Boston Snow Indicator

finance a la shmoop what is odd lot theory

well odd lot theory is an investment notion that presupposes that retail [Woman investor appears giving thumbs up]

investors are idiots the theory here is that when you see a lot of trades with

odd Lots you should basically do the opposite of what those trades are doing

like you know buying up a stock or selling down a stock or something like [Man throws stock away]

that well odd Lots are basically just small

order amounts like 22 shares here in 58 shares there in 77 shares here there and

everywhere and the idea is that odd Lots are almost always traded by small retail

investors who can't afford large blocks of stock and aren't wealthy so the [Stack of cash blows away]

presumption is that they're not experienced in stock market or have the

education or training to actually be making real trade schooled professional [Fire extinguisher blows out fire]

institutional investors who generally know what they're doing generally manage

large pools of money and trade in very large blocks like think big fat round [Stocks land around pool of money]

numbers in the millions of shares so when you inspect a tape running by

showing tons of tiny trades while odds are good that those are placed by you

know cardiologists and schoolteachers gardeners and plumbers all believing

that they can invest better than the market and the guys who make twenty five [People working in an office]

million dollars a year at goldman sachs yeah good luck with that and

statistically most retail investors who think they're smart enough to beat the

market are in fact idiots so the ethos of zagging in the opposite

direction of wherever retail investors are zigging well historically that's [Retail investor zig zagging]

generally been a really good idea they might be excellent cardiologists or

teachers or gardeners but when it comes to investing there well you know small

potatoes [Woman holding potato plant]