Odd lot theory

Answer 1

Placing a question mark at the end of a list of a few words does not make it a sensible question. There is insufficient information for us to even begin to understand this question. Please edit the question to include more context or relevant information.

Answer 2

Investors have been searching for an edge since the first markets came to be. Out of this desire to one-up the competition many investment theories have come and gone. There are silly theories about the performance of specific sports teams predicting market movements. Or the volume of lipstick sales – that has been claimed to be a predictor of market movements. Also, the length of women’s skirts has been claimed to be some sort of harbinger of things to come. One of these theories is the odd lot theory. Generally when shares of stocks are sold to institutional investors they are done so in round lots of 100 shares. When the casual individual investor buys into the market they typically don’t have enough money to build a well diversified portfolio with round lots, hence they purchase shares in chunks smaller than 100 shares. These broken pieces of full lots are called odd lots. Odd Lot Theory is a theory within the discipline of technical analysis that states that these small independent investors are generally wrong about the timing of equity trades, and thereby serve as a contrary indicator of stock price movements. Odd Lot Theory predicts that in a bull market, when the volume of odd lot purchases spike it is an indicator of a pending market downturn. On the other hand, Odd Lot Theory states that under bear market conditions, when a mass selloff of odd lots is seen the market is about to recover. While historically popular, Odd Lot Theory has failed to be borne out by analysis of market data and has fallen out of use by most investors. Also, the rise of mutual funds has presented an easy way for the individual investor to build a well diversified portfolio without buying odd lots of stocks. So just like the leading lipstick indicator, hemline index, or men’s underwear index, the odd lot theory has gone by the wayside and is today considered to be a silly relic of an idea. You’ll just have to keep searching for that edge elsewhere.