Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Buy Low/Sell High the Best Way to Conquer This Market?

Friday, May 10th, 2013
By for Profit Confidential

MarketThe buy low/sell high investment strategy requires a ton of resolve.

Going against the stock market that just proved an asset is not attractive is not only risky, but it is counterintuitive to the emotional decision-making that takes place in financial markets.

I always scan the stock market for positions at their 52-week lows.

The reason for doing this is twofold: 1) to identify potentially attractive buy low/sell high assets; and 2) to assess what Wall Street dislikes for the purpose of honing my market view.

What you want to look for isn’t a company that is going broke or whose business plans have failed, but a large-cap, brand-name company—a leader within its industry that is down on the stock market for its own specific set of reasons.

One company that exemplifies the scenario I’m describing is Barrick Gold Corporation (NYSE/ABX).

  • Double Your Money Twice a Month?

    Hottest stock-picker on the planet could make you richer 92 times! Over the past five year period, 86% of the stocks we picked made money—92 winners out of 107 picks! Average straight profit per pick: an amazing 54.1%!

    Click here now!

This blue-chip gold producer has been having a very tough time on the stock market. The position is down another 10 points since April and has been cut in half since last November.

Barrick Gold’s stock chart is below:


    Chart courtesy of www.StockCharts.com

Barrick Gold looks like a good buy low/sell high trade candidate. But obviously, there are two immediate explanations as to why the position just bounced off a major low: weaker gold prices and rising production costs.

The company did particularly well on the stock market between the mid-1980s and mid-1990s. Then it took a break for a good 10 years, doing nothing except paying its dividends.

I would now keep a sharp eye on Barrick Gold for a buy low/sell high trade. But here’s the thing: the company’s fundamentals are not going to suddenly just improve and turn on a dime, even if gold spikes higher. The company does have structural operational issues related to costs and shareholders aren’t happy.

With a four-percent dividend yield, a buy low/sell high trade on a position like Barrick Gold is becoming attractive.

Clearly, the gold bugs are taking a break, but practically speaking, the spot price of gold isn’t down too much from its high.

The buy low/sell high investment strategy does take a lot of determination, forbearance, and luck. It is, after all, a risk capital trade.

It’s worth scanning the stock market, if you’re so inclined, simply to see what the rest of the stock market dislikes. (See “Unbelievable Stock Market Now Destined for Greatness?”)

To buy low/sell high in large-cap, blue-chip companies, it really is more about getting the cycle right. And that cycle includes both fundamental economic factors and sentiment.

Bottom-fishing in the stock market is always a tough business to be in. But then again, you can land a really big trophy there.

VN:F [1.9.22_1171]
Rating: 8.0/10 (1 vote cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)
Buy Low/Sell High the Best Way to Conquer This Market?, 8.0 out of 10 based on 1 rating

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.