buying lo/selling hi

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kudos

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Anyone think it is a good idea to borrow 20k for example and buy aload of low priced shares (banks for example) and ride out the 'recession' and then ideally sell for a profit....or am I mad?

I can afford to borrow the 20 k - normally I put a chunk every month into the stock market but I think doing one big amount now while so low is the thing to do....am I missing something?

First post so I hope I have posted in the right place etc
 
What analysis have you done to decide that a particular sector is now 'low'? Is it just based on the fact that a year ago it was much higher? This view is far too simplified.
 
Yes - just basically the fact that prices have gone so low and although they may get lower I think buying now and waiting for the market to correct itself in about 3 years I will hopefully make some profit. What sort of analysis can I do we have been in a boom so long I can't remember shares falling like this?
 
kudos said:
Yes - just basically the fact that prices have gone so low and although they may get lower I think buying now and waiting for the market to correct itself in about 3 years I will hopefully make some profit. What sort of analysis can I do we have been in a boom so long I can't remember shares falling like this?
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This is all woolly. You need to look at some fundamental analysis if you really want to attempt to judge the "value" of a stock and the attractiveness of a particular price at any point in time.
 
If it was that easy then why hasn't everyone thought about it - consider that! Take the advice & do your research - are you prepared to lose all the 20k?
 
kudos said:
Yes - just basically the fact that prices have gone so low and although they may get lower I think buying now and waiting for the market to correct itself in about 3 years I will hopefully make some profit. What sort of analysis can I do we have been in a boom so long I can't remember shares falling like this?
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ya - this kind of analysis is most certainly flawed.

Your underlying assumption is that the old high price was the 'correct' price - and the new low price is the 'incorrect' price.

How are you so sure that in fact perhaps the opposit isn't true ?
i.e. the old high price was the incorrect price - and that todays price is in fact the correct one?

It would appear your analysis doesn't extend much further other than comparing one price to another price and for no real reason, randomly picking one as the rignt price and the other as the wrong price.

E.g The FTSE is lower today than it was this time 10 years ago.
In that instance, which do you think is the right price and which is the wrong price?

The bottom line is the price is the price is the price.
And unless you have done some very thorough analysis, it is very difficult for the lay man (or expert) to determine if a share/index is overbought/oversold.
 
As I posted elsewhere I still believe that one or more of the Irish Banks will need to be bailed out before the end of the year. If they are bought by an outside bank ( very real possibility ) then your strategy might work but if they go the way of Northern Rock your borrowing won't look so clever.

Take the advice offered above - the stock market is gambling - even for those who " know " what they are doing.

First rule of gambling - " If you can't afford to lose it don't bet it "
 
Actually I didn't want to be specific but what you say badge55 is what I think is going to happen - and not the northern rock bit.........I can afford to lose it otherwise I wouldn't do it. Only borrowing as I need to do it asap - otherwise I have cash coming in to cover it..
 
Once again people are breaching the posting guidelines and engaging in share price speculation. If this second version of this thread requires more moderation to deal with posting guideline breaches then it will be closed.
 
kudos said:
Anyone think it is a good idea to borrow 20k for example and buy aload of low priced shares (banks for example) and ride out the 'recession' and then ideally sell for a profit....or am I mad?

I can afford to borrow the 20 k - normally I put a chunk every month into the stock market but I think doing one big amount now while so low is the thing to do....am I missing something?

First post so I hope I have posted in the right place etc
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There is an old stock market saying - Never try and catch a falling knife. IMO, and my guess is as good as the next man, the market probably has a long long way to fall before it starts to recover. We'll probably see a few more false dawns in the meantime.

You said in your post that you put a chunk every month into the market. How's that doing?
Nuff said.


Murt
 
kudos - if you have to borrow the 20k to invest it then you dont have the money in the first place so how can you afford to lose all this 20k when you will be paying back the bank for it. its not a good idea in my opinion. and also

the average bear market corrects about 28-30% from its highs. the US is just gone down 20% . there is a good chance that it will fall a lot more than 30% as this is not a normal bear market. we also have a credit crunch, inflation and a housing depression that could cause this correction to go to 50% even. look at china, and the iseq. they are down a lot more thatn 20% and that is a reflection on the future of our economy.

there is no reason that the banks will stop falling in the near future.you should never buy stock that is falling, wait until a new uptrend emerges
 
jimbob1234 said:
never buy stock that is falling, wait until a new uptrend emerges
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Many would say that any attempted timing of the market is a mug's game - and that it's time in the market rather than timing the market that matters.
 
i wouldnt advocate timing the exact bottom of the market, i would just recommend waiting until a new bull market emerges. thats my opinion but then again im not a long term investor, my positions would last a few months at the most
 
jimbob1234 said:
you should never buy stock that is falling, wait until a new uptrend emerges
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I was told different and this was that it was good to buy now when the stockmarket is down, meaning you but more units for your money?
 
Go for it Kudos, ignore the naysayers!
ISEQ is off nearly 50%, bank fundamentals are good.
You probably won't pick the bottom of the market, but you probably won't be far off.
 
ClubMan said:
Once again people are breaching the posting guidelines and engaging in share price speculation. If this second version of this thread requires more moderation to deal with posting guideline breaches then it will be closed.
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OK - same problem with this thread so I am closing it. Don't start another similar one.
 
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