27 MAR 09: So-Called Geniuses

Regular blog readers know this is the time of year when we engage in Serious Spring Cleaning. It's going very well so far - and when you can watch college basketball playoff games while you clean the living room, so much the better.

The cleaning of the living room uncovered some very interesting newsletters we received in the mail almost a year ago. They're "tip sheets," promoting stocks which alleged experts claim are sure to soar. To their credit, none of the tipsters recommended AIG or major bank stocks.

The companies mentioned in these tip sheets usually are low-priced stocks you've never heard of. So my attention was focused when two different newsletters recommended Jayhawk Energy last spring. It certainly worked in my basketball bracket, as my alma mater Kansas won the national championship....

The "Contrarian Press" of California put a BUY recommendation on Jayhawk Energy at least twice last year, in April and June. It claimed operations were expanding in the "prolific Cherokee Basin" of Kansas. In 2009, mention "Cherokee" in the Midwest and people are more likely to think of profits at tribal casinos.

The Fagan Report gave Jayhawk Energy a "strong buy signal" last May, calling it "the next great American oil company." Yet for some reason, you're more likely to find low-priced gasoline in the Kansas City area at QuikTrip stations....

"You can buy Jayhawk under $2.75 and watch it go over $80," The Fagan Report assured me. Yet I'm admittedly skeptical when offers like this come in the mail, Especially when people I don't know offer stocks I don't know -- and even more when Jim Cramer isn't gushing over it on CNBC.

So while I didn't buy Jayhawk Energy, I held onto those tip sheets. And what happened? As trading begins today, the stock is selling NOT for 80 dollars -- but for about 23 cents. This "Jayhawk" is more like the baseball team, which does well to make the conference tournament each May.

The one-year chart for Jayhawk Energy shows it peaked last 30 April at $2.50. So even when gasoline prices hit four dollars a gallon, the stock didn't soar. It's as if all those oil wells in southeast Kansas evaporated due to global warming.

The Fagan Report's web site shows no sign of any apology, for how Jayhawk Energy has dropped 90 percent. Instead, its latest alert last July predicted the price would hit "four dollars in the near-term." Well, no - the price now is near terminal, as in cancer.

It turns out the Contrarian Press recommended a number of other low-priced stocks. So I couldn't resist checking their results:

+ Purple Beverage was hyped when its price doubled to three dollars a share. It dropped from there, and opens today at less than three-tenths of a cent. So if you went purple, you wound up in the red.

(I'd heard of penny stocks before - but three-for-a-penny stocks is even worse.)

+ Panglobal Brands was supposed to have an "extended upward move" last June. But it's dropped from 70 cents a share to seven -- and the only upward extension has been in investor anger.

+ Western Standard offered "potential oil and gas" from projects in Montana and North Dakota. Its stock has dropped from 40 cents to five. This also explains why people shouldn't bet on the outcome of American Idol.

To borrow from the fine print of these reports, this blog is not recommending any investment decisions. We're merely presenting the facts on how these.... hey wait. We just checked the Contrarian Press fine print. It includes this sentence: "The author is not a registered investment advisor." Is this one of those guys who throws darts at the Wall Street Journal financial pages?

But anyway: the lesson to me from this review is clear. "Contrarian Press" is well named - because wise investors might want to go contrary to anything it recommends.

As for the Jayhawks who really ARE successful - I'll have to miss the "Sweet 16" game against Michigan State tonight. It begins well after sundown for the Sabbath. But if it's like their meeting in East Lansing two months ago, the sun will set on the Kansas season as well.

By the way: our title today about stock pickers actually borrows from a sports talk show host on radio. "Papa Joe" Chevalier once called baseball player Eric Davis "another so-called genius." I think the reason had something to do with his contract - because you don't hear about Davis submitting doctoral dissertations anywhere.

Now for some more local items, from the Thursday news:

+ Muscogee County District Attorney Julia Slater announced she will NOT seek the death penalty for accused Doctors Hospital attacker Charles Johnston. Uh-oh - Republicans are going to say that list of transferred criminal cases has one too few.

(The District Attorney explained Johnston is 64, and wouldn't be eligible for parole if he's convicted until age 94. Besides, inmates serving life sentences are far less likely to inspire lengthy protest marches at the state Capitol.)

+ Marshal Greg Countryman unveiled a new talking dog robot, which can speak to children about staying safe. For obvious reasons, I listened carefully to the robot's voice - and it did NOT sound like Rep. Sanford Bishop.

+ WRBL reported Russell County authorities made two arrests for cattle rustling. Fifteen head of cattle were stolen from a farm in Hurtsboro, and were recovered in Buena Vista. This could bring Robert Schweiger out of retirement -- because ranchers would want to hire an old cowhand to ride on a horse, and prevent this.

+ The afternoon news visited Mulberry Creek Elementary School in Harris County, where people camped out one night in advance to register children for pre-Kindergarten. If Harris County residents line up all night for this, maybe we've found the perfect spot for a new baseball stadium.

(Some parents say lining up all night to register for "Pre-K" is better than the Muscogee County system, which draws names on a lottery basis. So they'd rather not "gamble" on enrollment, but they want to be part of a program funded by gamblers who play a lottery....)

+ The Columbus Cottonmouths opened the hockey playoffs by flattening Fayetteville 9-3. The Snakes scored five goals in a span of about four minutes - which was faster than Villanova and Duke scored at times in their basketball game.

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BURKARD BULK MAIL INDEX: 768 (+ 14, 1.9%)

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