A. The stock that keeps making new lows and keep going down or
B. The stock that keeps going higher.
Obviously, the stock that keeps making new lows. But that's not the weird part. People are more comfortable buying that risky stock rather than investing in a stock that keeps making new high.
This happens because everybody has a belief system that stock that keeps making new lows will eventually move higher and stock that keeps making new highs will eventually head lower. This is the real problem. That may or may not happen but it wipes one out of the system before doing that.
Here's SBI Bank
It was a low-risk value buy at 330 and it's low-risk value buy even today. Just look back and think how many times you believed it bottomed in 2015. ok forget stock - How about commodity? Remember - all the reports that Crude has made a bottom around $45. Here's where they are now
These are rare pictures.. after a decade and more.. savour them..! pic.twitter.com/Evk7Ems6KP
— kush katakia (@kushkatakia) January 11, 2016
There is nothing risky than buying stock or asset in downtrend. One should avoid such stocks at all cost. This is the most important lesson in financial market
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication, you agree to make no trade relying in whole or in part on the comments of the writers