When and for what medical purposes medical cannabis derivatives can be prescribed is still up to state governments to decide, with the legislation yet to translate into sales for any of the pot stock companies.

At the start of 2018 the sector received more good news when the government announced it would permit the export of cannabis overseas for medical use. Again though the legislation is new and yet to translate into anything in the way of sales or forward sales contracts for pot stock hopefuls.

Some studies have estimated that medical cannabis in Canada retails for around CAD$7.5 per gram and theoretically Australian cannabis could retail at a similar price, which means 5 tonnes of the crop could harvest around A$37,500,000. Even if not that much it's clear there's serious money to be harvested in the sector if it delivers on its potential.

These sales estimates are exciting investors, because of the particular potential for weed to be legalised for recreational use in Canada and across many U.S. states.

Exactly how much weed is smoked recreationally in Canada annually is unclear, but ballpark estimates have it as around 600,000 to 800,000 kilograms a year.

Canadian producers alone are expected to meet this supply, but that's not stopping others attempting to cash in on the growth in demand for cannabis for recreational or medical purposes globally.

If one of the ASX's many medical marijuana hopefuls can deliver some meaningful sales it will then need to make a profit on those sales to take the next step to becoming investment grade.

Serious investors generally only buy profitable companies, or those with a long track record of revenue growth and visible path to profitability ahead.

As such the medical marijuana sector on the ASX largely consists of companies spinning stories about their potential to grow sales as the legislative environments in Australia, Europe and North America offer growing opportunity to commercialise cannabis-based medical products.

Estimates for the value of the medical marijuana sector Down Under range from $75 million per year to $1 billion per year, depending on where you check or who you ask. The reality is that no one knows the size of different markets as it would depend on what medical marijuana products were available and on what basis doctors would prescribe them among many other factors.

Some of the pot stock hopefuls on the ASX include MGC Pharmaceuticals Ltd (ASX: MXC), MMJ Phytotech Ltd (ASX: MMJ), Zelda Therapeutics Ltd (ASX: ZLD), Botanix Pharmaceuticals Ltd (ASX: BOT), Cann Group Ltd (ASX: CAN) and Auscann Group Holdings Ltd (ASX: AC8).

Even failed software business 1-Page Ltd (ASX: 1PG) and bauxite miner Queensland Bauxite Limited (ASX: QBL) are attempting to cash in on cannabis-crazed investment markets.

I suspect very few of these companies will provide investors respectable long-term returns based on their current valuations. As such it's a sector to avoid in my opinion.

The post Can Australians get rich quick in the pot stock sector? appeared first on The Motley Fool Australia.

This was despite having only $400,000 in revenue and losing $19 million after tax in financial year 2015.

Ultimately the business performance never lived up to the hype, even though 1-Page announced 'major' contracts with Sears, Amazon, Red Bull, Starbucks, and more.

Many have commented on the seeming similarities between 1-Page and current market darling Getswift Ltd (ASX: GSW), a company whose share price has also risen well in advance of its revenue growth. Getswift has also announced major, unquantified, deals with big international clients including Amazon.

While Getswift's future is not yet written – the stock is currently suspended – 1-Page's future was sealed in September last year when it sold its core 1-Page business for $1. After a suspension lasting many months, 1-Page announced this morning that it was entering the medical marijuana business via an acquisition of HAPA in Germany.

1-Page will issue 90 million shares and pay 1.3 million euros to the founders of HAPA, who expect to open their first medical marijuana clinics, in Berlin and Dortmund, within the next two months.

Following the acquisition there will be around 240 million 1-page shares on issue, so the HAPA founders will own ~37% of the company. 1-Page will have around $23 million in cash and will change its name to European Cannabis Corporation.

There have been a number of stark lessons in there for those who have owned companies like 1-Page or other similar businesses like Reffind Ltd (ASX: RFN) – Reffind was one I owned. Hopefully 1-Page's future looks brighter for shareholders than its past does.

It just goes to show you can never count a "software company" out…They might transform into a medical marijuana company instead.

The post The end of an era: 1-Page Ltd becomes a medical marijuana stock appeared first on The Motley Fool Australia.

Obviously, and perhaps unfortunately, not every company can scale the same heights as Altium or Cochlear.

And, with so many tech stocks on the ASX boards, it can get a bit difficult to keep up, let alone determine the good from the bad.

But here are three we can all learn something from.

Reffind Ltd (ASX: RFN)

Reffind has proven be a thoroughly disappointing ASX tech stock for many of the company's shareholders.

Reffind promised big things when it listed on the ASX in July 2015.

The company has two products targeting the talent acquisition and human resources space.

The REFFIND App, a mobile platform, "helps businesses to recruit, engage and communicate with their employees".

And its WooBoard is a peer-to-peer recognition platform which "encourages employees to acknowledge and celebrate great work by their colleagues".

Reffind's share price shot up to $1.57 in October 2015.

But the company embarked on a process of spending that looked unsustainable to many.

When investors started thinking the maths didn't add up, they dumped their Reffind stock and the company's shares are now trading at under 3 cents.

Can Reffind re-find its mojo?

It's unlikely.

Even one of the company's directors, Timothy Shaw, appears to have lost faith in Reffind's potential to lift its share price having last month sold off 6.75 million shares in the company at 2 cents a pop.

Stargroup Limited (ASX: STL)

Stargroup designs, manufactures, sells and operates ATMs and other banking equipment.

In late 2007, Stargroup's shares were trading at around $1.

But this month Stargroup Ltd announced that receivers and managers were appointed to the company and three of its subsidiaries, including Star Payment Systems Pty Ltd, Stargroup Investments Ltd and Star ATM Pty Ltd.

In a related announcement, Goldfields Money Limited (ASX: GMY) stated that it would continue to provide bailment services to Stargroup based on a reduction in the facility limited from $30 million to $10 million.

Stargroup hoped to pump out lots of cash.

For many investors it turned into a financial black hole.

Robo 3D Ltd (ASX: RBO)

Compared to the two above, Robo 3D is a success story.

But for many of the 3D printing company's investors it's proven a disappointing venture.

Robo 3D's share price was trading at above $2.20 in early 2008.

Today, Robo's shares are going for around 4.6 cents.

But it's not all doom and gloom for Robo's shareholders.

The company announced this month that it had achieved a record monthly revenue of $1.3 million for October, more than 30 per cent higher than its previous monthly record.

Robo also stated that it will surpass its full-year revenue for financial year (FY) 2017 of $3.2 million within the first half of FY 2018.

All that means Robo might be worth keeping an eye on but I certainly won't be recommending it at this stage.

And while it's clear that not every ASX tech company can mimic the success of Altium or Cochlear, even the most unfortunate ASX tech stories can provide valuable lessons.

It is clear that keeping an eye on investments is critical and thorough research pays.

If you want to learn more about ASX tech shares, you can check this out…

The post 3 ASX tech losers I'd give a wide berth appeared first on The Motley Fool Australia.

Everyone and their dog is talking about it. Is it a good investment? Can you get rich from buying bitcoins?

If you had bought bitcoin a few years ago and held until today you would literally be sitting on millions of dollars.

However, I don't think that rise will happen again. In-fact, there's a real danger that Bitcoin will suffer big falls at some point due to the following reasons:

Nothing holding up the value

Nearly every other asset class has some form of income generation to justify its profit.

An investment property generates rent for its landlord, which means the property can at least be compared against its gross yield.

Most businesses generate a profit, allowing investors to analyse statistics such as price/earnings ratios. If it isn't yet profitable you can at least make a projection for a few years down the line and use a discounted cash flow model to get a value for today.

Cash in the bank or bonds will generate a yield for investors. Reliable governments provide excellent guarantees for money in the bank or the bonds that it sells to the market.

Bitcoin does not have anything backing its rise in value.

Technologically inferior

Bitcoin may seem completely outlandish to most of us, but it's already an inferior product according to experts.

The long-term use of bitcoin will be justified by its use in modern society. There's a reason why Blackberry phones, CDs and VHS tapes have all disappeared from use. They became obsolete.

'Bitcoin cash', a spin-off, is seen as the better product and could replace bitcoin in the future as the preferred cryptocurrency.

There are literally hundreds of other coins vying to be the number one choice, there is no guarantee that bitcoin will retain number one status.

It's pure speculation

Booms never end well for the item involved or the investor when the music stops.

Bitcoin will probably be seen as a new-age, snazzy trading tulip in the years to come. It's far worse than the excitement that surrounded Liquefied Natural Gas Ltd (ASX: LNG) or Reffind Ltd (ASX: RFN) in recent times.

Bitcoin is a great invention and I can understand why the early-adopters wanted to use it as a genuine currency without influence from governments.

However, it's been wildly inflated beyond a currency and has been turned into a trading tool that's testing the 'greater fool theory' to its limits.

A bitcoin could justifiably be worth $100 or even $10, instead of the crazy prices we are seeing today.

Foolish takeaway

Bitcoin is fascinating to watch from the sidelines, but you won't catch any serious investor getting caught up in it.

The post 3 reasons why Bitcoin could be doomed appeared first on The Motley Fool Australia.

However, the more you focus on growth shares, the more likely you are to end up choosing a bad one.

So, what do you do if you end up with a Reffind Ltd (ASX: RFN) or 1-Page Ltd (ASX: 1PG)?

Hold and hope?

If a share price has fallen a lot, it's worth looking at why you invested in the first place. If the long-term investment thesis is still intact, then perhaps it is worth holding on.

Shares like TPG Telecom Ltd (ASX: TPM) and Vocus Group Limited (ASX: VOC) have fallen a long way but they both could have solid futures from here with the growth of data usage.

A fallen share in your portfolio could also serve as a constant reminder to be as vigilant as you can be about the shares you invest in.

Sell and cut your losses

It might be the best choice just to cut your losses and get out of the stock, particularly if it's going to keep heading downhill.

Many investors would have been much happier if they could have sold their Vocus or Telstra Corporation Ltd (ASX: TLS) shares at $5 instead of the prices they're at now.

If the business looks like its going to go bust then it would probably be a better move to sell and get some cash, rather than nothing at all.

Perhaps buy more?

If you're that confident that the market is wrong on the business, then perhaps you should buy some more. Getting a lower price can only help your returns if you're right. If you're wrong then you have thrown good money after bad, but that's the game of investing sometimes.

Foolish takeaway

There isn't one size-fits-all advice for a bad stock, but studies have proven that people are statistically more likely to be better off holding as opposed to selling, although that won't be the case every time.

The post Stuck with a bad stock? appeared first on The Motley Fool Australia.

Here are some recent headlines:

"Pivotal Announcement Steepens Trajectory For GetSwift"

"GetSwift Ltd shares rocket on game-changing deal"

"Young Rich 2017: Joel Macdonald, the $100m ex-footballer behind GetSwift"

GetSwift is a smallish ASX-listed logistics business that saves companies precious time on their delivery routes. It's often the 'last mile' of delivery that's most challenging for logistics businesses and e-commerce companies.

So GetSwift sounds like a great idea.

And with so much press behind GetSwift, its shares haven't disappointed.

More press, more money, less problems

I think the $380 million company could be a good one for investors over time, once it starts generating meaningful revenue.

Although, take that with a grain of salt because I said the same about Reffind Ltd (ASX: RFN) before the company's shares fell 98%.

The differences between "shares", "stocks" and businesses

The words "stock" and "share" probably come from some latin word I can't pronounce. But fundamentally they mean that you have 'part' ownership (that's why it is a 'share') of the equity in a business. Just like a couple that has a 'share' of the equity in a home.

Yet, some financial analysts and all traders have taken 'a share' to mean something else entirely.

"Good" stock. "Bad" stock. 

To them, a "share" is an instrument for speculation. The same way you would speculate on the price of gold, Bitcoin or emu eggs – people often speculate on "a share".

There is no such thing as a "good" share or a "bad" share, they are just shares.

It's also vital for investors to know the difference between a "business market" and a "share market". If you focus on the 'share' and forget the business you are going to slip into a short-term mindset — something which can be very hazardous to your wealth.

The endless search for rationality

People gamble all the time. Horses, 'the dogs', keno, pokies, stocks, the name of Princess Stacey's sister's brother-in-law's second child. You name it, you can speculate on it.

Note: "speculation" is a word made up by a (bald) middle-aged finance dude that means "gamble". We respond better to labels when we do things that don't fit with the status quo.

Unfortunately, as my colleague Claude Walker knows too well, although it may not be a smart idea to "speculate" on "good stocks", the search for rationality in financial markets is endless.

What's this got to do with GetSwift?

It has been said by the company and its supporters that GetSwift has a novel idea and technology. But as investors, we have to carry our scepticism with us at all times. Without any material cash flows, as it stands, GetSwift is purely in the realm of speculation.

I'm very happy to be proven wrong in two or three years from now (and very well could be) but if my scepticism saves even one person from losing their life savings on the whim of a marketing team, it was worth the risk of looking like a (lower-case-f) fool.

The post Why I won't buy a "good stock" like GetSwift Ltd again appeared first on The Motley Fool Australia.

GetSwift Share Price

You can see in the chart above, GetSwift has wasted no time becoming a day trader's delight.

According to Sharestart.com.au, "GetSwift operates a technology platform that helps businesses optimise dispatch, routing and tracking of their deliveries to customers."

It morphed out of a liquor delivery business, which started in 2013.

Maybe you have seen those Deliveroo scooters getting around the city?

Okay, well that's not GetSwift.

Maybe you have used UberEATS before?

Nah, that's not them.

Well you definitely know Toll Holdings, UPS, DHL, Fastway Couriers, FedEx and StarTrack, right?

That's not GetSwift, either.

Anyway, including shares "not quoted" on the ASX, GetSwift has become a $450 million company. That's calculated using the near-77 million shares that are escrowed, but not the additional 55 million in options and performance rights.

What's not curious about GetSwift is its revenue for the entire 2017 financial year was $320,402. That's around 0.2c per share.

Why is it not surprising?

Keep reading below…

How to: GetSwift-ly to Financial Incontinence

People have made money trading markets, I won't deny that.

But if you think you're the exception and not the rule that has been tested on over 100 years of stock market history, all I can say is good luck to you.

Investing — as opposed to speculating/trading — in stable businesses at good valuations is the only strategy that has been proven to work consistently over the long run.

So, if you want to roll the dice on your wealth go ahead and buy GetSwift shares.

I did something very similar back in 2014/2015, with Reffind before it tanked 99.4%. I was lucky.

A friend of mine was hurt by 1-Page.

Fortunately, no-one I know was tempted by Resapp Health Ltd (ASX: RAP).

Foolish Takeaway

GetSwift could go on to be a wonderful blue chip company, but you must ask yourself: if you are a long-term investor, why would you buy shares in the company today?

It may well be the next big thing in logistics. But why not wait to see if any of its 'contracts' create sustainable profits for its shareholders?

Of course, if you are a day trader you will probably disregard this article entirely.

And for the record I'm not trying to cure investor irrationality — you're just as likely to find that on the inside of a Cornflakes box for all I know. But, if this article stops even one person doing something I think they will regret, it's worth it.

The post How to: GetSwift-ly to Financial Incontinence appeared first on The Motley Fool Australia.

Sure, I have had some absolute blunders in the sharemarket.

For example, I lost more than 50% of my money on instalment warrants of Rio Tinto Limited (ASX: RIO) — in less than a year.

My investment in G8 Education Ltd (ASX: GEM) shares cost me (very) dearly.

Slater & Gordon Limited (ASX: SGH) was… well… the single most expensive investment I ever made for my family's portfolio — and my own.

I invested in Reffind Ltd (ASX: RFN) in the 'hope' they would make money.

And I have learnt the hard way what poor management can do to a small company, like Yowie Group Ltd (ASX: YOW).

But none of these mistakes even compare to my failure to recognise the power of compound interest.

Because while I was trying to find the next gangbusters growth stock, I missed one very important idea: losing money destroys your ability to compound your wealth.

I'm still well ahead since I began investing.

But throw in an itchy trigger finger with emotions and you can easily and quickly mess-up an opportunity to compound your wealth at an extraordinary rate.

What not to do

Based on each of those terrible investments above, here are some thoughts:

• Rio Tinto: Keep investing simple. I've never heard of anyone who has got rich by investing in 'warrants'.
• G8 Education: It's okay to change your investing style. But there is no rush.
• Slater & Gordon: Don't take management's (or the auditors) word for it. Read the notes to the accounts.
• Reffind: Hope is not an investing strategy.

• Yowie: Position sizing is important. I put far too much in a company that was not profitable.

Be a better investor

My advice now is that you can try your hand at researching and investing, but don't let it come between you and the beauty of compounding.

If you have $1,000 to invest, stick half of it in a well-diversified portfolio and half of it in the other companies that you want to own. The diversified portfolio will also rise and fall. But so long as you accept it, I think it will reward you again and again over many years.

Just $500 invested every month for 25 years at an 8% return (slightly below the share market's long term average) becomes $442,060.

The post Give me 2 minutes and I'll make you a better ASX investor appeared first on The Motley Fool Australia.

I have written over 3,300 articles on investing, personal finance and everything in between.

But I'll be the first to tell you, sometimes I forget which day it is.

And some of the things I write isn't great.

And I've made investments that haven't worked out, like Reffind Ltd (ASX: RFN) and Yowie Group Ltd (ASX: YOW).

However, regardless of whether it's a Monday or Thursday, I'll be honest, transparent and accountable.

At the bottom of my articles, you'll find the names of the shares I own. That doesn't mean they are a good buy today, but if I hold them — I have not sold them.

I own many international shares, like Apple, Alphabet (Google), PayPal, Wells Fargo, Twitter…

I recently bought Amazon and ING Groep (the owner of ING Direct), and I'm eying off a few others.  

My point is: I don't own many ASX shares. Even though I've written — at a guess — 1.3 million words of wisdom on Australian finance.

Don't get me wrong, in the past, I owned many ASX shares.

But there are benefits to investing internationally which — by design — you can't get from investing locally. One of them is the ability to own great blue chip companies.

Do you eat your own cooking?

I'm always skeptical of company managers when they talk up their company — yet they don't own any shares.

I'm also skeptical (sceptical?) of almost every finance guru who recommends buying or selling shares, but they don't own any for themselves.

It's important that we 'eat our own cooking', so to speak.

But consider a finance guy – like me – who owns shares (a good thing, right?) and talks up the company, but he sells out tomorrow — without you knowing.

I'd say that's less ethical, transparent, accountable… call it what you want.

Ultimately

There's no way to be certain if the person giving you advice is genuine.

The solution: make up your own mind.

Take the person's advice and think about it.

After all, if you don't know what you own – you are more likely to sell out at the first sign of trouble. More often than not that's the worst time to sell.

And it's not hard to invest better than 80% of professional investors.

Just head over to Vanguard's website if you have no interest in learning. Alternatively, invest in your super fund.

1 ASX share I bought recently

I want you consider something else about my articles.

If I buy shares — or recommend someone else do the same thing — I plan to hold them for a long time. I kindly ask 'day traders' and 'month traders' to stop reading my articles now.

For example, I bought the Vanguard MSCI Index International Shares (Hedged) ETF (ASX: VGAD) for my young sister. It's a diversified local ETF that invests in international shares.

She'll get the proceeds deposited into her bank account in around 14 years.

And when it comes to buying, I'm just as willing to wait.

For example, everyone talks about the legendary investments made by Warren Buffett during the market crash of 2008/2009. But few people remember that Buffett had not made any real investments since 2001. He waited seven years to make another meaningful investment.

That's long term thinking.

The only other ASX holding I own right now is Platinum Asset Management Limited (ASX: PTM), which I bought in May.

It's a high risk investment, but I think it's worth the outside shot at success over the next five years. And although it's risky, it pays a generous dividend.  

Foolish Takeaway

Although you won't find many ASX shares in my portfolio, I hope my articles can give you ideas and pause for thought. The continuous disclosure of my portfolio can show you exactly what I have bought and hold. 

But remember, I don't really care if the shares I buy fall 10% tomorrow or 50% next week. I'm a long-term investor who focuses on buying great businesses — not 'great shares'.

The post How to read my articles + 1 ASX share I bought in May appeared first on The Motley Fool Australia.

Here's what I learned from some of these tech wrecks:

Newzulu Ltd (ASX: NWZ)

I owned Newzulu for a couple of years. While aware it was a speculative stock, and thus expecting the cash outflows, I was not critical enough of management's efforts to grow the core business. An inability to grow revenues meaningfully in 2 years should have been a signal to exit the business, as were the multiple capital raisings and acquisitions. Comments from former employees on Glassdoor about management's lack of focus should also have been a warning sign. The mistakes piled up on this one and inertia was the poisoned cherry on top – I should have sold much sooner.

Reffind Ltd (ASX: RFN)

I made a respectable return on Reffind, but again was too slow to sell – this kept a ~30% return from becoming a 100%+ return. I bought as the company was signing loads of new customers, but before the quarterly report was released, which revealed how much money those sales had generated (virtually nothing). This should have been the first cue to exit. The second cue to exit was when shares hit $1.50 – grossly overpricing the company especially in light of how small its revenues were. I should have been less patient, and/or quicker to accept what I thought at the time was an outrageous price.

iCar Asia Ltd (ASX: ICQ)

iCar Asia was a somewhat less speculative investment, I thought, with promising advertising businesses in southeast Asia. Tailwinds were strong and the company had good leadership as well as a working relationship with Carsales.Com Ltd (ASX: CAR). However, over the year I owned, revenue growth was too slow in my opinion to see management reach their target of break-even without additional capital raisings, and I sold late last year. In this article you can see a chart of the company's cash flows – again, I was probably too patient with the reversal. I was probably also too patient with the company's capital raisings – when it announced its 4th one in 3 years, that should have been my cue to quit.

Foolish Takeaway

The biggest lesson here in my opinion is that patience is good for most companies, but not for speculative companies that are burning cash. Most of the time, they are priced fairly richly – priced for growth.

If they do not grow to standards, they should be cut fairly ruthlessly, otherwise all you are left with is a company that is burning money. At least with companies like Woolworths Limited (ASX: WOW), there are assets, cash flows, and dividends to underpin some of the investment value. It is very unlikely that a big company like Woolworths will fall 50%, and then another 50% in the following year.

The post Valuable lessons from 3 of my personal investing mistakes appeared first on The Motley Fool Australia.

Unfortunately the opportunity for easy money and a questionable regulatory environment when it comes to listings means a lot of companies coming to the market range from a dubious to dire quality.

Smart investors need to be aware of these potential land mines as they could blow up your portfolio's returns as many will turn into loss-making capital sinkholes to be avoided at all costs.

If you don't believe me, take a look at the Tech Wreck table below and some of the horrendous one-year returns.

Source: Mike King, prices accurate as at March 13, 2017.

All of the above companies are likely to have an exciting story to sell about how their technology products could be disruptive, connected to the cloud, Internet of Things, or ready to use mobile to make their investors rich, but some of them are little more than a tax on the gullible.

A fool and his money are soon parted, with most of the companies above wrecking their shareholders' investments in what should be a textbook lesson as to why smart investors avoid the "story telling" end of the market like the bubonic plague.

So if you're serious about creating lasting wealth for yourself and family it's best to look for companies making profits and paying dividends – at the end of the day share prices will follow cash flows and profits either higher or lower over the medium term.

There are also plenty of profitable companies on the ASX that offer the opportunity for blockbuster returns over time if you know where to look!

Below are "Our Top 5 ASX Dividend Shares to Earn You Money in 2017"….

The post Warning: These Tech Wrecks could destroy your wealth appeared first on The Motley Fool Australia.

Before I get into it, just what is 'market sensitive information', anyway?

Companies themselves determine whether announcements are 'market sensitive', and according to the ASX's Continuous Disclosure rules, 'market-sensitive information' is information that the company believes 'a reasonable person would expect to have a material effect on the price or value of the entity's securities'.

Obviously, David Jones' sales update definitely falls into that category. But what about companies that mark announcements as market sensitive when they might not be?

The market sensitive announcements…that aren't

Start-up Reffind Ltd (ASX: RFN) did this regularly. On the face of it, its announcements seemed market sensitive, but many of them – 'REFFIND expands into New Zealand with two customer wins', 'Australia's largest McDonalds franchisee joins REFFIND' had a minimal impact on the company's sales, which were $164,000 in the first quarter immediately subsequent to these (and many other) customer signings.

As far I am aware Reffind didn't have have a website in its NZ 'market', let alone a sales team. It would have been more accurate to say that Kiwi customers had decided to use Reffind's products.

Yowie Group Ltd (ASX: YOW) is another one spamming announcements. Several of them, like: 'Yowie off to strong start in new Financial Year' (this coming just 5 days after the annual report) and 'Yowie upweights advertising investment by USD$1 million' are of questionable value.

Any info on sales to date could have been put into the annual report under the 'forecast' or 'outlook' or 'events subsequent to report date' section, like so many other companies do. As to the marketing investment it should be asked whether a US$1 million investment in marketing is really that significant for a company with an A$140 million market cap, US$31 million cash in the bank, and neutral operating cash flows?

It's noteworthy in the sense that it's Yowie's first big marketing campaign, but any reasonable person would assume that a company conducts marketing campaigns in its ordinary course of business. Other companies do this too, but their announcements are generally not flagged as market sensitive.

Reffind and Yowie are far from the only culprits, with 1-Page Ltd (ASX: 1PG) also going through an 'announcements' phase – and let's not get started on the speculative biotechs.

Foolish takeaway

Market-sensitive announcements command instant attention from investors, but they can also be used by a wily company for a variety of purposes. Some companies might try to use them to pump up their share price (perhaps in order to raise capital at a better price) and to give the illusion of progress when there might not be as much of that as investors would like.

All shareholders should view market-sensitive announcements with a critical eye, particularly if they come in quick succession or appear to be trying to hype up the company's success or prospects. It's certainly better to err on the side of caution, but I encourage all management teams to consider if their latest announcement is really market sensitive, or if they could just release it as a non-sensitive announcement.

The post How smart investors read market announcements from ASX-listed companies appeared first on The Motley Fool Australia.

A number of shares fell substantially further however, and here's why:

Asaleo Care Ltd (ASX: AHY) crashed 29% to $1.52 after a disastrous earnings update and half-yearly report from the company sent investors fleeing for the exits. Management announced a 17% decline in underlying net profit on the back of competitive pressures and higher input costs, neither of which is good for a company in Asaleo's position. Asaleo was also fully priced given its growth prospects (limited), which unfortunately left recent buyers without a margin of safety when business conditions deteriorated.

Asaleo Care shares are down 12% in the past 12 months.

Reffind Ltd (ASX: RFN) dropped 20% to $0.097 after today's surprise resignation of Managing Director and founder Jamie Pride, as well as the resignation of his alternate director three days ago. No explanation was given for the sudden departure and worse, the announcement was marked as non-market sensitive, which I believe is a grossly inaccurate designation, as the share price falls indicate. For a company with barely any revenues a founding Managing Director can be the driving force behind the whole show and today's departure without any explanation will be an item of concern for shareholders.

Reffind shares are down 80% in the past 12 months.

Coca-Cola Amatil Ltd (ASX: CCL) lost 3% to $8.85

Coca-Cola Amatil shares are down 2% on no news today, after a strong run from just above $8 at the start of July to $9.15 earlier this week. I continue to believe that the market is not sure what value to assign to Amatil, with mixed performance in its business divisions (some improving, some not) making it difficult to decide where the company is heading. As I wrote in this article, I remain comfortable holding my shares but it's likely to be a long haul for shareholders.

Amatil shares are down 2% in the past 12 months.

1-Page Ltd (ASX: 1PG) fell 6% to $0.445 on no news today, possibly in sympathy with a number of other technology companies like Reffind (above) and iCar Asia Ltd (ASX: ICQ). Now worth $50 million instead of $500 million, 1-Page is a much more interesting investment prospect – even if the hype has ended. 1-page has $41 million cash in the bank and continues to see levels of customer retention around 90%, which could be the foundation for building a profitable business if new customers can be added and upsold. With ongoing heavy cash outflows however, 1-Page remains a speculative investment.

1-Page shares are down 82% in the past 12 months.

The post Here's why these 4 shares crashed on the market today appeared first on The Motley Fool Australia.

I've written almost 3,000 articles on finance and investing, with a particular focus on the share market.

Over the years, I made some good investments and some downright terrible investments.

Some would say we can't dwell on our losers because there is so much more to learn from the good investments. However, confronting and studying my losers has helped shape me into the investor I am today.

I hope you can take something away from my mistakes, and avoid making them over your investing journey.

The list below is not based on personal dollar value or percentage losses. Rather, it is the list of investment ideas I have made public of which I am most disappointed.

• Newsat Limited (ASX: NWT)

Newsat Limited went bust in early 2015. It was a prospective satellite operator with rights over orbital slots. The company went bust from the time I began writing about the shares and added them to my portfolio.

The company was small and somewhat speculative, but my mistake was getting caught up in the 'hope' it would become a dominant satellite operator and not conducting enough due diligence on management.

• Rio Tinto Limited (ASX: RIO)

I bought warrants on Rio Tinto shares a couple of years ago — I lost 49% in less than a year. Warrants are like ordinary shares except they are 'leveraged' to enhance your gains (and losses!).

There are many reasons this investment went wrong:

• I didn't properly understand the industry
• I was myopic (focused on the short-term), and
• Leverage can be a dangerous thing
• Resources shares are more often than not terrible investments

• Reffind Ltd (ASX: RFN)

It's perhaps a little unfair for me to include Reffind on this list because it was — like the other four investments — my mistake. Reffind shares have fallen 84% in six months.

I got swept up into an easy-to-understand business model (which could still be successful), but failed to remain patient. I dived in head first, buying shares for around 68 cents before they peaked at $1.97. However, they now trade for just 13 cents — below their IPO price. I dived in before the company had a chance to prove itself. I should have been more patient.

• Woolworths Limited (ASX: WOW)

We all know Woolworths and the risks it faces in the supermarkets division from the likes of Coles and Aldi. Woolworths was one of my worst investments by dollar-value.

When the competition began taking its toll on Woolies in 2014, I believed its shares were oversold. I began digging into its financials to try and come up with a value. I let my bias get ahead of my valuation work, and as a result, I was overconfident in my forecasts for profit growth, margins, and management. I spent too much time on valuation work and not enough time on objectively identifying the risks.

• Slater & Gordon Limited (ASX: SGH)

Slater & Gordon shares surged from below $2 to around $8 in the four years leading up to its acquisition of the Professional Services Division of UK-based Quindell Plc in early 2015. I went along for much of the ride, pocketing the dividend cheques and making handsome capital gains. I even made a sizeable investment for my family's portfolio at much higher prices.

It was not until the PSD acquisition that everything started to unravel, and I began to question my holding.

An investor I respect warned me about the potential implications of the company's accounting practices. However, I did not heed the warning, and it cost me. I 'fell in love with the stock' as some would say, and ultimately I failed to be as critical of the company as I should have been.

I also made the mistake of buying a company with poor economics. After all, lawyers get paid very well, but cases (which can take years to see through) may or may not pay off. All in all, you're left with little margin for error.

Foolish takeaway

It's not always easy to confront your losers. However, I think it's important to remind yourself where you went wrong so you can avoid making the same mistakes again. It's also vital to track and benchmark your performance, so you can make an informed decision of whether or not to continue with the same strategy.

The post My 5 worst ASX investments ever appeared first on The Motley Fool Australia.

From an offer price of 20 cents per share, the shares soared as high as 38.5 cents before settling around 32 cents at midday. That represents a remarkable 60% paper profit, and shows that investors haven't been deterred by the ASX's recent blocking of music streaming company Guvera.

As the name suggests, DroneShield operates in the growing drone industry. Rather than actually producing drones however, DroneShield was formed to develop and sell proprietary hardware and software used for detecting drones, which are otherwise known as unmanned aerial vehicles — or essentially aerial robots.

In its prospectus, it said: "Governments and owners of infrastructure and other real assets are acutely aware of the threat posed by commercially available and affordable consumer drones. Until recently, there had been no cost-effective commercial detection and defence solution available to governments and real asset owners. DroneShield provides such a solution."

Indeed, the potential role that drones could play in the future is huge, but it does present risks. Already they have been involved in various incidents including a drone that crashed into the White House in Washington early in 2015, while a drone controlled by terrorist group ISIS was also shot down in Iraq around the same time.

Power plants and other important infrastructure pose as potential targets in the future and may need protection such as that provided by DroneShield. Other potential clients include prisons (for instance, items being dropped from drones to prisoners), ultra-high net worth individuals and airports, amongst others.

While DroneShield's technology could prove to be important, there are risks in such an investment. To begin with, regulations surrounding the industry are still unclear, while there is also the potential for competition to hinder the company's growth prospects.

There are also the obvious risks involved with the company's financials, including the recognition of just $123,862 in revenue for the period ended 30 September 2015. Indeed, there have been numerous listings on the ASX of businesses with low revenues and earnings, some of which, including Reffind Ltd (ASX: RFN), have thus far proven disastrous for shareholders.

Indeed, DroneShield is a risky investment prospect, but one that could still be worth keeping an eye on. Realistically, the industry is still young so if DroneShield does prove to be successful, investors are bound to be given another opportunity down the track.

The post Droneshield Limited goes nuts on ASX debut appeared first on The Motley Fool Australia.

Investors appear to have lost faith in the company's ability to turn its high cash expenditure into profits, and the most recent quarterly report only accelerated the company's fall. It's not hard to see why, given that receipts from customers were just $94,000 while the company spent $5 million on operating expenses.

1-Page remains optimistic, stating that its new Sourcing Platform (version 3.0) slowed the growth of new bookings because the business was focussed on product development. The new Platform should shorten the customer 'onboarding' time and allow 'close to immediate' revenue recognition – which has been a problem in the past, given that 1-Page reported $762,944 in new bookings during the quarter, but recognised only $94,000 in revenue.

Additional benefits of the new platform involve significantly faster deployment and greater scalability potential. Customer retention remains high at 90%, although given that the new Platform is yet to be deployed to all clients, this could change for better or worse. 1-Page expects all clients to be using version 3.0 by the end of the second (current) quarter this year.

Well, is it a buy?

1-Page is well funded, with $41 million in cash as of 30 April, and could have around two years of operations remaining at today's operating cash burn rate. With a new platform, great customer retention, better scalability and deployment potential, and the company now focussed on growing client numbers, the business appears to be in a good position.

However, reading between the lines, 1-Page's clients appear to be 'dipping their toes' so to speak, tentatively testing the company's solution before committing. Investors will want to watch that 1-Page is able to grow both customer numbers and up-sell existing customers significantly, because if this doesn't happen then the company is unlikely to prove a bargain.

I have learned the hard way with prospective tech companies that growing sales can be harder and take longer than management makes it sound, and indeed Reffind Ltd (ASX: RFN) has had a lot of trouble growing sales despite signing a number of big names. Investors should also know that buying a company with heavy cash outflows and minuscule revenues is not the key to good returns.

Yet despite that, 1-Page is now worth just $60 million, has two thirds of its market cap in cash and financial assets, and is well positioned to begin growing sales over the next two years. Investors wanting to speculate are unlikely to get a much better opportunity – unless the company isn't able to turn investment into growth, which is exactly why 1-Page should be a speculative investment only.

The post Is beaten-up 1-Page Ltd a buying opportunity? appeared first on The Motley Fool Australia.

Believe it or not, 1-Page Ltd (ASX: 1PG) has been just as bad for investors in recent months. Investors who purchased shares for 20 cents in the IPO watched the shares soar as high as $5.69 in September, only to crash 89%. The shares ended yesterday's session 13% lower at just 60 cents.

These heavy losses don't necessarily mean that the two businesses are destined for failure. I personally own shares in 1-Page, for instance, based on the belief that the company itself could potentially have a tool that could revolutionise the way in which companies hire and promote talent.

It still could, but the company's revenues and cash flows certainly aren't reflective of that yet and it is certainly testing my patience.

Reffind is the same. In its latest quarter, it generated just $134,000 in receipts from customers with a total net operating cash outflow of $969,000.

It's early days still for both companies, which could still grow those figures over time, but the lack of revenue is certainly a concern for existing shareholders.

The troubling thing is that Reffind and 1-Page are just two examples of technology businesses with promise and potential but little in the way to show for it with revenue or cash flows. That has the potential to damage investor confidence in IPOs which is why the ASX could be set to crack down on this activity in the near future.

According to a recent report from The Australian Financial Review, early-stage technology companies with limited revenue could soon be blocked from listing on the Australian Securities Exchange. That comes after 105 tech company floats on the ASX in the last two years, with 45% of those businesses having had revenue of less than $1 million.

Of course, many investors know the risks involved when buying the shares. If the product never takes off, there is the potential to lose 100% of invested capital. However, others are more naïve; they see a company with a promising product or service whose share price is soaring higher, and buy its shares only to watch them collapse again.

The AFR quoted Natasha Mandie, managing director for EM Advisory, as saying: "The reality is for investors that most of these listings will fail, either completely or partially, but fail. Only about 20 per cent or less will be a success."

Notably, Mandie has been advising the recently-listed Redbubble Ltd (ASX: RBL). The company's shares are trading marginally higher than their float price at $1.36 and, unlike 1-Page or Reffind, it expects to generate $114.5 million in revenue in financial year 2016. It also had $57.4 million in pro forma net cash as at 31 December 2015.

It's too early to tell whether 1-Page and Reffind will succeed in the future. If they do, current shareholders could be very well rewarded. But they are packed full of risk and the longer they go without generating a reasonable amount of cash, the less likely they are to succeed as investments.

The post Will the ASX block these high-risk tech shares? appeared first on The Motley Fool Australia.

By looking at some of the IPOs that have failed over the past few years in this article, you can train yourself to be wary when the same features are evident in future stocks.

So what are some of the worst performers, and what went wrong with them?

The most notorious and high profile dud of recent years was the catastrophic failure of Dick Smith Holdings Ltd (ASX: DSH). There were some major factors that contributed to the retailer's decline. The first was elevated inventory levels that could not be cleared. This stemmed largely from the decision of the retailer to maintain a high level of private label goods. Evidently, consumers did not warm to these "no brand" accessories and products.

Poor ranging decisions also contributed to excess stock levels. Excess stock shows that cash is not being paid by customers, and that the products are not in demand. At the same time, suppliers, staff and rent must be paid. In this scenario, cash dwindles quickly.

Lesson: retail is easier to assess than most sectors. Before buying shares in a retail stock, go into a store and walk around. Would you buy anything? Is the store full? Is there heavy discounting in an attempt to move products? Half an hour in a store will give you just as much insight as any article you could read.

Spotless Group Holdings Ltd (ASX: SPO) is another private equity float that has disappointed. Initially, investors were drawn to the defensive nature of the company – no matter the state of the economy, hospitals, offices and mining camps would still have to be cleaned and maintained.

However it is now clear that Spotless is competing in a competitive market with limited ability to raise its prices. It is also beholden to rising wage costs, penalty rates, as well as the costs that come with tendering for new contracts.

Lesson: make sure you look at the costs and the competitive environment of a company. Spotless faces heavy competition on price, so is vulnerable to competitors undercutting it. As a result, it also cannot raise its prices to cover rising wage costs. That results in falling profits, even if the company can hold revenue steady.

Reffind Ltd (ASX: RFN) is one of the many small cap tech stocks to IPO recently. After debuting at $0.26, it rose as high as $1.93. It is now a portfolio smashing 92% lower than those levels, at $0.15.

Reffind provides companies with software that make it easier and simpler for businesses to interact, survey and train their staff. It came to market with an impressive list of clients, and regularly added blue chip leaders in the building and construction, legal and hospitality industries in the following months.

A lot of cash was spent by management travelling internationally to try and grow the business rapidly. However, the company could not add clients and earn money fast enough to cover the cash it was burning through. That led to a capital raising, which was followed soon after with downgraded forecasts.

Lesson: with tech companies, cash in the bank is crucial. If a company is spending money too fast it will almost certainly return to the market for more cash. That will lower the value of the stakes of existing holders.

The post How to spot dangers when considering an IPO investment appeared first on The Motley Fool Australia.

Here's what you need to know:

• Revenue rose 25% to $142,000
• End user numbers grew 72%
• Signed new organisations including Nestle, Adobe, Charter Hall, Konekt, and Super Retail Group to its employee experience platform
• Average revenue per Reffind customer of $13,388 per annum
• Cash outflows of $1 million
• $3.7 million cash at bank, plus additional $2 million that was recently raised for $5.7 million total

The biggest disappointment to the market today was clearly the revenues, which are anaemic and haven't seen the kind of step-change necessary to justify recent valuations of the company. As it stands, a $10 million market cap may still be too high for a company making around $700,000 in annualised revenues.

Yet the company's cash position likely also attracted scrutiny, with approximately $5.7 million cash at bank. Reffind burned through just under $1 million in cash during the quarter, and today's cash balance is enough for less than 18 months of operations even before the ramp-up of expenditure to $400,000-$450,000 per month commences. Future capital raisings could be devastating for shareholders, given the depressed share price.

A positive is that Reffind intends to focus on sales and marketing rather than product development in future quarters, and this is expected to drive revenues and customer numbers in coming months. Under a new pricing model, the base annual revenue per client is expected to be around $30,000, just over double the current average.

A number of other unprofitable tech businesses like Newzulu Ltd (ASX: NWZ) and 1-Page Ltd (ASX:1PG) have also come under heavy scrutiny recently as a result of their constant cash outflows and limited revenues, and Reffind is cast from the same mould. This article here clearly illustrates the risks of purchasing unprofitable tech stocks.

Today's update was disappointing, and I'm fence-sitting on whether to sell my remaining Reffind shares. The company needs a step-change in earnings in order to justify its expenditure, and if it can't deliver one soon I will likely sell out before the company can attempt to raise capital again.

The post Why the Reffind Ltd share price has crashed today appeared first on The Motley Fool Australia.

Many IPOs over the past few years, such as McAleese Ltd (ASX: MCS), Vocation Ltd (ASX: VET), Dick Smith Holdings Ltd (ASX: DSH), Spotless Group Holdings Ltd (ASX: SPO), and Nine Entertainment Co Holdings Ltd (ASX: NEC) have been awful for investors.

Some, like Orion Health Group Ltd (ASX: OHE), and Reffind Ltd (ASX: RFN) are unprofitable, and were always going to be volatile. Integral Diagnostics Ltd (ASX: IDX) was hit by unexpected government regulation, while other businesses like Vitaco Holdings Ltd (ASX: VIT) were hurt by sentiment even though performance has been solid.

The point is, buying an IPO is a process fraught with risk because you, the buyer, are under-informed and up against a highly informed seller who can be more motivated to get the best price for their investment rather than earn returns for shareholders.

Of course, for every loser there are winners, such as oOh!Media Ltd (ASX: OML), IPH Ltd (ASX: IPH), and Burson Group Ltd (ASX: BAP). If you can't distinguish between the two prior to launch however, I recommend steering clear of the business entirely.

A rule of thumb suggests that shares have a ~50% chance of trading below their offer price in their first 12 months on the market, and the past few years have shown this to be broadly accurate.

With the advent of numerous retail brokers offering IPOs to investors, it's easier than ever to invest in one – but unfortunately no easier to make an informed decision. If you are going to try your hand at IPO investing, here are three crucial things to look for:

1. Who is buying, and who is selling (and why)?

Strong institutional interest can be a good sign, but far more important is to see whether existing shareholders are selling out most of their stake, and their stated reasons for doing so. Foolish Analyst Mike King pointed out a number of warning signs in this area with McGrath Ltd.

2. Where is the money going?

This is straightforward. If a significant chunk of money is going to things other than the business, investors should be concerned. JC International Group Ltd (ASX: JCI) declared in its prospectus that of the $5 million minimum it would raise, one third ($1.7 million) would go to IPO-related expenses, $1 million would be spent on an office in Beijing, and just 28% ($1.4 million) would be spent on performance bonds to win new contracts. When a company is spending more than half its minimum raising on IPO expenses and a new office, that's an item of concern.

3. How's the industry doing?

IPO sellers wouldn't be the first to try to exit an industry before a major downturn. This can be a difficult question to answer, but one that is well worth examining by would-be shareholders before making a decision.

You could also try contacting Foolish contributors on social media (see below) – we cannot provide advice, but if we receive enough interest we could look at writing an article on a company's prospects. The IPO must have a market cap greater than $40 million, and be likely to attract a significant number of household investors, who are our primary readers.

Or better yet…

The post Did you buy one of these disastrous IPOs? appeared first on The Motley Fool Australia.