Volumes exist in the market because there is a disagreement between bulls and bears. The greater the disparity that exists between bulls and bears in a name (or the market in general), the more volume that will be generated as the two sides trade against each other. One could say the lackluster volume in 2012 was not only due to a lack of appetite for equity exposure, but also due to a lack of conviction one way or the other. There is no lack of conviction on Herbalife stock, however. Ask around the office and everyone seems to be able to say whether they are on Team Ackman or Team Loeb. As a result, volumes have spiked recently and HLF will likely become a favorite among active investors for the next few months.
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5 Comments to "The Pyramid Scheme of Volume":
PaiGow
10 January 2013
Great debate on this one. Wonder how much of the activity is supported by fundamental investors versus technicians taking a side based on price moves supported by the volume. Perhaps the buying is all the "out of network" customers that truly believe in the product and the sellers are their referrals? :-)
asussman
10 January 2013
@paigow It would be interesting to see block trades in $HLF versus how much is being internalized?
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PaiGow
11 January 2013
Sure - Lit vs. OTC is close to 50/50 last week or so http://fragmentation.fidessa.com/fragulator/ Compared to other very active stocks, the lit number is low perhaps suggesting above normal block activity.
shamlet76
14 January 2013
looks like a bad short to me. of course, i am happy to see that.
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joyceparker
31 January 2013
Marketing organizations may sometimes appear to be flawless and professionals as we taught it to be. But then this doesn't secure as for having a sudden crack of business transactions , partnership or membership. Just like pyramiding scams which could be tiring to hear. Actually,
Multi-level advertising corporations are often accused running a pyramid scheme and some wind up being hauled into court to answer to such accusations. One, Fortune Hi-Tech Marketing, was recently raided by law enforcement officers as the company is being accused of running a multi-level pyramid structure. Read more here...
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