Auspex · @AuspexResearch

13th Dec 2016 from TwitLonger

Good Place to Start Before Following Me - Everything (Not Really), In a Nutshell

"Who's the more Foolish, The Fool or The Fool who follows him?"

Since you may have just clicked the "Follow" button or may be thinking of doing such a thing, let me begin by saying that you should trust no one in this game, that you should listen to no one but yourself, and that you should always do your own work - and do it well; in short (no pun intended), do not follow anyone.

Still here? I suppose if you are looking for further advice or insight between black and white (or perhaps between green and red in this case), then I shall tell you this:

Rather than follow me, empower yourself to become confident enough in your own work that you are able to make your own decisions. Know that these decisions will have immediate financial ramifications, and that is the exact reason that I stress that whatever strategy you rest upon, you had better execute it well. Rely on yourself, and when the NAV settles at the end of the day, you will have only yourself to hopefully congratulate. Trust me, it will feel far better than sharing the glory with some unknown face on the Internet. If you consider me to be a stepping stone on your path to your own liberation, then keep reading and I will share with you a little of what I do. If you like it, then feel free to incorporate it. If you do not, then take the opposite position and we shall see who wins. :)

That last statement was made in jest. If, after reading this, you are still so bored that you find yourself sifting through my old tweets for further Clarity, then please realize while every meaningful point I make is derived from factual data and logical calculations (the part that makes me $), I also Tweet a lot in fun to simply pass the time between trades (The part that keeps me feeling half-way sane). If I am offending your stock or you for buying such a stupid stock (wink), then know that there is no ill-will. I do not take myself too seriously, and neither should you. We can disagree and coexist. After all, that is what makes a market a market.

My time horizon and my position will most likely differ from yours. I might believe that someone is making a mistake in the long-run by buying a particular issue at a particular price, and I might voice my opinion complete with concrete facts and figures, inductive reasoning, and simple charts. However, if enough people band together to make that same mistake at the same time, then some of them will profit in the interim. In fact, my sole existence is predicated on the premise that many people will make the same mistake at the same time, providing profits to some along the way, but ultimately creating a situation in which the majority will lose. So, do not let anything that I say dissuade you from making what could be a profitable mistake. Just know that it is my opinion that if you play that game long enough, you will become part of the losing majority. That is why I prefer to be on the opposite side of that trade - longevity in addition to profitability.

That being said, there are many ways to make money in this game, and I recognize, as should you, that 2 opposing views can both be correct on different time horizons. I put this idea in the simplest terms I knew how some time ago, and I think it is still quite relevant :

"There is a picture of a black and blue dress that is breaking the Internet as we speak because not everyone looks at the black and blue dress and sees a black and blue dress. Some people see a white and gold dress. I think the black and blue dress perfectly illustrates the point that I am trying to make here: 2 traders will look at the exact same set of data and see 2 completely opposite ways of setting up Reward:Risk. In fact, to make it even more complex, 10 traders will look at the same set of data and see 10 entirely different ways to profit (long, short, swing, day trade, scalp, etc). The fact that one is right over one time horizon does not mean that the rest cannot also be right in different time horizons."

Before I talk about my particular time horizon, I should state that 100% of my trades are to the short side. I would do more if I could, but unfortunately they cap you at 100%. My time horizon is almost always to Infinity. No, I am not planning on holding a short position forever, although in many instances it would be nice. Rather than focus on a date range, think of my time horizon in this manner: Through detailed research, I will ensure to the best of my ability that the positions I take are against companies that can do me the least amount of harm in the long run. Think of this as Fundamental Analysis. Almost all of my trades are anchored in sound, fundamental analysis. This is a topic that I could expand upon far longer than you care to read. So, I won't. Not yet, anyway. How about I give you a few real-world examples of my research, and then, if you are still interested, you can go back through my tweets to see what kind of stuff I talk about in 140 characters or less.

Start with the Windstream Story. It was my introductory piece, so I tried to make it pretty good for everyone. Looking back on these stories, if you are an aspiring researcher, then really go through these. They are layups as far as the short trade goes. But, they give a really good look at the kind of stuff you can dig up if you carry a big enough shovel.

Part 1: A Walk Down Due Diligence Lane (
Part 2: Crashed But Still Overvalued? (
Part 3: Will Windstream Technologies Stock Be Worth 5 Cents By Next Year (
Part 4: The Problem With Real World Applications (

Virtus Oil and Gas takes a look at how to pull apart a business when there is no business to pull apart:
Behind The Scenes of Filipino 'Boiler Rooms' And Paid Advertisements (

Finally, a look at the simplest of research:
Confusion Causes 12,000% Run Up In Riviera Tools Company (

I was playing with a loaded deck, because most of us know by now that almost all penny stocks end up at 5 cents or less. But, we have to let them try. It is The American Way. The point of the research was simply to show how far one can go in order to get a complete understanding of the subject company against which he/she will deploy capital. Having a complete understanding of your subject will set you apart from the sheep who say what I believe to be incredibly stupid things like"I do not care about what the company does. I don't trade the company! I trade the tape!" Attitudes like that are what cause everyone to make the same mistake at the same time. So, while I think their behavior to be stupid, I do bless them for only using charts when trading. That is Technical Analysis (at best), and it is a prerequisite for Success (If you keep reading, then you will see my use of it). If you are not well-versed in this discipline, then I would suggest you do not even attempt to trade until you have a firm grasp of the subject. Once you Understand Technical Analysis (Have you noticed that I capitalize some words that need not be capitalized? Its on purpose), Trading will become only mildly impossible (wink wink). Since my goal is to not send my capital to die in the realm of mildly impossible, I also rely heavily on that aforementioned Fundamental Analysis weapon to get me through each battle. It is why I do my best to make my research as in-depth as possible. Thorough fundamental research makes the next step in the process much easier for me - Trading.

I said it makes Trading easier, not easy. Trading has fascinated me for what is the better part of my life. How can something that really amounts to nothing more than the flip of a coin be one of the hardest things in the world in which to achieve long-term success? A question for another day. This pinned Tweet has gone on long enough, but before I go I will give you a couple of links to some previous Tweets that give a little peek at what I look at and think when setting up a Trade in my quest to achieve long term success in this game of 50/50 chances. Note that you will need to use accompanying photos that I was unable to pin to this Tweet. Yes, this is the Technical Analysis part ... as well as some oft-overlooked Human Psychology exploration. Hint: If you do not Understand Human Psychology better than you Understand Technical Analysis, then you are the proverbial prey. A much larger story for a much longer day.
Pairs with Graphic from July 2, 2015.

Embedded in that Tweet are links to these trade analyses.
Pairs with Photo from March 1, 2015 (You should be able to click on my Photos beneath my name).

This Tweet outlined a possible trade in $AXN for a guy who was asking how I would have handled it. It has no accompanying visual, but that doesn't keep it from making a few good points! ;)

Aside from those Tweets, you might enjoy going back through the other Photos to see some of the charts that I use to ease my mind when betting against a company. After that, you can feel free to read my old Tweets. Like I said, some are valuable, a few are funny, and others are probably completely worthless!

Hopefully, this Tweet made you think a little bit. That is why I wrote it. Well, that and the thought that has lingered for so long that one day I will put finger to keyboard for a longer body of work that contains everything in my head. Perhaps this is the beginning of that process. In retrospect, it is quite egotistical of me to think that the 2 rocks that fight over the empty space between my ears have anything of value to offer anyone. Perhaps that is why I do not attempt to sell anything to anyone. (triple wink - get off their crack pipe)

If you have questions, then please feel free to ask. Despite my negative outlook on most things, I am actually a pretty agreeable chap. Good luck to you, too, in your journey.


I have updated (December 2016) this Pinned Tweet so that it includes the following TwitLongers:

This is a philosophical rant intended to dissuade aspiring traders from pursuing their dreams. It's not as easy as the guys who are selling stuff to you would have you think.

This TwitLonger is useful for the avid researcher who is looking to gain insight regarding some obscure techniques that can be applied to Fundamental Analysis. It also shows you how you, as a researcher, can literally change the behavior of people (in this case, of the people running the company) through your work. Proof that you really can make a difference!

Here is another TwitLonger that was supposed to talk about the debacle that is $GEVO, but ended up more of a philosophical rant.

Here is what has become a wildly popular TwitLonger, and it is probably ... no, it is the most valuable piece of information I have ever put on social media. Enjoy. It's free of charge.

A + B = D TwitLonger:

Finally, this is a TwitLonger that supplements the previous TwitLonger in a real-time, real-world situation. This one is free, too.

Real Time Analysis Using A + B = D TwitLonger:

If you enjoy anything that I have written and are looking for a way to make it up to me, then I ask that you do this:

Tweet to me some feedback. I will use the collective feedback to help mold future information. Do not go overboard. Just let me know if it was helpful and if it was not, then what could have made the information more clear for you. Basically, I want to know what you don't know and how my presentation of information was better/worse than other things you have tried.


Thanks, and good luck out there.

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