Bottom Fishing

AAA

DEFINITION of 'Bottom Fishing'

Investing in stocks that are cheap because of a problem with the company or the economy. A bottom-fishing investor speculates that the stock's depressed price is temporary, will recover and make for a profitable investment. Bottom fishing is a risky strategy because the company's stock price is depressed for a reason and may not bounce back.

INVESTOPEDIA EXPLAINS 'Bottom Fishing'

Here are some examples of bottom fishing:


-Investing in the stock of an aluminum company when aluminum prices are depressed.
-Buying the stock of a container shipping company during an economic depression.
-Investing in a print media company when the Internet is putting such companies out of business.
-Buying shares of a bank during a financial crisis.


In each of these cases, it is unclear when or if the stock's price will recover.

RELATED TERMS
  1. Undervalued

    A financial security or other type of investment that is selling ...
  2. Bottom

    The lowest point or price reached by a financial security, commodity, ...
  3. Bottom Fisher

    An investor who looks for bargains among stocks whose prices ...
  4. Dilution

    A reduction in the ownership percentage of a share of stock caused ...
  5. Value Trap

    A stock that appears to be cheap because the stock has been trading ...
  6. 52-Week High/Low

    The highest and lowest prices that a stock has traded at during ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Investing Basics

    Barking Up The Dogs Of The Dow Tree

    One well-known and successful strategy for cashing in on dividends is the Dogs of the Dow. Here's what you need to know about them.
  2. Forex Education

    4 Factors That Shape Market Trends

    Trends allow traders and investors to capture profits. Find out what's behind them.
  3. Options & Futures

    Market Speculators: More Help Than Harm

    Speculators often get a bad rap, but it's important to remember that they only observe trends, not manipulate them.
  4. Options & Futures

    5 Common Mistakes Young Investors Make

    Starting to invest can be a scary process. Luckily, steering clear of common errors is half the battle.
  5. Economics

    Industries Prone To Bubbles And Why

    Investors who want to avoid future bubbles should learn from the past in order to protect their investments.
  6. Trading Strategies

    Introduction to Types of Trading: Fundamental Traders

    Learn about the different traders and explore in detail the broader approach that focuses on company-specific events.
  7. Economics

    Economic Meltdowns: Let Them Burn Or Stamp Them Out?

    Whether the Fed should intervene in market bubbles is up for debate. Learn about both sides here.
  8. Investing

    Are These 2015's Most-Promising Small-Cap Stocks?

    At least one of these small-caps should spike in 2015.
  9. Trading Strategies

    Day Trading: Top Scenarios To Take Profits

    Three ways to take profits while day trading, based on price movement and what the asset is doing that day.
  10. Trading Systems & Software

    Robinhood And Scottrade: What's The Big Difference?

    Technology and competition has made trading possible for anybody with an internet connection. You can make a trade for just a few dollars or less.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center