In each case, you could have nearly doubled your money within a matter of days or weeks, but it took courage to act when fear ruled.

Energy Power, just like Diomed, was also the target of multiple smear campaigns. However, during 2001 the company grew, turned profitable, and investors made money.
 

Diomed (AMEX: DIO)- Is a Similar Pattern Unfolding?

A quick glance of the chart reveals Diomed has been crushed in the last 10 days. Fear rules the day as investors wonder if the company has any merit, and short sellers are winning the game.

While it is too early to tell for sure, a pattern may be developing similar to Energy Power in 2001. Trading the extremes in Energy Power proved very profitable in 2001, and we believe the same scenario will unfold in 2002 for Diomed.

Despite all the bashing of the company on message boards and in the media, there is one fact which is indisputable. Those who have taken the time to read the 140 page 8K SEC filing detailing the reverse merger had the opportunity to review the independent valuation prepared by Atlas Capital Services.

Atlas Capital is a Wall Street based financial services company which was retained to render and independent opinion of the valuation of Diomed. You can learn more about Altas at www.atlascapitalservices.com.

According to the 8K filing with the SEC, Atlas independently determined Diomed to have a value of at least $141 million. At today's prices, the company is trading at a value of only about $120 million. This does not mean the stock cannot go lower. However, we believe that based on Atlas's independent valuation, the stock at these levels is about as risk free as a small cap stock can be.
 

Why All The Excitement About Diomed?

Diomed issued a press release late Tuesday evening which gives investors some insight as to why shareholders have high expectations for the future of the company.

Late Tuesday the company revealed that Massachusetts General Hospital plans to offer Diomed's EVLT for the safe and effective elimination of varicose veins by the end of this month.

Massachusetts General is one of the highest profile and most respected hospitals in the world, and the first of many hospitals and clinics we believe will offer this procedure. This is the first formal announcement from a treatment center indicating they will offer the procedure.

Diomed just received its FDA Approval in late January to begin offering the EVLT procedure.  EVLT is proven to be the most effective and least invasive treatment for varicose veins. 

Mentally fast forward two years and imagine five hundred hospitals worldwide offering EVLT. Visualize each of those hospitals performing an average of three procedures per day, 250 days per year. This equates to 375,000 EVLT procedures being performed in 500 hospitals yearly. Of course you have to be willing to take the risk this scenario will at least partially unfold, and you have to think long term.

The disposable fiber used in each procedure earns the company approximately $250 in gross profits. 375,000 procedures each year would yield $94 million annually in gross profits. This does not factor in the profit margin for selling the original laser or the profits from PDT therapies.

Is it any wonder investors are willing to take the risk on shares of Diomed with this kind of profit potential?

We have published this edition because we believe Diomed is trading at a nearly risk free level, and now is the time to load up. No doubt the bashing and smear campaign will continue, and as a result lower levels are possible. However, remember that short selling represents future buying as positions eventually have to be closed out.

On behalf of our members we would like to thank the perpetrators of the smear campaign. We never thought our members would have the opportunity to participate in Diomed at these levels, and if the company ends up prospering, profits will be enjoyed by courageous investors.

Here is the complete text of Tuesday's New Release For Your Review:
 

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MarketByte LLC has been paid a fee of $100,000 in cash and 250,000 options convertible into free trading shares, exercisable at $3.50, by the Mohammed Patel, an individual, for publishing information on Diomed Corp for a period of one year. MarketByte LLC has been paid a fee of 125,000 shares of free trading stock of Energy Power Systems Limited for representing the company for one year. The fee has been paid by Fieldston Traders LTD acting on behalf of the company. Please review our policy on selling shares found in our Mission Statement on our home page.

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