Thursday, 19 September 2013

Why isn't this moviestock priced higher when I like it so much?

Moviestock prices are driven by market forces - basically, the collective trader demand to own (or hold short) shares in the moviestock. You as an individual may think that a movie sounds great or, if you've seen it, is great (or awful), and on that basis decide it's a good investment. But that doesn't mean the market as a collection of traders necessarily agrees.

There are many possible reasons why the market may not share your enthusiasm for owning a particular moviestock.  For example:
  • the movie might not ever get made
  • the movie might not have any stars attached
  • the movie might not have a release date, or it has a bad one
  • the movie might not have a distributor, or it has a bad one
  • the movie might have a horrible trailer
  • the movie might not be tracking well with the general audience
  • the movie might not be earning enough at the box office to justify its price
  • the movie might actually be terrible.
If it's not any of these reasons, there's probably some other good reason why the price is lower than you think it should be.

Obviously the same thing applies in reverse with movies you think are awful. Plenty of awful movies prove to be very popular with the general audience. And while you may think that a particular movie looks awful, the movie could be aimed at another section of the movie-going audience entirely, and that target audience thinks that the film looks great. Whether or not you want to see a movie is generally a poor indicator of that movie;s financial success.

Really, the most important lesson to learn is not to play HSX based on emotion. Personal attachment to a particular moviestock or starbond rarely makes a good investment strategy.

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