To OTC Journal Members: 

Many thanks to those stalwart readers who pointed out the error in yesterday's edition wherein I delved back into the murky of depths of Mark to the Market accounting on the banks. Before I get to the correction, I'd like to point out some additional information on this issue that came to light today. 

The venerable Art Cashin, the director of trading for UBS, made his annual St. Patty's Day appearance on CNBC this AM. Cashin is one of the few guys who really has his finger on the pulse of the markets, and is worth listening to. If you tune in and happen to catch him pay attention.

He was asked if an adjustment to Mark to the Market accounting for the banks would make a big difference, and he said he felt it indeed would make a huge difference in the values of the stocks.

That having been said, let me make my correction from yesterday's editon. I mistakenly said UYG was the triple ETF on the financials. That was an error. In fact, it is the double ETF. Anotherwords, it is designed to move double the percentage of the Financials Index on any given day in either direction. The triple ETF trades under the symbol FAS- today it's trading around $5.25- up from $2.75 in the last seven trading days.

Just to clarify- here's exactly what I recommending. I rate XLF (the 1 for 1) a strong buy just under $7. UYG (the 2 for 1 ETF) would be a strong buy at about $1.75, and FAS (3 for 1 ETF) at $3.50 to $3.75.

I believe FAS could go to $20 by year's end as we wind our way through the financial crises. On these ideas- Caveat Emptor- Buyer beware. The more agressive you are, the more volatile the security.
 

Spicy Pickle's (OTC BB: SPKL) Bread Garden Headed to Australia

I know a lot of you will think I'm nuts, and I probably am. However, I'm drawing on the experience of 23 years participating and trading in small stocks, and I think there's a fortune to be made right now for those who can set their sights beyond next week and see a month to a year down the road.

There are thousands of low priced stocks trading as if they were going out of business. Valuations are the lowest in years, and certainly the macro environment is making it very tough on small companies. Some will fail, but if you can pick the ones who survive this mess and go on to prosper, you can make a fortune from these level. For the astute investor, pessimism is your friend. 

The greatest penny stock I've ever seen was $.375 in 1987 (for you vets, you'll remember stocks quoted at 3/8s). By 1990 the stock traded as low as one penny- yes- a mere one penny. No one would touch it and everyone knew the company was going out of business.

Needless to say, at the top of the 1990's Bull Market in March of 2000, after 1 reverse split and 2 forward splits, this stock was trading at $125 on the NASDAQ- that's right- $125 dollars. On a split adjusted basis, the stock really traded down to about $.03 before making $125 10 years later.

As far as Spicy Pickle is concerned, we have probably reached the point of maximum pesimissim. The stock is trading as if the company is going out of business. For those who believe this way, here's the flaw in your thinking- even in a recession, people have to eat. They are going to eat, and they are going to be a bit more judicious about the way they spend money on their restaurant visits.

It's not just Spicy Pickle- there are other oversold fast casual restaurant stories with very compelling valuations right now, and I'm looking at others as well.

There is limited growth potential for new Spicy Pickle stores in the US while this nasty recession continues, but people are still eating in their stores as the faire represents a great value proposition. 

Now, let's jump over the Western Canada where Spicy Pickle's wholly owned subsidiary- Bread Garden Urban Cafes, is going great guns. Today, Spicy Pickle disclosed a recent article published in the Business in Vancouver Journal points out there will be 6 new stores open by July. 

Therefore, by this summer, there will be somewhere in the neighborhood of 56 Spicy Pickles and Bread Garden Urban Cafes operating in the US and Canada, and the Bread Garden chain is on an expansion binge.

Those who wish to read the article in last week's publication need only Click Here to be taken directly to the article that describes this ambitious expansion in detail.

In today's disclosure Spicy Pickle also revealed Bread Garden Urban Cafe was headed to Australia to open a store in Brisbane and test the concept Down Under.

So, the company that is proportedly "going out of business", is actually expanding to the Australian continent. Strange behavior for a company about to shut it's doors according to the current market pricing.

Those who really believe the company is distressed to the point of closing its doors will be disappointed when Q1 earnings come out. The company has ratcheted its corporate overhead down considerably to respond to the current environment, and I believe losses will be extremely minimal. As lean and mean as they are now, incremental increases in business will push them closer to profitablity. 

Right now, the market is valuing each open unit at about $150,000. It's absurd. It won't stay this cheap.

Six new Bread Gardens in Western Canada over the next several months, over 50 units operating today, and expansion to Australia. It's oversold, and no one cares right now. It's the perfect opportunity to make money. 

Those few investors with the courage to act will be the ones to make the most money. Maybe the upside is only to about $.50 from here this year- a lot more in future years. Still, from today's levels, that would be a 300% return on today's money. 

Faith is often defined as belief in the absence of data. You don't really need to have faith with no data- there's plenty of data to support higher prices.

If you have a few dollars set aside for an irresistable speculation, SPKL below $.20 is the one you should "feast on" today.

Here is the complete text of today's news for your review:
 

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