Bagholders

I interrupt this bull market for a quick welcome to all the new readers of this blog.

If you invest and trade you will one day be a bagholder.

The definition of bagholder from Investopedia:

An informal investment term used to describe an investor who holds a position in a stock which decreases in value until it is worthless. Typically, the bag holder will hold the position for an extended period of time in which most of the investment is lost.

I have been a bagholder.

It’s brutal.

Just this year I helped Credit Suisse fill their bags with my money with their toxic $XIV. It took about an hour. While my losses don’t fit neatly into the definition of bagholder, I sure as hell felt like one.

As much as I want to help people find great ideas, I can’t help myself when trying to point out potential bagholder stocks. I have watched the markets for decades and seen every type of scam. On the social streams you start to feel them happen.

The bagholder stock of 2018 is now a company called Helios and Matheson Analytics ($HMNY). They acquired MoviePass last year and for a short while they were the darling of the markets. The year 2018…not so much. Here is the chart:

From $2,600/share (split-adjusted) at the start of 2018 to SEVEN CENTS today.

Yesterday the stock traded $40 million worth of shares. The market cap is just $140,000. Bagholders are loyal to their graves.

The easiest way to avoid bagholder stocks (and become a bagholder yourself) is to never own stocks on the 52 week low list.

That won’t help you avoid all the pitfalls and scams in financial markets, but you will avoid being a bagholder in the true definition of the word.


Also published on Medium.