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Its not too hard to pick a knife up off of a floor

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September 15, 2010 – Comments (5) | RELATED TICKERS: HQSM.DL , MHS.DL

Real quick post (as per usual).  What is peoples obsession with trying to catch (or rather, it often seems like people are trying to CAUSE) a bottom?  When does a stock ever drop like crazy for a couple of weeks, and then all of a sudden rebound on one day and leave behind anybody that didnt call a bottom?

I am an amateur with TA (and I dont even know that much about fundies).  I mostly use common sense and random bits of information on how the game works (money manager rules, seasonal patterns, etc) but how hard is it to look at a chart that goes straight down for 5 weeks, loses 40% of its value, then for 2 weeks its flat, and then starts to climb on higher volume.  THATS when you buy it. I really cant see any reason to buy before that.

5 Comments – Post Your Own

#1) On September 15, 2010 at 10:40 PM, portefeuille (99.60) wrote:

I really cant see any reason to buy before that.

I can. Value investing for example ...

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#2) On September 15, 2010 at 11:49 PM, Valyooo (99.53) wrote:

So you would rather buy something for its value when its down 20% and then have it lose another 20%, instead of letting it bottom, then scooping it up for its value, and letting it rise with a lower cost basis?

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#3) On September 16, 2010 at 11:14 AM, EnigmaDude (95.14) wrote:

The problem is knowing when it hits bottom.  Just because a stock starts to climb on higher volume does not always mean it has stopped falling.  Could be a dead cat bounce.

Take a look at TSYS.  That is a real world example for me.  I thought I bought at a near-term bottom around $5, then it continued falling below $3.  So I bought more shares around 3 and now it seems to be climbing.  But I could still be wrong...

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#4) On September 16, 2010 at 5:19 PM, JaysRage (89.30) wrote:

When does a stock ever drop like crazy for a couple of weeks, and then all of a sudden rebound on one day and leave behind anybody that didnt call a bottom?

About as often as this.

a chart that goes straight down for 5 weeks, loses 40% of its value, then for 2 weeks its flat, and then starts to climb on higher volume. 

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#5) On September 18, 2010 at 2:24 PM, Valyooo (99.53) wrote:

If theyre equally as likely why go for optiuon 1 which is a lot more risky than option 2

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