Hey friends. I don’t typically mention specific stocks in my posts as you know. Today, though, I’ll offer a rather extreme example of how chasing the hottest thing without a solid fundamental basis for doing so can lead to harmful loss to a stock portfolio.

Go here to view a Yahoo Finance page summarizing some key data for Helios and Matheson Analytics Inc. (HMNY). You can go here to view the website and specifically click on the MoviePass link to read about the arena of HMNY’s business that led to a skyrocketing price not so long ago followed by a free fall for the ages. In this Yahoo Finance link, you can see the daily price information for HMNY stock over the past 12 months. If you scroll down, you will note that the stock price closed on September 14, 2017 at $2.63 and then rose to a high price of $38.86 less than a month later on October 11. Yesterday (Friday, July 20, 2018), the price closed at $.104 per share.

Not unlike some cryptocurrency stocks of not long ago that rose feverishly only to have gravity pull them to the floor, HMNY is a story stock that for a moment was going to revolutionize how people go see movies. But the numbers didn’t add up to warrant the kind of “chasing” behavior that occurred.

Here’s an interesting article published several days ago at Seeking Alpha reflecting information about the nature of HMNY’s business model and the author’s opinion toward the business as it stands now.

Some people may have made a lot of money in HMNY’s stock. Many others probably took a really tough loss. One of the reasons I wrote Choose Stocks Wisely is because of how the balance sheet analysis helped me avoid some tough losing situations like the ones I encountered during my initiation to the stock market years ago. Investing in stocks is risky business. There’s no escaping that. But calculating that risk based on as much hard quantifiable information as you can find is essential if one hopes to consistently experience success at investing.

See you next time.