Should You Buy Stocks That Are Trading At their 52-Week Low?
Most traders will keep looking out for stocks that are trading at their 52-week high or 52- week low. They consider buying or selling a stock based on their 52-week high or 52-week low and miss out on evaluating the valuation of the company. If you use these statistics to take your trading decision then you are definitely doing wrong.
All stocks trading at their 52-week high on Bitcoin Code are not sure to come down from that price. Similarly, stocks trading at her 52-week low are also not sure to start their bullish move from that level. Successful investors do not base their trading decision on the 52-week high and 52-week low values.
Stocks at their 52-week low are not a good buy
A stock that is trading at its 52-week high is not necessarily costly. Similarly, a stock trading at its 52-week low is not necessarily cheap. The price of the market does not determine if the stock is over or undervalued. Buying at its low does not mean that you have grabbed a discount. It is like buying something just because it is on sale without knowing if it is even worth paying for the sale price.
Before you buy a stock even at its 52-week low price take care to understand the business potential, its quality of management, stability as well as the growth prospects of the stock. Unfortunately, most of them will only see the price and take an investing decision. This is just a trap.
What is the reason?
If the stock is trading at its 52 weeks high or 52-week low then there is definitely something behind it that is causing the stock prices to reach these levels. If a stock is trading at the highs then this could mean that the stock is fundamentally very strong and is being backed by better business decisions. A stock trading at its 52-week low could be because the company is doing poorly and the investors think that its performance is only going to get worse with time.
The market may not always be correct but you should be very strong to be able to contradict the market. If not then you will be losing a lot of money.
Think about it! Would you buy something that is not performing well because it is priced cheap? Even when you know that the thing is of no value?
The same applies to stocks as well. If the stock is selling continuously then why would you want to buy this stock?