What I think is that, in order to do bottom fishing, one has to have some experience in the market, the broader the better.
Because these businesses could be called be cyclical, and as such there could be many reasons for cycles to happen in these businesses, some regular, some new. So to be able to make profit, I think one has to be knowledgeable about what is happening at ground level, how is the end product moving, even channel checks could also be a requirement, along with a good understanding of the business. I don’t think one can simply go on the basis of margins or price fall alone.
Investors who have experience only in relatively secular businesses, or did not witness a 30% fall in the stock price due to the nature of the businesses, may view these kind of businesses with the same eye too, and if the price falls big, which is part of such businesses, they may get surprised. Also price not moving for a couple of years, nothing new is said by the management, this for some investors, could be frustrating.
And the more the layers in a business, the more attention it requires, shipping news, crude, competition from other countries, alternative products if any, raw material price, so on and so forth.
TA also comes into picture I guess both for taking a position and exiting. When there is a movement with good volumes across the board, maybe it means momentum has started.
Of course, one can learn this type of investing and make money too, no denying that, not everyone’s cup of tea I guess.
Just my thoughts and not invested in any of the companies, except for a beginner’s enthusiasm with Apex’s IPO.
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