Playing & Trading Strategy

Price History Chart (courtesy KaiGee)

First the numbers: Up around 7% for the week and 2.3% so far for the month of December. We achieved our target of a $3.00 per share weekly increase, albeit as a consequence of the ‘Victor Frankenstein’ (FRNKS) derivatives that we shorted. Truth be told last week was a quiet one with no wide releases, IPO’s or real news to speak of. We did however reach the milestone of a $50.00 share price which means we are now up more than 400% since IPO.

As the coming week is devoid of any new releases I have decided that to address issues that impact on the fund’s performance rather than discussing the specifics of our portfolio. Anyone that wants to see what we’re currently holding has only to click on the tag at the bottom of the page.

Experienced traders know that the best way to enhance your portfolio is to be active in the ‘golden hour’ around reset, that is the thirty minutes before and after Midnight (PST). The thirty minutes before reset is the time when you short the top 20 gainers and buy the top 20 losers on the ‘Top price Movers’ board and the thirty minutes after is when you consolidate your gains. Obviously this does not include blockbuster stocks which don’t necessarily exhibit the same degree of volatility. This simple act of ‘flipping’ stocks  guarantees that you start the day profitably. Frankly I’m amazed that HSX allows this to continue as it skews the underlying game experience for the majority of players. The reason I mention it is that it is the ‘elephant in the room’ that impacts every portfolio and is the bane of a fund managers existence - unless you exploit it.

The other guaranteed way to make money is to follow the news on the  ‘Movie Board’ in the Forum. Obviously the quality of the news is highly variable: ranging from the official (Antibody) and semi-official (Oleg Max and other long-term players) tagging of news related stocks, to the more dubious practice of posting news-lite info, that is either tagged inappropriately and removed, or not tagged and being allowed to remain on the board. In the first instance bona fide tagged news stories are worth their weight in gold, guaranteed to see major stock price moves. Unfortunately even the bogus news and news of dubious value tends to move the stock price because people tend to act on a news story without evaluating the quality of the information, then others react to the initial market move and before you know it an irrational distortion of the stock price has occurred. If you want an insight into the psychology of market irrationality I would refer you to a book written in 1841 titled ‘Memoirs of Extraordinary Popular Delusions and the Madness of Crowds’ by Charles Mackay, particularly the chapters on Financial Mania’ (wherein an emotional feedback loop becomes a self-fulfilling prophecy). Again, as in the case of ‘reset trading’, these bogus news stories are a major vexation for players who wish to trade on market fundamentals. However, like it or not, you have to respond to such moves unless you want to suffer significant losses. As I learned the hard way a long time ago in the real world “you can’t buck the markets”.

The reason for the above discourse is to outline the difficulties fund managers face trying to maintain consistent returns, restricted as they are to investing in a limited range of stocks. There is however an ever more insidious difficulty than market irrationality and that is blatant market manipulation. I logged on this morning to find that a stock in my fund,though not in the fund portfolio, had risen in a relatively short period by more than 80%. This despite there being no news reported on the Movie Board. Further analysis on google showed no activity related to this property in the past 24 hours. This was not an isolated instance, as upon closer examination, there were at least two other Fox properties that made the ‘Top Price Movers’ board without any news as well as numerous examples of penny stocks that showed suspicious movement.

Anyway, food for thought huh?

happy hunting,

hyper