In
technical analysis, the theory that
odd-lotters (defined as small
investors who deal in fewer than 100
shares at a time) are both badly informed and have low
risk tolerance. Therefore, an investor may
profit by doing the opposite of whatever odd-lotters are doing. For example, if a technical analyst sees that a substantial numbers of odd-lotters are
selling a particular
security, he/she may take this as an
indicator to
buy that security. The theory had some prominence in the 1960s and 1970s, but came under criticism later for lack of evidence that odd-lotters'
investments underperformed the
market as a whole. By the 1990s, the odd-lot theory had largely fallen into disuse, in part because of the growing popularity of
mutual funds for small investors.