er the
years. Degree requirements were different. Records had been moved many
times. They failed to pin it down.

Joe didn't care whether or not someone had a degree. It is what one can
do that matters. But he cared if someone lied about it; lying is a bad
sign. SPM stock broke above $14 and began to correct. The short sellers
piled on, selling borrowed stock, driving the price down in order to
frighten investors into dumping their shares. The price held in the $10
range for a few weeks and then quickly fell to $8 and then $7. The
short position grew larger by the day. The bulls argued that all those
borrowed shares had to be bought back sooner or later and that the
upcoming positive mining audit would trigger a massive short squeeze
that would quickly put the price over $20. The company continued to
release good news.

When the audit report was finally released, it verified only the
original assay results, a year old, and made no mention of the
extraction yields. The company made bland assurances about ongoing
efforts to improve the extraction technique, but there were no hard
numbers and they were running out of development capital.

Trading in SPM was suspended. When it resumed, the stock cratered to
below $3 in seconds. Joe waited for a bounce, clamped his jaw, and sold
out at $3.25, just below the high of the day. Over the next few months,
the price dropped to a nickel and the company went bankrupt.

Joe was in shock. He had lost $17,160 plus commissions, half his
savings. As he thought it over, he realized the mistakes he'd made.
He'd broken the primary law of diversity. You should never have all
your eggs in one basket. Secondly, he had wavered between the attitudes
of the trader and the long term investor, ignoring the safeguards of
each approach. If you are trading, you must wait for good entry points
and you must exit immediately if the price moves against you. Gains
more than compensate for losses, if the losses are strictly limited.
Furthermore, Victor Sperandeo had cautioned never to give back more
than half your profits--they are too hard to come by. At one point Joe
had been $32,000 ahead. It hurt to remember.

If you are a long term investor, on the other hand, you must know that
the company is sound. Joe failed to follow through on his investigation
of the CEO. He had been too cheap to go to the annual shareholder's
meeting where he would not have found the qualities he looked for in
management.