Thread: Buying stock in hoping of a bounce back?

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  1. #1

    Default Buying stock in hoping of a bounce back?

    Anyone buy stock based on hoping of the stock having a bounce back?

    What I am talking about is stock such as PEIX.
    Which had a strong going 2 years ago with over 14 dollars per stock but dropped to 0.27 awhile ago.

    Is it a good idea to buy the stock because they were doing great before in hoping of a huge bounce back?
    Or is it stupid to invest in a dieing trend?

    Are there any strategies involved in doing stuff like this?
  2. #2


    PEIX has been in play lately for some intra-day trades but if you are looking at buying it as a long term investment you need to do the historical research for at least 10 years in the past. Determine sales, cash flow, debt, EPS, etc. to see if it is a profitable company. Also not only if it is a profitable company but if it is a "deal" to buy right now. You don't want to pay full sticker price for a car that is actually worth a lot less...
  3. #3


    Sure, I use to do this when I was emotional trading TST because I grew up such a fan of Jim Cramer. Glad I am out of that now.

    Hope is dangerous in buying stock. I would make sure there are clear signs of bounce back, not just hope or desire on your part. Verify those with others as well. It does not have to be trendy news but you should not be trying to assume to much or making farfetched connections.
  4. #4


    Pull up a 5 year chart on PEIX and form a quick opinion.

    Going deeper than that, making a decision such as the one you are considering is where some knowledge of fundamental analysis would come in handy. IOW, does the company fundamentally have a reasonable chance of recovery.

    I would do what you are considering only as a speculative move. Nothing wrong with devoting a small percentage of your portfolio to speculation.
  5. #5


    Buying stocks is like playing the game of pool for money.

    Some people will play pool with anyone for money. (They lose their shirt.)

    The smart people only play pool for money with those they know they can win against! Those are the people who do not lose money.

    Same with stocks. You can do research into a company (read their financial reports), the industry, find trends for the industry, read news about the industry and see if there are problems or a bright future.

    Basically become a somewhat expert in that field/industry.

    Then you will KNOW in advance what the future holds for that business.

    If you just watch TV and see programs which say that Solar Electric panels or Ethanol is the thing of the future - That these things are the solutions to our energy problems, then you might think those things would be a good investment!

    BUT when were those TV programs made? Are they re-runs? If it is a movie, be aware that movies are fantasy. The people who write these things live in a world of fantasy. BTW companies can pay Hollywood movie producers to show their products in a movie. And I assume for the right amount, show certain things in a positive light. (Like winning big money in Las Vegas - most people lose!)

    If you read news stories, recently published books, papers written by experts in the field, and look at the company's financials, you might see an entirely different picture!

    For example I was looking for corporate bonds to buy. I saw a solar panel manufacturer with a nice yielding bond. And off the top of my head, I thought that would be a growth industry. However I checked the companies financials and they were losing money! Turns out China was making panels cheaper and the company was having trouble. They later went bankrupt. Good thing I checked their financials first and did not invest in their bonds!

    As for Ethanol, I'm no expert on this, but I have been reading news stories from time to time on this. I seem to recall there being a government subsidy which later ran out? And I recall reading that growing corn for fuel was causing food prices to go up? (Maybe long term we would have gas for the car, but go hungry?) Anyway I seemed to get the impression this was not a long term solution to our energy problems.

    Anyway learn all about this before investing. Go to, click on News at the top or side. The search for the following words...

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