September 6, 2006 

September is historically the worst month of the year for the stock market.

Here are some eye opening statistics: Since 1962 the S&P 500 has closed down in the month of September 57% of the time- 70% of the time at the end of a four year cycle- this is the 4th year. The average loss in a down year is 5.7%. The only other month that is down more often than up is July.

September '05 was not bad. In lieu of the strong August, my guess is September could be tough this year. I have a couple of theories about September. Investors have a renewed enthusiasm for the market after the long, boring summer months come to an end. Not so fast- fund managers return from their summer haunts loaded for Bear- why- because seasonally Q3- the quarter that ends at the end of September, is one of the weakest of the year. Corporate performance mirrors the efforts of people, and in general people don't put out as much effort in June, July, and August.

Q3 is followed by Q4- generally the best time of the year to be positioned in stocks. Why? Holiday shopping combined with year-end effort by the people who work at companies.

The money managers are selling now out in front of Q3 numbers. They will be back in October and loading up for the traditional year end run. 

I have three new microcap ideas to introduce for the Q4/Q1 run. The first will come early next week. This would be a very good time to get some capital ready for new ideas.

One last thought- if you invest in microcap stocks, whether they are OtcBlog ideas or from other sources, you are going to have losers. It's part of the process. The most successful microcap investors accept this, and have the ability to sell the losers and move on without looking back. Unsuccessful investors sell their winners when they get up a few percentage points, and then moan and complain about their losers, blaming everyone but them selves. If you believe you have a loser in your portfolio, get rid of it and move on. Believe me, you will feel much better, and you will improve your odds of making money.

Here's a quick review of the current offerings in order of my view of which have the most upside at the current time:

Advanced Cell Technology (OTC BB: ACTC) 

These guys are on the forefront of Stem Cell research, and they will continue to make headlines. The current financing is done and I believe the market has absorbed every share. Nowhere to go but up!

I realize there are a lot of microcap newsletters. Whether you love or hate the OtcBlog, or love or hate stem cell research; ask yourself this- how many microcap newsletters have you read that gave you ideas with the White House and the President of the United States commenting directly on their technology achievements?

This company has developed technology, which requires the attention of the most important single person on planet earth. Love it or hate it- the choice is yours.

When I first heard the story and studied their achievements I knew I had to report on this company. Short term- impossible to call but I'm inclined to believe higher- long term- look out above. 

Force Protection, Inc. (OTC BB: FRPT) 

Force Protection has been a huge winner for us.  When we first began covering FRPT the stock was trading around $2.00 with little volume. We saw the stock take off after only a few months and recently traded over $7.00. The stock continues to make new highs and demand for vehicles is tremendous.

We would be taking some profit now, however, the long term looks great. You will see some pullbacks but I would not be surprised at all to see this one on NASDAQ soon. Can you say "Money Managers"?

Pick your spots and always use limit orders.

Groen Brothers Aviation (OTC BB: GNBA)

Great company-for the time being bad stock. This company has the kind of story microcap investors dream about.

I'll be the first to admit. The GNBA saga is wearing me out. Everyone wants to know why the company is doing so well, but the stock is trading so poorly.

Since first covering the stock at about $0.20, we have seen a high of $0.49, and a low of about $0.13. The volume has dried up a bit and the stock has drifted down on little or no trading. This is a great opportunity to own this one cheap. It will take little buying to see the stock pop back up. Market Makers are looking for some stock at a discount and any significant volume will move them out of the way.

With the recent announcement on the progress made with DARPA. The Company will realize significant revenue and will open the door to even more contracts. The contract with DARPA is worth a potential 40 million and GNBA has already reached the third milestone for phase 1 of the four-phase program. The Company just needs to successfully work through the contract with DARPA.

If they pull this off, watch for the stock to trade much better. I can't give you any timing indications, but I can say they are working hard on it right now. Still looks great! 

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