Buying a Stock That's Down

 

Last month we did well by buying our stock at a temporary low after the market’s August 28 mini-crash, and now, a month later, we see the market retesting the same low. Can we buy low successfully again by targeting a new stock? Or more important, should we try?

Well, the alternative is buying one of the few remaining strong stocks, and betting that it will remain so. But history tells us the odds are very low that any stock will remain strong in this environment. More likely is that the growing sickness that is spreading rapidly through the market will eventually take down everything. Thus, I will once again recommend buying a stock that is down, with the expectation that it will be higher months down the road.

The stock was originally recommended by Chloe Lutts Jensen in Cabot Dividend Investor.

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This is an excerpt from Cabot Stock of the Month, which features the best stock to buy right now. Each recommendation is hand-selected from those recently researched and recommended by Cabot analysts. Editor Timothy Lutts explains why it’s the single best stock to buy in the current market environment. This publication is a great introduction to Cabot’s services.


Timothy Lutts can be found on Google Plus.

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