12/3/2020 update: Warner Bros. upended longtime U.S. film industry convention by announcing that all of their 2021 releases would be released to HBO Max concurrently with movie theaters. As a result, for the time being a winning strategy on HSX is, "short all big 2021 movies and especially those released by Warner Bros." (This updated strategy expands upon the recommendations below, which still apply.) This strategy makes sense because all of Warner Bros' 2021 movies that open on HBO Max will close at H$0, barring any changes to movie release schedules or HSX's rules; and Warner Bros. releasing new movies to HBO Max will pressure all studios to release movies straight to their own streaming platforms at least for 2021. The cinemas' loss of the exclusive movie release window will depress the U.S. box office generally as Americans become more accustomed to watching new releases at home, and U.S. cinemas will face a huge loss of business unless they can innovate and attract customers some other way (sports?). HSX itself may also be forced to make updates - e.g. become a general prediction site, find other measurable and forecastable entertainment content, etc. - if a smaller U.S. movie box office also reduces interest in HSX and the U.S. box office generally. Watch to see if HSX changes how it operates and also, post-pandemic, how many Americans return to watch movies at the theater.
The Hollywood Stock Exchange is a just-for-fun prediction market for U.S. movie box office performance. At a challenging time for U.S. movie theaters - with a mostly flat total box office now hit by a pandemic, high reliance on big-budget blockbusters like The Avengers, and streaming and the international box office growing more important for studios - HSX remains a useful information source for U.S. box office trends. So when a professor used HSX as a prediction market example in September 2020 in one of my MBA marketing classes, I was excited to get started with my halkells trader account.
As a Hollywood outsider, the site has been a cool way to learn about new movies and forecast their box office success, and many users share their trading strategies openly. Whether you just are getting started with HSX or looking to push to the next level, here are a 12 suggested trades, rationales, and additional tactics that are 99% certain to outperform between November 2020 and March 2021.
- Short sell WOND2, CTAM2, and SOUL. The basic tactic here is to short sell movies already announced to release directly or concurrently to streaming platforms. This is because movies that go directly to streaming with cash out at H$0 on HSX, and movies that released concurrently tend to have less box office success because of people watching at home. These three movies all fall into this category: Wonder Woman 1984, is scheduled for theater release and concurrent streaming via HBO Max on 12/25/2020; Coming to America 2 coming exclusively to Amazon Prime Video on 3/5/2021; and Soul coming to Disney+ starting on 12/25/2020.
- Buy KTSS3.RP, WOND2.RP, and CNDYM.RP. The value of these securities increases H$1 each day that their movies remain unreleased, for a maximum of H$60. Because none of The King's Man, Wonder Woman 1984, nor Candyman are scheduled for release before 12/25/2020, each of these securities is basically guaranteed to increase 50-100% in value from their current prices near H$30.
- Short sell GMBAT, NRAPA, and HBENN. These are all StarBonds scheduled to decrease in value radically soon. For example, GMBAT currently trades at H$66.74 but is scheduled to drop to $21.98 on 12/15/2020 because a successful movie in this actor's five movie trailing average (A Wrinkle in Time or AWITM) will be replaced by one that earned much less (Come Away or CAWAY). The stories are similar for NRAPA and HBENN, readjusting on 12/8/2020 and 2/2/2021, respectively. In general, the best source I know for forecasting StarBonds movements is KaiGee's "Next SBO Adjusts" website.
- Buy AFRAM, BONDS, and SNL. The idea here is to buy movie funds, which all tend to grow over time because they are run by veteran HSX traders who know how to read the market. (A rare exception: steer clear of BOOKS right now because it has been recently absolutely flat.) These movie funds also provide interesting new movies and StarBonds to consider.
- Log into the Market Calendar page on Sundays and buy or short sell securities slated to cash out the same week. Every Sunday, HSX will publish the movies and movie derivatives scheduled to cash out during that week. If the cash out price is different from the current market price, buy or short sell the security accordingly. For example, if Movie X is scheduled to cash out at H$0 on Monday, short sell it on Sunday, and your invested H$ plus profit will be back in your account by Monday night.
- Watch the ticker at the bottom of the screen because it moves the market. The opportunities here can be immediate and huge. For example, Coming to America 2 (CTAM2) dropped from $110 to $44 in four days after the ticker announced the movie would go straight to streaming. Fully invested at 150,000 shares, that would have translated into a H$10 million profit over that time. Try to catch one of these waves by watching the ticker or the top price movers page, and if you do you could increase your portfolio by millions in just one day.
Using these tactics, my halkells portfolio increased from H$2 million to H$48 million between September and November 2020, a 2,000% gain that was also #1 worldwide on the platform during the same timeframe.
One last note about HSX is that while it is a just-for-fun market, there can still be a lot to learn. HSX concepts that also apply to actual capital markets include short-selling, balancing risk and reward, minimizing fees (each HSX transaction carries a 1% H$ fee), thinking about ROI over the investor's time horizon (not just the movie's), and distinguishing between market noise and actual market signals. And as with actual capital markets HSX does include long-time active participants with massive accounts, some of whom enjoy sharing their insights within HSX's built-in community forums.
Please reach out to me if you decide to use any of the above tactics or others, such as momentum trading or playing the daily contests. I would love to hear how it goes.