But this idea, attractive as it is, is not quite true. The reason is something that I've decided to call the Fundamental Error of Risk. It's a mistake that most people make (myself often included!), and that an intro finance class spends months correcting. The mistake is looking at the risk and return of single assets instead of total portfolios. Basically, the risk of an asset - which includes a bet! - is based mainly on how that asset relates to other assets in your portfolio.
There seems to be positive correlation between financial investment product purchases and future purchases. Low volume entities fluctuate at a higher rate with less correlation due to a larger percentage of the product being subjected to "insider" or "arranged" trading. Nothing illegal suggested here of course, just day to day trading in the real world. High volume trading instruments, however, can clearly exhibit trending and the trend "lives" are long enough and obvious enough to ride and take profit from indicating that sometimes a bet may reveal intentions.
When does a bet fail to reveal your true beliefs? When it hedges a risk in your portfolio.
If this claim does not immediately strike you as obviously true, you may benefit from reading this post by econblogger Noah Smith. Excerpt: