Holding out hope

In my last two posts, I described how the company's management has no particular incentive to make REFR into a profitable corporation, and how the board of directors is effectively a puppet of management. Given this knowledge, what sane investor would have anything to do with such a company?

In my experience, there are basically three types of investors in REFR. First, you have Type 1 (I'm numbering arbitrarily here), the true victims, unaware, largely elderly folk, who trust brokers and money managers with their wealth, only to have them unscrupulously place them in such horrid investments as REFR. They are unlikely to be aware of REFR, and even if they somehow hear the story, they have no particular reason to think it has anything to do with them. Their story is a tragedy, and unfortunately one about which there is very little else to say. Regulation of brokers and money managers is pathetic and we are miles away from reform on that front.

Then you have Type 2, the run of the mill suckers. They see SPD demonstrated, and they say, wow, I gotta get me a piece of that. It's a mistake that investors make all the time, and probably every one of us has done something like that at some point, but it's a mistake all the same. Being "wowed" by the SPD demonstration, by the way, is nothing to be ashamed of, even in long-term retrospect. The little demonstration panel, roughly one foot square including a thick border in which the wiring is kept, works quite well and is quite an impressive sight. Indeed, for all we know, that might be what led Robert Saxe to acquire the patents for SPD and incorporate Research Frontiers to begin with.

But, inevitably, the investor reaches a state of disappointment, when it becomes clear that their expectations with respect to REFR and SPD are not being met. At this point, a lot of different things can happen, depending the psychology of the specific investor. Some will shrug and say, oh well, and walk away. A handful of others will get angry at management for having led them on, and become sharply critical of the company. (This is not the path I treaded with REFR, though I have met a number of people who did.)

Others, sadly, will continue to hang on. They'll accept management's constant alibi that they only thing they were guilty of is too much optimism. They blame themselves for having set expectations too high, or they decide that management deserves another chance. Or maybe they put past failures out of their mind as irrelevant, after all, that's the past, and they're investing in the future! Welcome to the world of the Type 3 investor in REFR.

Type 3 is the type that you see on the message boards, staunchly defending (usually in the sense of "the best defense is a good offense") the company and everything it has ever done, and, if something is so ridiculous as to be indefensible in retrospect, dismiss it out of hand as some ancient relic with no bearing on the present day.

It gets to a point where their rationalization of every single foible of managment becomes so comical, that one begins to question, are these real investors in the company, or are they plants, shills if you will, there to egg on potential Type 3 investors and encourage them to believe exactly what REFR would like them to believe.

It would be truly comical if the entire board full of REFR bulls were all shilling to each other and no legitimate buyers were actually listening to them, but the evidence indicates that there are at least some genuine longs caught up in the bizarre web of hype surrounding REFR. Who is who, is much harder to determine, however.

Type 3 investors in REFR, whether genuine or simulated, generally have one common trait, and that is an inability to admit being wrong. About anything. They will rationalize just about anything to escape the conclusion that they made a mistake. And if cornered, they change the subject, frequently to the motivations of the person asking the question to begin with. Indeed, when this blog is eventually "discovered" by someone from this group, their first reaction will almost certainly be to question my motivation for saying all the things I am saying. They will do this because they will not be able attack the substance of what I am saying in a meaningful way.

So that gives a full reckoning of the players in this tragedy: a management clique looking out only for itself, a board that is a puppet of management, and a shareholder base consisting of the ignorant and the ego-blinded. And all around this motley group, a number of spectators, alternating between grieving the overall tragedy and guffawing at the pratfalls of those involved.

Welcome to my box seat. Enjoy the view. There's a lot more to see.