Bottom Fishingroshankumar.2007@rediffmail.com
One day there was a man named Raj who was taking astroll when he came across a bunch of rag-pickers whoseemed busy scannin...
healthy and robust companies also tend to test thebottom.At such times, the sentiments are so discouraging thateverything ...
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Bottom fishing

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Bottom fishing

  1. 1. Bottom Fishingroshankumar.2007@rediffmail.com
  2. 2. One day there was a man named Raj who was taking astroll when he came across a bunch of rag-pickers whoseemed busy scanning through piles of garbage andwaste. He realized they were searching for valuable stuffthat sometimes erroneously makes their way into thegarbage. This practice of the rag-pickers reminded himof an oft-used term in investing known as “BottomFishing”.The stock markets health is largely dependent upon“NEWS” flow reflecting the state of the macro-economicenvironment. In other words, a good macro-economicenvironment leading to good and positive “NEWS” flowimproves “sentiments” of investors. No investor wouldlike to invest when the economic environment is notconducive because the risks of investing in adverseconditions are rather high.Lets say a country which erstwhile had favourablepolitical conditions, suddenly finds itself in the throes ofterrorism. Under such circumstances the stock marketplummets to a level that is commonly referred to as the“bottom”. At such times the stock prices of perfectlyroshankumar.2007@rediffmail.com
  3. 3. healthy and robust companies also tend to test thebottom.At such times, the sentiments are so discouraging thateverything is viewed from the same “pessimistic” lensand all companies good and bad get painted by thesame “gloomy and gray” brush.However, such are times that present the bestopportunities to astute investors. There are opportunitiesto identify stocks that are quoting at prices below theirintrinsic values. Such under-valued stocks can yieldhandsome returns when the negativity in the macro-economic environment alleviates. Identifying suchvaluable stocks in what is popularly known as “BottomFishing” which translates to “fishing for good companieswhen the markets bottom out”.roshankumar.2007@rediffmail.com

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