Prajna Capital - An Investment Guide

The term bottom fishing is generally applied to the practice of buying what you think is an undervalued stock, especially in a period when the markets are bearish. The logic behind bottom fishing is that the prices of stocks sometimes fall much below their actual value in a dismal market situation which makes them attractive. Investors purchase these stocks at cheap rates with the expectation that when the markets improve, the stocks will bounce back and become a profit-making investment. Bottom fishing is, however, fraught with risk as the markets could always move contrary to expectations. There are two crucial aspects determining the profitability of bottom fishing — Price Time Price - With regard to price, it is largely felt that the market has bottomed out and you may currently get stocks at the cheapest rates. Time - However, there is no guarantee as to when the markets will move up or dip further. So if you’re looking at making quick profits in the near future, bottom fishing ...