If you haven’t been paying attention, Dr. Zeros announced that HSX would reset all boards on January 12. Traders have the option of having their accounts reset to 2 million. This is causing some consternation among traders. Since a year-to-date reset was going to happen sooner or later anyway, I don’t mind that it is being done now. I have lately been finding my 17 million dollar portfolio a pain in the ass to manage, and I have been considering Dan Krovich’s route of starting a new account 2 million with the next quarterly reset. Personally, I will jump at the chance to reset my account.

Here is why you might want to consider it as well:

Fact: all boards are being reset, so your ranking on the board is solely dependent on the percentage gains in your account from the day of the reset onward.

Fact: it is easier to have high percentage gains on a smaller account. Consider Thanksgiving weekend. There were three stocks that were almost unanimously considered to be great buys, FLUKB, ALIKB and FLUBR.

Now lets look at what happens when accounts of different sizes play the best possible strategy:

Account 1 is a newbie, and has 2 million dollars. She buys 10k each of FLUKB and ALIKB, and buys 29,800 shares of FLUBR, using up all her account. After the adjustment, she has made 1.25 million.

Account 2 has been playing for a month, and has 3 million dollars. He also maxes on FLUKB and ALIKB, and can afford to buy 45,900 shares of FLUBR before running out of money. After the adjustment, he has made 1.67 million.

Account 3 has been playing for 2 months, and has 4 million dollars. She can max on all three stocks, and has 750k left over and invests it in SCRM2, which turns out to be the best non-opening choice, rising 15% over the weekend. After the weekend, she has made 1.89 million.

Now if the leaderboard had been reset just prior to the weekend, here is where all three would be: 1) Account 1 with a 63% gain 2) Account 2 with a 56% gain 3) Account 3 with a 47% gain

So even though account 3 made the most money, she is ranked last, since the game is scored on percentage gains, not monetary gains. So, the more money a player has, the worst they will do percentage-wise.

Conclusion: if you choose to forego the reset, know that this will be a very serious handicap, particularly if yoru account is quite large. I will confidently predict that anyone in the top 99 ytd who declines to have their account reset will not make the top 99 anything until the next reset, even if their name happens to be Phoenix or Hybrid.

So, if leaderboard ranking means nothing to you, or if you want the challenge and relish the opportunity of sending that arrogant Cinemeconomist an “I told you so” e-mail (which I will run in my column if you can prove your claim), go ahead. But if you are like me, and play the game partly because of the competition factor, you should give serious consideration to taking up the offer of an account reset. The month after the last reset, when I was striving to make the leaderboard, competing with HSX legends like Jeff Sandler and new masters like Phoenix were the most fun I’ve had with the game.

See you at the top.

Tom Miller