Disclaimer:  VFC has no affiliation with any of the mentioned companies nor with any third parties associated with any of the mentioned companies.  VFC has received no compensation for this blog post, although there may be an unrelated advertisement or two at various locations on this blog.  VFC does not offer advice or investment services and nothing you read here should be construed as such.  VFC is just a guy with an opinion and access to a computer and a keyboard; bringing discussions and ideas to the table.  #AhYeah.


 

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Asia Broadband (AABB) delivered - as promised - by launching their global crypto/gold exchange on Tuesday, 28 December 2021.  Shares quickly retreated, tho, being cut in half by Wednesday morning trading to about the fifteen cent mark.  Some were predicting prices in the multi-dollar range on the exchange release - a few predicting even more gains.  With all that hype and with a successful exchange launch, why such a massive high-volumed pullback?

Is it the "sell the news" phenomena?  

Yes, at least partly.  I'll divert from the AABB news for a paragraph and discuss that investing strategy.  

Many short term investors buy into the hype of upcoming catalysts and then sell either at the catalyst point or just before, because no catalyst is ever one hundred percent certain to occur.  The only thing that is certain at that point is the realized gains you can have sitting in your account if you do sell.  Is there a risk to that strategy?  Yes, you could miss out on future gains if the stock does run, but as long you banked profit, that is all that matters - that's the name of the game, banking profit.  VFC's strategy is to hold a core share through the catalyst "just in case" while using some trading shares to bank profit.  I like to be on "house money" by the time the catalyst hits.  The core shares are good, too, if you are investing with a long term outlook and are not interested in the day to day short term price activity.  Other long term investors will just hold their shares and not trade anything during the short term swings.  Fair enough if that is one's investing strategy and is confident in their DD that the value will definitely appreciate over the long term.  I like to think that nothing is certain, so I enjoy trading the trading shares and holding a core.  Especially in very risky sectors and stocks.  Remember, AABB is still listed on the pink sheets.

Back to the trading action on Tuesday and Wednesday morning.

A couple of other factors played into the runup then dump.  Sure, there is a large number of shorted shares, many are likely of the naked sort, given the information available to investors and traders.  Those players with all those short shares will definitely not want the price to run, but can they collapse the share price all on their own?  Not really, but this is where human emotion comes into play.  The unhardened retail investors start shitting themselves when a stock doesn't react like they thought it would, so couple that with the big boys making a share price look scary by dumping the price, it creates more selling which - guess what - created even more emotion-based selling.  

Like it or not, too many people trade on emotion.  They get caught up in the hype before a catalyst and then panic when the hype doesn't pan out like Mickey Three Fingers on the message board said it would.  That is why "over-pumpers" or "over-hypers" are just as dangerous, if not more than the short selling bears you see on the internet.  It's also why the bears likely employ "over-pumpers" of their own to create even more of a panic sell when they want to dump the share price.  In the case of AABB, although there is legitimate progress being made with the company, the over-hype before and during the run significantly aided the dramatic drop after the run because of the items we discussed above.

Another factor?  People don't actually take the time to read press releases and all the information available to them on the Internet.

If you look back at my previous post, we discussed how the launch would be a phased launch, according to the company's own words.  Too many people didn't read the previous PRs and counted on a full launch that would include over 200 trading pairs.  Those who expected that type of launch are likely the same ones who trade on emotion and not facts.  Many likely sold for a loss when they got caught up in the panic sell.  It's important to fully read the PRs instead of listening to people on message boards and it is VERY important to temper expectations.  People love the "get rich quick" idea and let their emotions take over.  And that all plays into these volatile price swings in the OTC market, and it also feeds into the hands of the big boys who are making money when the weak hands are not.  

The facts?  Nothing has changed with AABB from last week - EXCEPT - they have actually launched a global exchange as promised.  And - as we discussed in my previous blog post - they launched it through the low-volume holiday season so that any glitches and kinks can be worked out relatively under the radar.  Smart move, in VFC's humble opinion.

As we move into the new year, look for the trading pairs to grow and more publicity, which could include some sort of marketing campaign if all goes well with the growing exchange.  It would have been a piss poor move to accompany a marketing campaign with the first phase of the launch, which is evidence that management is taking this seriously and not trying to create just a "pump and dump."

Two huge events that could change the scope of the AABB share price are (1) uplisting to a major exchange.  This would take current and audited financials along with listing requirements for whichever exchange they applied, most likely the NASDAQ.  (2) share retirement.  Reducing that bloated share count would likely dramatically impact the share price and it is a possibility, based on information contained in previous company PRs.  A combination of those two events would be money.

Lessons learned here:

- don't be a dipshit, read press releases and temper expectations.
- don't believe everything you read on the internet, especially on stock message boards.
- understand what the long and short sides of the trading action have to gain and lose from a rising or falling share price.
- don't trade on emotion.
- devise a trading strategy for each stock you own; stick to it, but be flexible if FACTS change, not EMOTION.
Biggest lesson learned is that the exchange launch is another step in the right direction.  

Will be interested to see what happens in the coming months as trading pairs are added.

Ah yeah.

Disclosure:  VFC is long AABB.

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