$DRYS: This is What Insanity Looks Like

Some of you may have heard about $DRYS, the dry bulk shipping company that had a massive spike and subsequent collapse in the last week.

The Spectacular Rise and Fall of $DRYS
The Spectacular Rise and Fall of $DRYS

Within one week, $DRYS went from under $5, to almost $100 before trading was halted by Nasdaq for a day and has now fallen to around $12.

And for no other reason than irrational exuberance.

If only we had learned from our friend Isaac Newton, who lost millions in the South Sea Company bubble and collapse.

Isaac Newton's and the South Sea Company Stock
Isaac Newton and the South Sea Company Stock
Takeaways:
  1. As long as people are irrational, irrationality (i.e., inefficiency) will exist in the stock market.
  2. Inefficiency breeds opportunity (i.e., the price of a security does not always reflect its intrinsic value).

Quantitative investing is one path to finding repeatable opportunities to exploit. Chasing greed is a path to getting burned, if not this time then maybe the next.

I’m hoping to have more new posts soon. I’ve been busy putting where money where my mouth is, experimenting with some new strategies with real money and not just words on a blog.