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U.S stocks were roughly unchanged on Friday morning, with the benchmark S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES: ^DJI  ) down 0.03% and 0.08%, respectively, at 10:15 a.m. EDT. Yesterday, legendary investor Carl Icahn told Reuters that "it is time to be cautious about the U.S. stock markets. ... I am being very selective about the companies I purchase." Back in September, he also said "the [stock] market is giving you a false picture. ... I don't think a lot of companies are doing that well," but that didn't stop the market from rising over 15% since then. Nevertheless, short-term price action is not evidence of much (yes, nine months is short-term in the stock market), and when one of the world's most successful investors voices his concern regarding stocks, it's probably unwise to dismiss him out of hand.

Speaking of things that are unwise: What value would you assign a company that has a single employee, no revenue, and no cash on its books? Even as late as yesterday's close, Cynk Technology (NASDAQOTH: CYNK  ) had a market value in excess of $4 billion. This morning, Finra halted trading in the shares, which had risen more than 200 times in value since June 16. Here's what the shares are (and always were) worth: zero. How does this sort of tomfoolery happen?

In less than an hour of rudimentary due diligence, I uncovered red flags that were so glaring that Cynk Technology looks like a parody of a penny stock fraud. When Cynk filed its first stock prospectus more than two years ago, it billed itself as a "development stage company" that was set to launch Introbuzz, a social network that would charge members for introductions to other members. As far as the company's valuation at the offering goes, Cynk was up front:

The offering price of the common stock bears no relationship to any objective criterion of value and has been arbitrarily determined. The price does not bear any relationship to Introbuzz assets, book value, historical earnings, or net worth.

The prospectus also warned that the company's then-sole officer and director, Kenneth Carter, was only spending 10 hours per week on company affairs, and added that:

He does not have any public company experience and is involved in other business activities. The company needs could exceed the amount of time or level of experience he may have. This could result in his inability to properly manage company affairs, resulting in our remaining a start-up company with revenues or profits.

Which is exactly what happened. In the company's most recent earnings report for the quarter ended Sept. 30, 2013, Cynk was still referring to itself as a development-stage company. It warned:

The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors raise substantial doubt about its ability to continue as a going concern.

When I read stories such as this one, I don't know whether to laugh or cry. If you're a stockpicker, I suppose it may be comforting to know that you are competing against people who would sink their money into the likes of Cynk Technology without even glancing at the prospectus. Shares are fractional interests in a business, and when there is no business behind the shares (or even a glimmer of a business: the Introbuzz website is inactive), they are worthless. It's just that simple.

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Alex Dumortier

Alex Dumortier covers daily market activity from a contrarian, value-oriented perspective. He has been writing for the Motley Fool since 2006.

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