When is the stock price right to buy?
There are millions of stocks. Therefore, going through and analysing each one would be impossible. We need a method of filtering down the number of stocks we want to analyse. Michael Burry, the famous investor who predicted the housing crash came up with such a method that we adopted.
As an investor, especially a value investor, you want to buy stocks when they are unpopular and ride the price wave upwards. Based on this, the following rule allows us to filter for stocks that are currently unpopular:
- Only analyse a stock whose current price is within 10-15% of the 52 week low price.
By filtering for stocks whose current price is close to its lowest price over the past 52 weeks, we are cutting our analysis down to stocks that are currently unpopular. This method helps to narrow your potential investments at a given moment in time.
Our free value investing guide will teach you how to build on this and find the best companies to buy.
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