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Trading AXM: A dreadful fish or future swan

Discussion in 'Shares' started by wdongli, 29th Nov, 2010.

  1. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Are you scared to scream after you see the following chart? Quite possible!

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    Some with the fundamental background would tell you:

    1. The management just look after themselves.
    2. They lie with that dogs wake with fleas.

    Some with the tech background would tell you:
    1. Don't have hopes to trade these sort of shares.
    2. You take a punt today but the payment could not cover your cost.
    3. No big deal.

    The most import points from tech people:
    1. no company looks after option holders who don't convert, for its not in the company's interest.
    2. Easier just to issue more options and let those that aren't converted, expire worthlessly

    ***
    The positive side the above thoughts is now most of us are very careful and count on the risks very seriously. The risks of AXM could be felt. Even it could be survival, but no one really know when it would happen or if it could happen before the option expires. However how about you just put some affordable money to bet?

    The negative side is all of the above thoughts are the linear extension of what happened in GFC. No one could predict the future even we should anticipate what in the future.

    Often than not we put the money into the market or run away with 100% sure based on what we have seen. If we sit down think we should know we could not predict IT boom and bust, Peak before GFC and the crash.

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    Please note I am a shareholder of AXM. I bought it at $0.04 with 50% paper loss. I am ready to see all of my capital into the hell with AXM but I do feel it is quite highly unlikely. What I put in is what I prepared to lose.

    Seriously saying I don't think AXM's crash are caused by its management team. If we could not see the future they could not see the future too. Their problems were they failed in risk control and management. They quite possibly failed in both rewarded or no-rewarded risks.

    However how many people in the market between 2006 -2008 had cheered for it to die?

    ***
    Would AXM's failure in the past be your failure in future? How about your own risk management? It would definitely depend on how you play with the dirty-cheap fishes.

    Have you read about the Cigar Butt Theory which used by Buffett before he worked with Charley Monger? It could work for the little market players for years even you could not use it for your business empire if you are really ambitious.

    Another thing we need to note is Buffett play his butts to get all of the butt into his control. If you could not control your butts, you have to buy the lowest price based on your senses about the market sentiment and some historical long enough voting about the value.

    The key is the margin of safety. Could you be sure you could get enough margin of safety from AXM? if not, you should invent some new ways to get the margin enough for your portfolio.

    ***
    AXM could be falling knife or swan. No gold ultimate bubble at all, you would be hurt terribly in about 70% chance. The beauty and trick are here: Something quite probably appear to trigger the ultimate bubble.

    Do you know the black swans? If the bubble in AXM could be the target to all of the market. Would you want to take the risks for some future great return, such as 10 baggers?

    GFC hit it first. Internal problem hit it second. What's next if it would not die?

    ***
    Advice: Don't follow me but you and your risk profile!