Thursday, 19 September 2013

Why are so many dumb traders holding this security the wrong way?

On HSX, there are usually a few very obviously profitable short-term investments, like movies that open much higher (or lower) than expected, arb moviestocks, and starbond adjusts. And lots of moviestocks and starbonds make profitable investments over the long-term, because you can reasonably expect their price to steadily increase or decline.

But when you look at the number of shares held on the moviestock trade, sometimes you will see that the overwhelming majority of traders are holding the investment the "wrong" way - either against the short-term adjust, or against the prevailing long-term trend.  What's going on here? Have you got it wrong, or are all these traders complete idiots?

Neither. It is actually because many HSX portfolios are not actively traded.

HSX has been around for over fifteen years now, and over that time there have been a lot of traders who have stopped playing the game and allowed their portfolios to go dormant.  Even though their portfolios are no longer traded, their positions still show up on the "shares held long/short" section, giving the illusion of popularity.  This is especially notable for moviestocks that have been active on HSX for a long time, and were once hot stocks to own, but now are stalled projects. AUST4, FLASH and HALO.

And then there are casual traders who are not so dedicated to HSX that they check their portfolio every day, every week or even every month.  There's a big uptick in HSX activity over the summer and the holiday season, when the combination of movies that people want to see and the allure of buckets of easy H$ entices more casual players back to the game. There's also a down-tick in spring and fall, when the movies are generally less interesting and making H$ is harder, giving people less reason to play. When these traders are taking a break for the game, they either take the long-term perspective and invest in moviestocks they believe will go up in value over the coming months (or years), or leave their portfolio as it is without worrying about it.

So obviously these portfolios are missing out on H$ opportunities by not holding their investments the right way. But the people running them aren't morons. They just have other priorities outside of HSX.

1 comment:

  1. Other priorities than HSX?!?! HERESY!!!

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