Saturday, October 21, 2006

Buying low late Oct and late Dec

For those investors who like to buy low this is a good time window to do so. The reason is that many institutions have a fiscal year that ends October 31. They often clear out losing stocks so they can report the loss and use it to offset any gains for the year.

For stocks with a large following of individual investors, the late December time period is another buying window. Again the reason is that many sell to report the loss.

A couple of names that come to me off the top of my head include F Ford, NYT New York Times, EBAY eBay. Barrons and many newspapers and some websites have lists of stocks moving to new lows. I found a search at MoneyCentral, but the data seems off because it includes GS Goldman Sachs on the list and it just hit a new high, not a new low (link). Ideally stocks should have solid financials and are depressed for a temporary bad new incident, not long term deteriorating fundamentals. However, in the case of poor fundamentals, this can still be a good time to buy for traders (as opposed to investors).

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