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What happens when you buy assets down 80%?


ie "catch a falling knife"


by James Gruber on June 29, 2013
There’s a traders saying that warns against trying to “catch a falling knife”. That is, you shouldn’t buy ssets which have sharply declined as they’re likely to go down further before there’s any recovery.

…history suggests that you should do the opposite – buying assets down 60% or more has delivered fantastic results on 1, 3 and 5 year timeframes. And intuitively this makes sense. If almost everyone has sold out of an asset and there are only buyers left, there’s usually only one way for prices to go.

Given this, I thought it’d be worth taking a look at the assets which have been pummeled and may be due for a comeback


He presents some data.

http://asiaconf.com/


My first post here. Who am I? Nobody important. I sometimes lurk here. Retired. Managing my investments. Usually I post on METaR and Mining and Metals boards, and on occasion, LKF.

I happened upon the above-referenced article tonight, and wondered whether the usual posters here, who I’ve come to admire over several years, might have some further thoughts about the issue.
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