• Bottom fishing can be a risky business, because shares are usually sold cheaply for a reason.
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A 5% rise was attributed to bottom fishing after losses earlier this week.
Investing in stocks that are cheap because of a problem with the company or the economy. A bottom-fishing investor speculates that the stock's depressed price is temporary, will recover and make for a profitable investment. Bottom fishing is a risky strategy because the company's stock price is depressed for a reason and may not bounce back.
Here are some examples of bottom fishing:
-Investing in the stock of an aluminum company when aluminum prices are depressed.
-Buying the stock of a container shipping company during an economic depression.
-Investing in a print media company when the Internet is putting such companies out of business.
-Buying shares of a bank during a financial crisis.
In each of these cases, it is unclear when or if the stock's price will recover.