Derricut on investment flabber

Simon Derricut, as a comment here, wrote:

(and I comment).

One thing about the money that is being talked about is that every year IH (and all the other players) will need to produce accounts and pay taxes. That means that people who do some digging will find out the truth or otherwise of all the rumours. There are legal implications for lying about the money.

Indeed. Darden and Vaughn have high experience with Cherokee, making risky investments, where some fail, and would be thoroughly aware of the possible pitfalls of failure to fully disclose risk to investors, and knowing that fraud would likely fail to escape detection. In the attempts by Planet Rossi to show that Darden and Vaughn are crooks, examples are dredged out of Cherokee history; but, when examined closely, none of these have held up as evidence of fraud or deceptive behavior; the fact that reporters have strongly implied fraud and that investigations have been started is used by Planet Rossi as if it were proof, but the lack of conclusions is actually evidence of the opposite. The worst thing found, so far, was an accounting error, an understandable one, arcane, where a particular expense was, by securities regulations, not to be charged to investors, whereas IH did make that charge. No wrongdoing was found, only error.

Similarly, if IH did get Rossi’s IP to actually run, and later try to sell it without acknowledging (and paying) Rossi, then he will have legal redress. They can’t “steal” the IP and get away with it.

Right. Again, Planet Rossi must imagine that somehow the IP would be hidden, disguised. I can only imagine that as possible if the IP were not actually patentable. Further, to pull off this scam, IH would be risking billions in legitimate profits, all to … what? Take some secret payments under the table from some other company, perhaps Brillouin, where they have only a relatively small and old investment? They would be risking that some whistle-blower would reveal their perfidy. Rossi tried hard to find evidence along these lines and apparently failed, though we may not have seen everything.

The point about VCs (Venture Capitalists) is that they are gamblers. Where most investors want to get a certain return on investment, VCs estimate the risks of losing their money and calculate whether the possible gains outweigh the risks so that, on balance, they gain more money than they lose, but it is known that since the investments are high-risk then a certain proportion will in fact fail and they’ll lose their money on those ones. In fact, if not enough projects fail then the VCs are not earning their money, since they ask a high percentage of the profits of those that succeed. No-one would take a low-risk project to a VC, after all – it costs too much.

This accords with my understanding. VCs are gamblers, but in a game where they can act to play odds that, overall, favor them. This all is dependent upon their ability to estimate those odds. Typically, there are not betting the farm on a single project, but engage in many projects, distributing risk, increasing the potential gain, or hedging it.

(That is, they might bet on exclusive possibilities. This is the simple answer to why IH was not immediately offering to return the License. After all, what if Rossi actually has something? What are the odds of this? And … what would Rossi be offering in return? He seems to have imagined that he could just unilaterally cancel the License “for nonpayment,” but the Agreement was certainly not written that way, this was just another Rossifiction. IH has a License until and unless they give it up or a Court takes it away — which is unlikely unless their investment is returned, at least the original investment.)

Analysing the risks correctly requires that the truth be told by the receivers of the VC backing. At least the truth as far as they know it. IH of course knew that Rossi tended to not tell the truth, which raised the risks somewhat, but the payback if Rossi had actually had some real technology was sky-high and a 1% probability of that was deemed to be worth the risk. Dewey states that 1% probability as their cut-off point.

They will, if sophisticated, include the possibility of lies in their estimations. Humans lie.

1% is actually conservative, if the loss can be sustained. I estimate the value of a practical LENR technology, something like what Rossi was claiming, at about a trillion dollars. So 1% would, in theory, be worth about $10 billion. However, straight game-theory play is not how humans actually operate. We want better. We also have alternatives, other ways to invest, and may seek maximization among choices, not merely some absolute average return from one.

I think that all of the above should be pretty self-evident to most people who have been watching, and that most of these points have been made at various times. Everyone (IH, Woodford etc.) should have been aware of the risks of backing Rossi. There’s also an obvious risk in backing LENR in general, since the main scientific consensus is still that it is a measurement error.

Yes. The risk involved with LENR, however, may depend on time-horizon. Short-term returns in LENR are very unlikely. Longer-term profit is much more likely, even probable. But “longer-term” might be in excess of twenty years. I assume that IH and Woodford were quite aware of risk, and quite aware of the extensive criticism of Rossi. They certainly knew about Krivit, and we see McLaughlin taking Krivit (mispelled) into consideration in February, 2015. I would assume they had read everything Krivit had written. Krivit, however, is a yellow journalist, and draws firm conclusions from evidence that is less than conclusive. And WTF does a certain unfortunate figure’s child molestation prosecution have to do with Andrea Rossi? Is Rossi responsible for every reprehensible action taken or allegedly taken by everyone who supported him?

Krivit wrote about the obvious, so I’d assume that IH knew all this, likewise Woodford. This was all extensively discussed in the CMNS community, which was mostly very skeptical of Rossi.

Still, the big profits go to the people who correctly bet that some fringe science can be turned into a technology. Of course, the profits can be even bigger if you can get the government to put the initial research money in and you then utilise that research, but that’s another story….

Right. So part of an IH strategy might be to encourage and support governmental and other non-business investment in research. That is where APCO might shine. I see a sane long-term IH approach as being an observer, ready to act quickly if the opportunity arises, but not routinely spending a large budget. Probably maintaining a lab but only engaging substantial staff for specific and vetted projects.

As I see it, IH began with a fairly low estimation of achieving success, and during the Doral test that estimation went down (below 1%) because of the way Rossi ran his operation, stopping any verification of his process. It seems unlikely that Tom Darden would have kept such estimations secret from Woodford or anyone else who intended to invest, since that would open him to being sued for fraud by such investors. Since we haven’t seen Woodford suing Tom Darden, it stands to sense that they must have been happy, and are still happy, with his honesty in telling them what he knew of the risks.

For reasons that others have stated, we cannot conclude from the absence of a lawsuit that Woodford is happy with IH. However, there is no sign that they are unhappy, so far. There is no sign that they have attempted to withdraw their investment. I’m sure they are unhappy about so much being spent on lawyers, but it is possible that this, or some of it, might come back from Rossi and Johnson. I don’t expect Bass and Fabiani to be big sources of recovery. Sad cases, in my opinion. I doubt criminal indictments would stand there, but … if one through carelessness aids a civil fraud, one can be held liable, and this could be “joint and severable” liability, where the total liability can be collected from each.

Though we’re not privy to what went on between IH and Woodford, that lack of any legal proceedings implies strongly that there is no problem with that relationship and that Woodford are happy with the information they received from IH. They may be annoyed with Rossi, though.

Though we may not be able to trust what people say, what they do is a reliable indicator.

The operative word is “indicator.” So often in internet discussions, indications are taken and presented as proof.

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Author: Abd ulRahman Lomax

See http://coldfusioncommunity.net/biography-abd-ul-rahman-lomax/

9 thoughts on “Derricut on investment flabber”

  1. Rigel – the difficult thing in the Free Energy field is actually in deciding what ones aren’t a scam or mistaken/bad measurements. All the “big names” in the field must be aware that their devices don’t actually do what is claimed, and the scam-of-the-week generally uses a principle that obviously won’t work, so it’s like shooting fish in a barrel. Still, someone needs to be telling the truth about those claims and to provide a platform for others to comment without being censored. In analysing all those ideas, though, and reducing them to principles, I found an error in some basic theory and at the moment we’re testing ways to exploit it. We should have data during the next couple of months to prove it (or not). There’s a possibility of a “kitchen table fab” that any competent engineer could make cheaply and prove the point, but that one isn’t my idea and so I can’t publish it until it’s proved to work and the inventor is happy to publish.

    For Rossi, we start with Piantelli who seems to be a solid scientist who wasn’t mistaken and probably also got his measurements right. We don’t however know how many failed experiments he had. Given that we suspect that the LENR is most likely a near-surface effect, and that Rossi used a lot more surface area, it was not possible to call Rossi absolutely a scam earlier on – there may have been some real results. That it was lies only became certain with Doral. If Rossi had kept his claimed power output small we may still have not been certain, though of course there’s been a lot of the characteristics of a scam since the early days. Difficulty in reproducibility has however been a big point about LENR from the start, so the fact that people failed in replicating what Rossi claimed to have done would not have been surprising even if Rossi had been telling the truth.

    When we look at the precautions Fleischmann, Miles and Cravens needed to take to achieve a successful result, it’s obvious that it’s easy to make a mistake in fuel preparation, and that getting the conditions right isn’t a walk in the park even for experienced experimenters. Even then, some don’t work, and we don’t know why. Do the same things (as far as we can tell) and we get different results. The material source (and thus the trace impurities and precise concentrations) may be critical, and we don’t know enough yet. For Pd/D, cathodes cut from the same block produce different results. Maybe the same applies to Ni/H, and thus it’s possible that Rossi could have seen some excess heat at some point and couldn’t repeat it. It’s of course also possible that Rossi fooled himself by bad measurements or was simply lying from the beginning. My bets go on lying from the beginning by now, since in the Doral test he made no provisions for dissipating the 1MW of claimed heat. He knew it wouldn’t work before he started, and designed it to fool the equipment he specified.

    I see the IH strategy as being the only practical way of proving whether Rossi actually had a technology or not, since Rossi seems to have been happy to publish bad measurements for as long as necessary. I don’t see where Rossi was profiting from his capers before that, though, and I can’t see the reason for false claims anyway. Being famous is the only gain I can see before IH put the cash up. Still, as we’ve seen in the Free Energy field, some people make a nice living selling hope, and scams are common. Still, knowing for certain that Rossi was lying is a gain, in that hopefully fewer people will waste their time on analysing fake results and trying to replicate an LENR setup that never worked, and thus we now have more chance of someone trying *something different* and thus achieving a real result. Rossi has wasted a lot of peoples’ time and money, and thus delayed advances in the art that may have occurred if he hadn’t lied about his results. He’s still wasting a lot of peoples’ time in discussing the court case, of course, but that’s something people do for fun.

    It’s unlikely I’ll be in DC, but I hope you get to welcome Abd. Should be a good conversation.

    1. Simon,
      I do not have the time to respond as I would like — to your– as always thoughtful reply.

      Don’t worry Abd and I will hit it off, and one topic will be coming over to see you. So don’t worry just start to make beds.

      I appreciate your comments and always have. I wish you knew me better so maybe this Abd trip will help us all. Surely, I want LENR to work. I have a technical background that would be surprise some, I do not like to talk about it.
      So I will say this. I will do my best to host Abd and get him the access he wants. But I am sure that this is not portrait that the ‘LENR is being suppressed’ folks want to hear. I mean I am absolutely sure.

      But the thing is I always have my mind open. And now I see you are reading Lenr-forum. So certainly you know I am trying to heal the riff. Small steps. And I am working on the first one now.

      Anyway this CFC forum is suitable to more verbage. I really like R-G. I am very accepting to others points of view as long as they bring the butter to the table.
      I have to say I called you a polymath once (I learn by studying the history of ideas and words so you are stuck with polymath). But it is the depth of thought that matters. I have seen it for years in each and every one of your posts. So on R-G I see the regulars. But the topics are far from PESN (I am hesitant to use that word) and right on topic. Leading people to information and letting them make up there own damn mind is something I loved about Scarecrow. Now Mark E. he was special also. So to go back to R-G the topics are real. So Ken/Dansie and everyone is to be commended on it.

      Now on to Rossi he is full of bullshaite. So I am hoping that Abd can explain this to me (and probably have to explain it again and again). It is a scam. What I really do not get is why others can not see it. There are many good folks that are working in LENR. Those that seem to support Rossi after all this time I just do not understand. One fellow on ECW open forum said the e-cat had a 10 year birthday. I tried to confirm. But it goes AT LEAST back to 2011 or when the patent was submitted. Ha. Leave it at that.

      Anyway, this summer will be interesting. And I may just keep Abd.

      1. Rigel – I agree with Abd that this should be fun, and I’m sure you and Abd will find a lot to talk about. It would be good to have a working LENR, though there are maybe alternative ways of getting nuclear power without having massive structures. I know of a few projects that are in progress. In 5-10 years the energy field will look a whole lot different than it does today, providing some of them succeed.

        Since we’re all retired and can’t be sacked (except the final removal for natural causes, of course) we can investigate the “crackpot” ideas with no worries about losing income. For young researchers, though, that beyond-the-fringe status means risking their whole career and there are more than enough other things to research, that bring far more kudos. LENR is not suppressed as such, but few will put a lot of money behind it.

        LF tends not to have helpful discussions. The best recently was Bob Higgins’ automated test idea, where some teamwork and useful suggestions came in. When it comes down to pure Rossi talk, though, it seems that the logical input is ignored and the socks and enthusiasts (who want Rossi to be right even though it’s obvious he isn’t) keep repeating the same things. Even with Bob’s tests, though, it’s based on the premise that Rossi actually had a working technology and trying to replicate it. Chance of success pretty low….

        Abd dives deep into the subject. That also means his posts are long, but the information density is high. It’s worth taking the time to read, where the pithy one-liner comments on LF can generally be skipped without any loss. High emotional content, but short on the beef. Tom’s excellent posts seem to be largely ignored, in that the same questions turn up later, but maybe the reason is that it’s somewhat hard to find a post again later – the links are fluid and changeable. Whereas in Vortex I can bookmark a link that’s interesting and go back years later to find it again, with LF that would probably fail after a few weeks. There’s not much point in me commenting on LF – it’s like writing on the beach. The point of writing about things is to change what happens by pointing out logic. Abd is using his writing to change things.

        In the Free Energy field I’ve seen it happen again and again that someone who has been shown to be talking carp still gathers followers who want to believe. Such ideas end up joining the ranks of “suppressed technologies” that you can easily find in Rex Research, Pat Kelly’s compendium or a load of other sites, with (often) full instructions of how to make it and what is claimed for it. There’s also a yearly fest where these non-working ideas are expounded and the latest non-working machines are shown, though not demonstrated fulfilling the claims. Rossi is just another one on the list. He’s selling Hope, and people really want to buy it. He’s better at it than most, though. Sad to say, but I predict he’ll retain a significant number of supporters even if he goes to jail again. It’s just a sign that the MiB want to suppress his world-changing technology.

        This is getting some way off the topic of investments in LENR, though. That investment, though, does need some degree of calculation of the risks, and so gathering the evidence and qualifying how good it is is the task that needs to be done, unless some experimenter manages to undeniably prove it experimentally and can get it replicated. There’s always a chance that a Plan A might work before Plan B grinds to completion. There’s however a much higher probability that the various versions of Plan A in progress will all fail, since the small ones are often based on RossiSays and the long-term ones (Brillouin, Miley, Cravens etc.) seem to be stuck at the same point and are without solid replicable data since the details are proprietary.

        Beds will be available here, but will be occupied for the next month or so as we get the 2LoT devices fabbed and tested. Things will be a bit intense for a while, so send an email.

        1. Whereas in Vortex I can bookmark a link that’s interesting and go back years later to find it again, with LF that would probably fail after a few weeks. There’s not much point in me commenting on LF – it’s like writing on the beach.

          I think there are ways to create permanent links to a particular post. The standard quotation link seems to automatically refer to a place where the post is moved. That is, redirection or something like it is automatic. I think the basis for this is that the post number does not change when a post is moved, and the system actually ignores, then, the thread name. However, the post number that displays on the right, used for “sharing,” changes whenever a post before it is moved away. The page number within a topic shifts when posts are moved or deleted. These are poor design. Subthreads don’t exist; if they did it would be possible to create a hierarchical display, with levels of depth.

          WordPress is better, more flexible, with wide support; but still human work is needed to create useful structure. Posts here are intended for transient content; pages for developed content. We can create page hierarchies beyond what is created simply by assigning categories. We can create organizing pages. It only takes time.

          As well, as I will be showing, I hope, my ban from LF is quite useful, it keeps me from wasting time reacting so quickly to posts there. If I write something here that anyone thinks is of value, they can link to it on LF, that has, so far, never been sanctioned. If I write too much, someone can summarize it (and that has been done, a little). I can also be asked to summarize, I will normally do it.

          Even more important, errors in posts here can be and are corrected when they are found. Differences of opinion can be organized for access and review. We have, here, only begun to scratch the surface of the possibilities. The only harm from the ban is that I cannot correct errors in my posts on LF, and it would take an admin to do it. That is essentially dumb. The idea of respecting a banned user, I have found, is typically foreign to administrators, this was all-too-common on WMF wikis. That is, what is called a “voluntary ban” can be used, and, under decent conditions, can heal disputes. Voluntary restrictions. How about a restriction against my posting to LF with any new posts?

          I found, though, that Staff there was utterly intransigent, impenetrable (and essentially anonymous, i.e., there are admins and mods I have good communication with, but they profess helplessness. So where is the problem? I concluded, in the end, that the inflexibility must be with the Owner, or whoever has top-level admin access, domain access.

          E-Cat World is much more straightforward! It’s Frank, period, for better or for worse.

          The point of writing about things is to change what happens by pointing out logic. Abd is using his writing to change things.

          This is not quite how I’d say it. I write to express what is called Self in my training; this is not the individual ego, exactly, it is the human collective Self. Logic is a tool, but not a particularly powerful one, as one might notice by how often “reasoning” fails to communicate. There is something else. I call it presence.

          In my training, and as a coach, we were prohibited from coaching by text; text was used only to set up appointments or for prearranged notifications. The minimum was voice phone, where personal presence wasn’t practical. For some aspects of the coaching, personal presence was required — at least that was the rule, what was expected.

  2. I have been reading Simon since his partner in “New Energy” Dansie was on the old smart scarecrow. After R-G came on line it was refreshing as they were more on the almost real technology and Dansie can call a scam a scam. Anyway both Simon (also Jed and TomHux BTW) and you Abd are thoughtful men in a world of short words. It makes your content more powerful as it is both directed and meaningful. And again if you or Simon or anyone who is trying to make this a better world come to D.C. I want to help with what I can.

    1. Rigel, please call me at the number provided to you in mail to your gmail account (used for posting here and also previously for private email). I need to schedule the DC trip.

      1. Abd,
        I have sent you an email with my contact info and some addresses. I hope you get it and it’s readable as my wireless was funky. I will contact you and you should have received my email. If the email comes though re-read it as it is most sincere.

        1. Rigel, got your mail. Fantastic. I’ll be working on schedule. So for those reading, I expect to be in Miami by the 26th June, and plan to stay there for two weeks. I’ll be in DC a few days before that. If anyone wants to meet me, I do receive form submissions from Contact Us. — unless you look to the filter here like a spammer. Not likely, the filtering is quite good, and if it blocks you I think you are notified.

          I may also stop in DC on the way home, not decided yet.

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