Notes

Burying Your Company's Stock


You must bury the shares of your public company to reduce its float. Your investor relations costs will be lower if your public company has a lower float. [See my article The Proper Use of Shares.] read full article The buried shares will be deducted from the float, and the remaining amount is the effective float. You want to get the effective float as close to zero as possible. If your effective float is zero, you need not find buyers for your float because there are no shareholders selling their stock in your company. This, of course, is the ideal situation. I suggest that if you want your public company to succeed in all aspects, you may want to structure your company's float like this.



Speculators, Not Investors

American stock buyers, on the whole, are speculators, not investors [http://www.iht.com/articles/529443.htm]. Stocks are bought with the intention of selling them quickly at a profit. Even the U.S. government realizes that speculating does not lead to economic growth. Taxes for stock buyers willing to hold their shares for at least one year are less than for those who speculate in the Market and quickly sell their stock. The American Government's tax incentive hasn't altered the speculative nature of the U.S. Market, because long term investors are consistent money losers. I've always wondered why long-term investors buy and hold stocks in this manner.

Avoiding Having Your Shares In the Market

I have been involved in the North American stock market for over 20 years and can confirm that professionals make more money by selling shares short (betting on the fall of the share price or the bankruptcy of the company) than by purchasing shares. The textbooks only list one of over two dozen of ways that professionals use to sell short stocks. I have written an article on shorting shares that includes 24 ways. It is the only way to effectively defend against short selling. Make sure that your company shares are not in possession of the Depository Trust Company in New York.

When most people buy shares, they leave them "in street name" rather than taking possession of the share certificates. "In street name" simply means they are all turned over to the DTC for safekeeping. Short sellers "borrow" or otherwise rely on the existence of street stock to sell nonexistent shares into the company's market. Public short sellers expect to pay the "borrowed" shares back at the much lower cost when the stock collapses. Professional short sellers never expect to buyback the nonexistent shares and legally avoid U.S. taxes on their profits in doing so. Your company cannot be sold short if the shares can't legally be borrowed.

If you can prevent your shares from being sold on the DTC by having your shareholders insist that they receive their certificates in person, then your company has a Cash Market. Few companies bother or understand the dangers they run from short sellers. Brokerage firms and DTC try to make it as difficult as possible to create Cash Markets in any stock.


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