Buying on Bad News

Buy on bad news and sell on good. 

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Buying stocks on bad news refers to the strategy of purchasing shares of a company when its stock price has dropped due to negative events or news. This approach is based on the belief that the market overreacts to bad news, leading to undervaluation of the stock.

Investors who subscribe to this strategy see an opportunity to buy the stock at a discounted price, anticipating that the negative impact of the news may be temporary or that the market has exaggerated its significance. However, this strategy carries risks, as the bad news may have long-term consequences for the company’s financial health and stock performance. Investors should conduct thorough research and analysis before making investment decisions based on bad news.

I have personally used this strategy for years and it has been mostly successful but it does require patience and discipline.

A good example of a publicly traded stock that has been in the news – not in a positive way – is Boeing (NYSE: symbol BA).  Founded in 1916 by William E. Boeing, the Boeing Company is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, and missiles worldwide. As of today, it is trading at approximately $148 and has a 52-week high of $267.54 with a low of $146.02.  It is also near a five-year low. Still, at those price levels it is likely highly held by institutional stakeholders in contrast to mom-and-pop investors. Boeings recent challenges have been well documented and are too long to list here but might be an interesting play.  The risk, however, would be substantial since it is critical that they quickly correct their perceived production issues.

It is nevertheless a perfect example of this type of strategy.

How much trouble is Boeing in?


Please keep in mind this information should not be considered as financial advice. Investment decisions should be based on individual research and consultation with a qualified financial professional. The value of investments can fluctuate, and past performance is not indicative of future results. Always consider your risk tolerance and financial goals before making investment decisions.


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About The Publisher

Jeff Corbett
As entrepreneur, author and magazine publisher with over 25 years’ experience in the global marketplace, I enjoy writing as an advocate for international business and personal freedoms. Thanks to my experiences building businesses I also have a tremendous interest in reading or writing about motivation and self-discipline.