bottom fishing

Bottom Fishing

An investment strategy in which one buys high-risk stocks in companies that have recently dropped dramatically in price. The investor buys the stock in the belief that the drop is due to panic selling, rather than a serious fault in the company, and that the company will recover. The number of bottom fishers may increase in a prolonged bear market. See also: Distressed securities.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

bottom fishing

Used to refer to the activity of investing in securities when it is believed the market has reached bottom following a major decline.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Bottom fishing.

Investors using a bottom-fishing strategy look for stocks that they consider undervalued because the prices are low.

The logic of bottom fishing is that stock prices sometimes fall further than a company's actual financial situation warrants, especially in the aftermath of bad news. Bottom-fishing investors hope the stock will rebound dramatically and provide a healthy profit.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.