Definition of Bottom Fisher
What is a “bottom fisher”? What is meant by the term “bottom fisher” as it applies to the stock market?
A “bottom fisher” is an investor who attempts to get in at the “bottom” on a stock. “Bottom fishers” will usually look for companies that have seen their shares drastically lowered in value due to some event (missed earnings, CFO leaving the company, etc). The “bottom fisher” will attempt to buy at the bottom of the downwards move, as they will believe that the company is worth more than what it is currently being valued at.
Let’s look at an example.
XYZ announced that their Q3 earnings would fall far short of analyst expectations. The reason? XYZ revealed that two major customers had delayed new purchases due to a poor economy.
XYZ immediately trades down 30% after the news, and continues to trade lower over the coming months.
Joe Smith, who considers himself to be a “bottom fisher”, determines that these two major customers will eventually start to buy again, and he decides that the market is currently undervaluing XYZ’s business. Smith decides to buy at what he hopes is the bottom. Hence, Joe Smith could be called a “bottom fisher.”
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