There seem to be a lot of questions around “When the SP will move up”.
@Mike R made a comment – “Makes you wonder how important we all are in the overall scheme of things” – My example will hopefully demonstrate as “Pretty Important as even one person has the ability to move the SP”
@szaba_the_hut mentioned the “Herd Mentality” and “a SP breakout would attract the herd an force sellers to hang on, The timing is always key to max value….”
So I’ll tell a little story of one ordinary person and how he managed to influence the Herd….
The Time – pre-discovery of oil in Senegal – FAR SP 2.5 cents. It has been stagnant for a long time and low volumes.
Long-termer has seen it all before on FAR and previous cases before drilling the SP walks up and drops suddenly when no oil is found. Never looked at HC so no idea of what holders were thinking – just goes by personal experience.
Decides to take out a loan to ensure there is more than enough funds to do what he was planning.
Suddenly Trades start to hit the queue for FAR and 1,000,000 shares are purchased/sold in multiples. Buy and Sell queues are managed to facilitate trades.
The Trades get tested at various times and at times you buy or sell more than you really planned. Don’t care as it’s a bargain anyway and you double down with your trades (warning - this is gambling). The more volume you can place on the queue the more influence you have on the direction the majority of times. Other traders get excited with the volumes starting to get through and your sells get bought un-expectantly. That’s fine as you make a profit anyway as the herd piles in. You keep buying upwards – its cheap and your volumes keep pushing the SP upwards. 60%-70% of trades are done in the T+3 day allowance before having to be settled (it’s 1 day less now making that tactic harder). The rest is done with funds in case you’re stuck holding for longer.
After a while you notice the SP moved from 2.5 cents to 5.4 and the SP takes on a life of its own as you get closer to drilling. Too much volume is now piling through and there is no managing the Stock. The Trader now takes a solid position and trades ease off. The Big Buyers move in probably not happy seeing the price move upwards and “massive volumes” start to get traded as they want to take positions. Not much time left now before the drilling would commence….
Personal circumstances change – wife and kids come onto the scene, can’t do risky trading anymore.
Would be interesting reading the HC posts of the time to see what posters were thinking…
The morale of the story. One normal person has the power to make the SP Hustle if they are prepared to take the risk. This is not a recommendation and the risk is that someone with deeper pockets can push it in a direction you don’t want. The psychology of a large trade is interesting and probably makes people wonder who is trading as large frequent trades suggest deep pockets. This strategy probably worked at the time as it was pre-discovery and the big boys were not trying to cap the price yet. The Other morale of the story is probably that barring special events you need Traders to push the price up. They won’t come until some event like drilling in Gambia is defined and the event is close as timing is everything . Hopefully the volumes increase like they have in the past and the brakes get released.
Just the opinion of one person. Hopefully the story was entertaining.
(20min delay)