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The Tipping Point - On Malcolm Gladwell, Viral Growth Models, and Market Reform

Location: Blogs Bob O'Brien's Sanity Check Blog    
Posted by:   bobo 1/10/2006 11:42 AM

One of my favorite books of the last year was Malcolm Gladwell's, "The Tipping Point."

Written in an accessible, straightforward manner, it described the way that small grassroots movements developed into huge mainstream trends, seemingly spontaneously, and of their own accord.

One of the most important takeaways was that there were three tiers in Gladwell's "viral" model of the way information, and trends (really also information - ways of doing things, or viewing things, or wearing things) disseminate. First, there were the pioneers, those who set the trend by doing something different. Next were the networkers, the communicators, who broadcast to their networks the "new new thing," popularizing the trend from those at ground level to the larger communicators. And finally there were the popular communicators who transmitted the info to the mainstream. That is the simplified model - trend-setters, those of influence who note the trend and communicate the importance of the new thing to their networks, and finally the mainstream communicators.

My description for the groups of folks that have noticed a problem in the stock market and are calling attention to it, are "Market Reform" advocates. They want to reform the markets and make them safer and fairer. They recognize problems that threaten the structural integrity of the system, and are willing to devote tremendous amounts of time and effort to calling attention to the issues, and proposing solutions to correct them.

This site was created to gather the braintrust of this loose affiliation of individuals, and to create a movement. The Market Reform Movement, for lack of a better moniker. We now are at stage two of our development, in my opinion, wherein the pioneers have paved the way, and we need to communicate the existence of this movement's efforts to the dissemination networks - the message boards, the chat rooms, local radio, other blogs, PBS, even CNBC and the mainstream financial system's communication machine. I would propose that this is something that we can all participate in, by broadcasting this website's existence to every outlet we know of, repeatedly, so that new folks discover it, and hopefully, begin to ask the right questions.

If we are successful in our efforts, at some point we will hit critical mass, and achieve "The Tipping Point" - that moment where the momentum is such that the movement breaks into the mainstream. One could argue that we are close, with Time Magazine covering the issue in December, and the NASAA forum's fallout, and an increasing number of talking heads devoting more time to denying that any problem exists.

I believe that this is the movement's opportunity to kick it up a notch and to take it to the next level, and would encourage everyone to do what they can to popularize TheSanityCheck.com. From here, any interested reader can access a host of resources that will educate them as to the actual lay of the land. Get them here, get them to read and to listen and to look, namely open their eyes, and get them to tell their contact base, and we go "viral".

Not in the negative sense of a viral infection, but in the exponential growth curve of a viral information epidemic. One group of pioneers provides information to the carriers, who distribute the info to ever larger circles of influence, who become information disseminators themselves.

This is something everyone can help with, and can spend a little time doing, with huge long term results. Tell a friend, post on some boards, send some emails, post on some blogs. The information is available now, the viewpoints are available, the data to support the conclusions are available - to anyone that wants to see. A one stop shop is here to make it easy, one URL to direct folks to, one hub from which to embark on the information journey.

Any suggestions as to how to spread the word are appreciated. 2006 will be the year that the mainstream woke up and discovered the crisis. And you will be a part of that.

Happy New Year.

Copyright ©2006 Bob O'Brien
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Comments (6)
OSTK buy out By tommytoyz on 1/10/2006 12:37 PM
Bob,
Before all data was lost, you had posted a theory that an unsolicited buy-out offer was imminent in OSTK and that would enable the shorts to exit at a sane price for them - all of them.

The only problem I can see with that is the fact that the Byrne's control over 50% of the voting shares. That makes such an attempt futile.

The institutions that lent out their shares, relinquish their votes in doing so, no matter how may times the shares have been passed arounf and re lent.

It would make for interesting lawsuits and discovery if it came to a vote and More voters were cast, making the vote uncertain.
Re: The Tipping Point - On Malcolm Gladwell, Viral Growth Models, and Market Reform By bobo on 1/10/2006 1:22 PM
I'm working on getting that blog entry back, and if not, I'll just write it again. I know the theory by heart. And it isn't to actually win the tender, it is just to have an excuse to file a massive class action and get the SEC to halt trading and open an investigation.
Ostk Buy out By tommytoyz on 1/11/2006 7:02 AM
I don't see the point nor what the excuse for an investigation would be. If trading were halted in OSTK, the shorts would not be able to cover through the open market either.

Your original point makes sense if the shorts can get control of enough voting rights to effect a buy out at a low price. Otherwise there is no profit in an attempt fro them. An investigation might even go against them as as over vote might shed light for civil lawsuits to go after certain brokers - and they don't want to have any light shed on them.

Also the cost and risk to get the price even lower can't be trivial. I'm sure if it were easily possible, they'd have done it already. Not that's it's impossible, just not easy. The damage they've inflicted has already been massive and they've had to stick their necks out to do it with millions of short open positions.
Re: The Tipping Point - On Malcolm Gladwell, Viral Growth Models, and Market Reform By rrm_bcnu on 1/17/2006 1:01 AM
All one needs to do is look at other halted issues to see the effect that a halt has on price. Broker-to-broker trading in the gray market is prime country for drastic reductions in price. The Bid is ususally 50% of the Ask in gray trading. A relentless decline would ensue, allowing buys to cover at prices on can only dream of in normal trading. That is why SEC halts MUST be based upon clear and compelling evidence of wrong doing. Otherwise the SEC benevolent action my play right into the hands of Naked Short Sellers.
MY IDEA By TOTAL KNOWLEDGE on 1/19/2006 7:41 PM
GET 20 PEOPLE TO BUY 4.9% OF A COMPANY THAT IS NAKED SHORTED BIG TIME THEN LET THEIR FRIENDS GO OUT AND BUY A MILLION SHARES EACH .. SO LOOK AT IT LIKE THIS A COMPANY HAS 50 MILLION SHARES TRADING AT 10 CENTS.. YOU BELIEVE THERES A HUGE NAKED SHORT SO ME AND MY 19 FRIENDS EACH BUY 4.9% ABOUT 2.45 MILLION SHARES EACH SLOWLY OVER MONTHS THE SHORTS WILL SELL US ALL WE WANT .. WE DONT HAVE TO DECLARE BECAUSE WE DONT OWN 5%.. THEN WE LET OUR FRIENDS EACH BUY A MILLION SHARES SO ROUGHLY 20 MILLION SHARES MORE THAN FLOAT.. US 20 GUYS GET TOGETHER AND BID 100.00 A SHARE FORE THE 2% WE DONT OWN. OUR FRIENDS OWN 20 MILLION WORTH 100.00 OR A 1000 A SHARE WHATS THE DIFFERENCE THE HIGHER WE BID THE MORE MONEY ARE FRIENDS MAKE THATS 200 MILLION OR 2 BILLION THE WALL STREET FIRMS HAVE TO PAY OUT TO OUR BUDDIES SO WE INVEST ROUGHLY 10 MILLION TO MAKE BILLIONS.. THE SEC IS CORRUPT LETS BEND THEM OVER WITH THEIR WALL STREET PARTNERS AND SHOW THEM A GODD AAAAAAAAASSSSSSS WHOOPIN... BETTER YET I WOULD BET MY LIFE THAT STOCKS LIKE MICROSOFT AND ORACLE ARE NAKED SHORTED TO THE MAX.. JIM ELLISON AND BILL GATES WOULD MAKE WAY MORE MONEY SPINNING OFF DIVISION INTO THESE COMPANIES AFTER THEY BUY STAKES IN THEM.. GOOD WAY TO GET EVEN MR ELLISON WITH THESE THUGS THAT ARE NAKED SHORT YOUR STOCK.. BETTER YET CALL WARREN BUFFETT IF HES AS TIGHT WITH BYRNE AS THEY SAY HE IS.. THAT WOULD PUT A MAJOR WHOOPING ON THE SHORTS.. WHO CARE WHATS THE SEC OR DTC THINKS THEY ARE CORRUPTION AT ITS BEST..
PAT BYRNE BEND THE SHORTS OVER By TOTAL KNOWLEDGE on 1/19/2006 7:49 PM
BYRNE SHOULD GET HIS RICH BUDDIES TO BUY 200% OF THE STOCK 4.9% EACH AND MAKE A 500.00 BID FOR THE COMPANY THEY WONT NEED ANY STOCK WALL STREET WILL ACTUALLY HAVE TO PAY THEM .. THE DEAL WILL COST THEM NOTHING AND THEY WILL MAKE BILLIONS..

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