Stock market they say is not for the weak and that is very true. No matter how much amount of fundamental analysis that you do every now and then there will be some opportunity which will arise in the stock market that will defy logic and conventional wisdom.
That is a lot of people always keep pool money aside to take advantage of these special situations. The most important thing is that you will have the money when the opportunity presents itself. That is why it is always better that as stock market investors that you should keep your eye open for a lot of special things like hostile acquisitions, mergers or scandals or even country risks.
Any controversy involving company can generally give the stock price a jolt and if you think that the company is fundamentally sound then you should make sure that you invest. Every dip in the price is way to enter the market.
That said there have been numerous opportunities in the recent past like the sub prime mortgage crisis as that helped a lot of people buy bank stocks at absolute dirt cheap prices. An important point is that in the special situation you are taking a calculated risk and hence it is important that you know that what is you risk taking ability.
To take advantage of these situations you also should be reading the financial dailies as they will generally give you the first news and you need to act base don that news and your own analysis of the situation.
This advice will not be against the buy and hold strategy as essentially you are reviewing the situation and saying that the best price at which the share should be bought is this. You will still buy the shares which will give you returns in the long run. The only difference being that the method of selecting the stock is not the fundamental analysis but it is the special situation which will guide you. The end result is the same that is that you have picked up the stock at a low price for a larger gain at a later stage.
The other factor in this kind of situation is that there is some of calculated risk. This can never be taught and will come with experience in the stock market. That is where the seasoned investors are able to gain edge over the new investors.
The author suggests that satyam share price is the best example of special situation and you should also look at the Unitech share price
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