by Dr. Bart DiLiddo
Friday, 04/17/2009
I just finished re-reading Chapter 15, Bottom Fishing: The Art of Buying Low and Selling High, in my book, "Stocks, Strategies and Common Sense," and I was reminded of how hard I thought it was to do. In fact, I wrote that, "Buying low and selling high is not as easy as it sounds."
Well, I wrote that in 1997 and I've learned a lot since then. One of the biggest lessons, and perhaps the hardest one to learn, is to buy "S" rated stocks when bottom-fishing. Yes, I know that "S" means Sell, so why would I be buying "S" rated stocks? Simply because bottom fishing is all about buying stocks which have been beaten-down in price and are about to start going up.
With VectorVest, it's easy to tell when a stock's price has been beaten down. I simply look for stocks with low Relative Timing, RT. I know that all of these stocks will have "S" ratings because their Prices will be below their Stop-Prices. So this part of bottom-fishing is really easy...at least it is when you have VectorVest.
The hard part, however, was in knowing when these beaten down stocks are about to go up. Intuitively, I knew that the best time to go bottom-fishing was when the market exploded from a bottom, but identifying that crucial event was the trick. It was hard to do until we developed our Market Timing System in 1995. Since then, VectorVest has a stellar history of advising its subscribers to go bottom-fishing at the right times. For example, we advised our readers to go bottom-fishing on August 2, 1996, just as the market was rising from a bottom. The following week, we presented a five step bottom-fishing procedure "that can pay big dividends."
Had you followed those instructions and held the top 10 stocks ranked by VST Desc until yesterday's close, you'd be up 103.2% with eight winners and two losers. Had you bought the top 10 stocks ranked by VST/RT Desc and held them until yesterday's close, you'd be up 486.7% with seven winners and three losers. Over this same time period, the S&P 500 Index gained 30.7% and the Price of the VectorVest Composite went down 9.6%.
While we were proud of our bottom-fishing capabilities even 13 years ago, we always wanted to get better. Some of this history was presented in my essay of March 27, 2009. Most importantly, we illustrated in that essay and in the associated "Strategy of the Week," how sorting by VST/RT gives explosive profits and sorting by VST gives wonderful long-term results. But the biggest factor in successful bottom-fishing is getting in at the right time. I think we've gotten pretty good at that too, but you're the judge.
All I can say is that when we alert you to an imminent rally like we did on March 6, 2009 and give five proven strategies to use, and repeat the guidance on March 9th, the day the market bottomed, and we're sitting at our computers ready to buy on March 10th when the market exploded, that's Bottom-Fishing Made Easy.