Businessman Investor

Touching base with the rational business psyche of stock market investors

Tuesday, October 4, 2011

The Uncertainty of Bottom-Fishing Versus the Certainty of Striking the Bargain Deal Now

Bargain! What are you waiting for? You can never be so sure when the bottom is coming.  That's the uncertainty. You can, however, assess the bargain deal now, and strike it now. That's the certainty.
This is Part 2 of a Series. Go to Part 1: The Uncertainty of Price Movement Versus the Certainty of Underlying Value in Bear Markets

The following was my response to an online forum inquiry regarding bottom-fishing and timing the exact, opportune moment of getting into the bear market.

Timing (or rather, precision timing) isn't really so everything...

Once a bargain price is established, we won't necessarily have to fish for the bottom—because what matters is that the purchase has already been done and executed at a bargain price regardless whether the price further dives or not.

You can never be so sure of the bottom. When you're about to conclude that it is here already, market price action can suddenly surge, or do the extreme opposite. And that's the uncertainty.

You can, however, assess the bargain deal now, and strike it now—that's the certainty.

In other words, the gain on the deal is already struck at the moment of the transaction. You don't speculate for it. If the price further goes down south, that doesn't change the worth of the underlying value you have acquired. That only means you're further given the opportunity to accumulate more of that same value at a more attractive price.

Intrinsic value remains the same regardless whether the market commits suicide or not. That being so, I'd advise not to time the market as a whole. But rather be more specific which particular stocks to watch and prospect. Once you identify a bargain offer and act on it, the certainty of the value deal is sealed—because you're not necessarily solely depending on a possible upside market action.

The focus shouldn't be bottom-fishing, but striking and sealing a bargain value deal.


  1. this makes sense for the value approach...Sir I just want to know your side regarding Aboitiz power...does it established being a value stocks or still in its infancy of becoming a value stocks in other words under the growth stocks territory...

  2. Hi Manny_Chill! Welcome to my blog and thanks for the comment. Sorry for the delay in the reply. Was busy with some other things. Anyhow, regarding your question. Personally, I don't really habitually distinguish between what a value stock is and what a growth stock is. Because the only important thing to ask is: what company and at what price? A supposed growth stock, for example, maybe an enticing cash cow, but too overpriced. A value stock, on the other hand, may indeed be enticing bargain-wise (it's so cheap), but when you look at the underlying business, you realize it's a dog with a lot of fleas. As for Aboitiz Power, hmmm... Anyhow, just to satisfy answering your question, I think it's a growth stock (but don't take my word for it, hehehe...) And if it's a good stock to buy at its price level, that's another question still =D



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