What is a Bottom Fisher?

A bottom✨ fisher is an investor who looks for bargains among stocks whose prices have recent꧙ly dropped dramatically. A bottom fisher is optimistic about buying these low-priced stocks because they believe that a price drop is temporary or is an overreaction to recent bad news and a recovery is soon to follow.

Understanding the Bottom Fisher

A bottom fishers may attempt to find stocks that the market has undervalued through fundamental analysis. Or an investor may simply view a recent price decline in the stock as too aggress🅺ive and therefore they buy the stock thinking it will recover (higher) soon.

Bottom fishers tend to be more active during a prolonged 澳洲幸运5开奖号码历史查询:bear market where there may be stocks getting hammered lower through panic selling. When the market is dropping, or even plunging in a major wa𒊎y, many stockholders get nervous and impulsively rush to sell, wanting to unload their stocks so quick🐲ly that they are willing to accept virtually any price.

For the bargain-hunting investor, this is the chance they h📖ave been awaiting. They are eager to pounce on this opportunity, and swoop in to buy at low prices🍒.

While a bottom fisher may pick up some good deals and make money, they are also trying to 澳洲幸运5开奖号码历史查询:catch a falling knife. While an asset may have fallen a long way, or look good fundamentally, if other investors don't buy it, and instead keep selling it, the price will continue to drop. Sometimes others know something the b🦩ottom fi♚sher does not.

Bottom fishers need to do a lot of re🎐search, or follow sound technical or statistical patterns, in order t꧟o profit from buying declining assets.

Bottom Fishers Profit From Other Inv𒁃e༒stors’ Panic

Bottom fishers are hungry for good deals. If in fact it is a good deal, it comes at the seller's expense. The sellers unload at low prices, and the bottom fisher buys up the potential deal.

Unfortunately for the bottom fisher, it's difficult to tell the difference between a bargain and a stock that has fallen for a fundamental reason. It is smart for these deal-seeking investors to do research and try to determine the factors that led to the price drop. They can then decide if the stock is likely to rebound in the near future or not.

For those bottom fishers who are not knowledgeable enough about the market or savvy enough 🀅to research the particular companies whose stocks they are considering, this type of investing strategy can be like rolling the dice. There is the potential for big returns, but there is also a good chance that the stock may continu෴e to do poorly.

Bottom Fishing Tactics

There are many unsuccessful bottom fishers. The successful one♋s use a strategy. The strategy they use varies, yet put the odds in their favor. It could be fundamental, statistical, cyclical, or technically based.

Fundamental bottom fishers may look for stocks that are trading at low 澳洲幸运5开奖号码历史查询:price-to-earnings (P/E) ratios compared to prior readings. They may also look for favorable 澳洲幸运5开奖号码历史查询:price/earnings-to-growth (PEG) readings which may show whethཧer a stock is priced favorably based on the company's future earnings potential.

Technical traders may look for patterns that price is bottoming and starting to turn higher, such as an inverse head and shoulders, a 澳洲幸运5开奖号码历史查询:rounding bottom, double bottom, or 澳洲幸运5开奖号码历史查询:cup and handle reversal.

Example of Bottom Fishing in the Real World

Macy's Inc. (M) commenced a long-term price decline in 2015. There were several times bottom fishers may have been lured in. They may have been able to capture short-term profits on rallies, but ultimately the price kept dropping.

ꦅThe first inverse head and shoulders was quickly ༒followed by lower prices.

The second inverse head and shoulders saw the price rally for about 6 months before succumbing to selling pressure once again. There were also a triangle pattern than broke to the upside, but then fell shortly a♋fter.

Some stocks do turn around and head higher, but others do not. Bottom fishers require 澳洲幸运5开奖号码历史查询:stop losses to help control their risk in the event the stock they buy—hoping its a good deal—keeps falꦗling.

What is the Difference Between Bottom Fishers and Mo🥀mentum 🔥Investors?

These two strategies lie on opposite ends of the spectrum. Bottom fishers attempts to buy near the bottom after the price has fallen. 澳洲幸运5开奖号码历史查询:Momentum investors buy as the price 💫of the as💛set is rising, assuming that the rise will continue.

Limitations of Bottom Fishing

Bottom fishing can be done successfully, but it is often referred to as catching a falling knife. People who attempt bottom fishing must have discipline to cut losses when the price doesn't reverse as expected. They also must have a sound method for determining when an asset could stop falling and start heading higher.