If you want a proper education in investing, take a bath. Lose some money.

Winning stocks breed careless, greedy market players. But the worst stocks are the best teachers. You don’t soon forget a kick in the teeth.

As someone who once rolled the dice on a gold company that magically transformed itself into a 3D Internet mall at the height of dot-com mania, I consider myself somewhat of an expert on the subject of the Stock Market Crash Course 101.

Of course, you don’t have to take that bath. If you don’t feel like flushing your money down the toilet, you do have the option of going to school on the stock market’s Titanics without investing in them.

Most investments sites provide statistics on winners and losers. Globeinvestor.com is one of the most useful places for scanning winners and losers (click on losers on the home page, then year-to-date losers).

With a bumper crop of crashes this year, it’s a good year to spend some time in school.

The current Crash Course poster child on our list of Top 10 smashed hits is World Heart Corp. (TSX:WHT), which has rewarded student investors with an 87.5-per-cent loss year to date, worst among TSX stocks over $1.

If you couldn’t see Hurricane Heart coming, you were probably that guy bodysurfing on CNN oblivious to the red flags.

Which brings us to:

* Red Flag No. 1: The CEO of World Heart on Jan. 1 was Rod Bryden. He is a former owner of a National Hockey League franchise, the Ottawa Senators. The Senators went into bankruptcy protection. NHL owners aren’t exactly penny-pinchers.

Get it?

You’d have been a heck of a lot better off betting that the CEO of this a rtificial heart- making company would be fired. Which he was.

The fact that World Heart managed to lose $25.7 million in the first nine months of 2003 may also have been a hint that this stock was an accident waiting to happen.

Furthermore, the stock had just spiked almost 1,000 per cent late in 2003 to $10. It recently traded at $1.43.

Stock in Metallic Ventures Gold (MVG) has been giving World Heart a run for its money, having tanked 79.1 per cent to $1.55 year to date.

* Red Flag No. 2: Junior gold exploration stocks are just about as risky as junior gold exploration stocks that become 3D Internet Malls (i.e. the infamous Sikaman Gold). Metallic Ventures shares tripled in 2003, a year in which the company had zero revenue. It does have some holes in the ground. In Nevada. Take a right at the casino. Get it?

Third on the TSX crash list is Bennett Environmental (BEV), which has plunged 75.9 per cent to $6.56 year to date.

* Red Flag No. 3: When an environmental company – Bennett treats contaminated soil – gets in hot water with an environment agency, is that a hint the stock may be a falling knife or what? Indeed, the Quebec Ministry of the Environment has taken issue with Bennett’s Quebec plant, citing air quality concerns.

This company is not having a banner year. Founder John Bennett resigned as CEO, then resigned as chairman “to spend more time with his family,” which, translated, means he resigned to spend less time with his company.

And then there are the usual class-action lawsuits from the market’s poor losers – American investors.

Get it?

Fourth on the TSX crash list is Labopharm (DDS), down 70.8 per cent to $2.68.

* Red Flag No. 4: Playing biotech stocks without earnings is a crapshoot. It can take a decade or more to bring a drug to market. Most biotechs run out of money before then.

(If you’d invested in Labopharm at the start of the year, you knew – or ought to have known – that the company lost $24.5 million in the first nine months of 2003. That’s even more than my wife spends on curtains. Get it?

In fifth place is Hip Interactive (HP) with a 68-per-cent plunge to $1.28.

* Red Flag No. 5: In this accounting scandal era, companies who are math- challenged are wonderful candidates for raising the ire of shareholders.

Hip was pretty hip until the company announced a downward revision of earnings expectations, citing “certain accounting errors.” The company also fired its vice-president of finance. Get it?

Running sixth and seventh are two more companies developing products in the medical field with frightening burn rates – VSM Medtech (VSM), down 67.6 per cent to $1.47 and TSO3 Inc. (TOS), down 66.8 per cent to $1.

Rounding out the Top 10 are Nevsun Resources (NSU), down 63.8 per cent to $2.60 on recent news that the government of Eritrea in Africa has halted its mining operations; Descarte Systems Group (DSG), down 62.5 per cent to $1.38 on its blood-red balance sheet; and Specialty Foods Group Income Fund (HAM.UN), which took a 62-per-cent beating to $3.05 on suspension of its monthly distribution payment to unitholders.

If you happen to own all 10, congratulations. You’ve already graduated from Stock Market Crash Course 101.

With honours.

* SAGE WORDS: “The market, like the Lord, helps those who help themselves. But, unlike the Lord, the market does not forgive those who know not what to do.”

– Warren Buffett, an investor who does not and would not own the aforementioned companies.

HOT STOCK: GUYANA GOLDFIELDS
GUY-TSX $3.80
Up $1.37 (+55.7%) on 1,907,504 shares (for week ending Oct. 1)
After a brief hiatus, the gold bugs have once again backed up the truck to load up on shares in gold stocks, and Toronto-based Guyana, the leader of the pack of a glittering array of gold plays, couldn't have timed the release of their drilling results from the
massive Aurora property in Guyana any better than this.

COLD STOCK: CYGNAL TECHNOLOGIES
CYN-TSX $1.23
Down 29 cents (-19.4%) on 131,650 shares (for week ending Oct. 1)
Tech stocks wound up a dreadful quarter on a sour note. Cygnal, a software firm based in Markham, Ont., is among the worst performers in the tech sector. The latest swoon puts the stock 62 per cent off its 52-week high of $3.24.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)