As an investor one has an option to follow the bottom Up approach which means that one has to buy as and when stock declines. In another word we can call this as value investing approach where a person is trying to find value in stocks which are going down or have bottomed.
Thus one has to buy only on declines and one do not buy on up move. Another rule which gets applied is that one is buying only smaller lots. One can understand same with an example i.e. say one has money to buy 200 stocks and in that scenario, one buys only 100 shares and balance 100 will be bought only when the stock falls.
The key in that one need not be over enthusiastic while buying and one may even show a bit hesitation while buying. Last but not least; keep strict stop loss which means don’t buy at that level if you have not bought already. If you have bought already book loss and get out of the stock.
Though in this process one may miss a lot of multibaggers but whatever one will buy will be definitely value for money and will be like a golden egg in the portfolio.
17 Jun 2011
What is Bottom Up Approach?
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