Over the course of the past several years, I have proposed that companies that sell stock, but report no profits or revenues aren't really selling stock, but something else. Because of the similarity in the way the "stocks" of many of these companies lose money in a way comparable to the way out-of- or at-the-money call options do, I proposed that they were really some type of call option, perhaps a perpetual equity-profit call option. The name perpetual one-time-premium equity-profit swap was also considered.

I came to the realization that if lousy stock needed to be redefined, so did real stock. Some time ago, making a joke after observing another in the parade of Canadian names down 90-plus percent, I proposed that the stocks that companies with no revenues and no profits sell should be called specks.

Advertisements
Advertisements

Everyone knows specks go to zero

Here is how the language works: shyre, share; speck, stock; speculity, equity; speculation, corporation; articles of inspeculation/incorporation; speculate/corporate board of directors. The Latin for corporation, corporare, is reported as "to combine in one body." The Latin for speculation, speculari, is "to watch." To this writer, it seems as though the language itself guides us. Speculities are assets meant for investors to have access to, but "watch," where equities are assets designed for investors to "come together," and perhaps actually buy, if so inclined.

I am convinced that this will save lives. Deceiving others with methods that appear to be employed in the marketplace for stocks without revenues and profits, today, would seem to create motive for a wide range of nefarious acts.

Advertisements

Removing this deceit from Canadian society benefits every citizen, and others it affects around the world. How many lives would need saving for a rename from stock to speck (or something else) require to be worth the trouble? More than one?

More transparency benefits all

The name of this new instrument would warn investors who may not understand what they are buying and provide a higher level of "full, true and plain disclosure," which is always beneficial for all market participants. Indeed, we are all charged with the goal of continually increasing the level of disclosure available.

Specks would allow all current participants to continue, simply substituting the name speculation for corporation. An equilibrium would be achieved among consumers with the two equity categories serving as a built-in safety mechanism. Everyone knows speculities are going to zero, or close to it. I'm not sure that this is the case with many penny stocks, particularly those on the TSX Venture Exchange.

Journalists can change overnight

Take this as a basis for new legislation, or take it as sick, absurdist humor.

Advertisements

My plan to rename these securities will save lives. This plan protects the average investor with an invisible hand and hinders none, but those who would cheat, steal, and commit other nefarious acts, up to and including murder. If adopted, the impact of this plan will be felt for the rest of the current arc of humanity and create a more transparent marketplace, which should result in increased #Business activity, fewer ways for people to rip each other off, and less motive for a wide range of nefarious acts.

In every official document in Canada, companies with no revenues should be referred to as speculations instead of corporations and their stock as speck, or their equity as speculity. One could own a shyre of speck. Journalists can choose to implement this themselves. If every journalist in the world refused to refer to a corporation that had no revenues as such, and wrote "speculation" instead, as well as replacing the words "share" with "shyre," "stock" with "speck," and "equity" with "speculity," things would change, quickly. My goal is to see my definitions of corporation and speculation, and its various derivations, introduced into the Ontario Securities Act, other Canadian legislation, and vernacular usage.