Thursday, December 4, 2008

The (mini) ride of the Phoenix

I have written often about the Phoenix effect, or the profit potential of holding low-priced, beaten up and near-bankrupt stocks in a bullish recovery. Bespoke recently documented an example of the performance of such a basket here.

When the Phoenix does finally rise, the upside potential for a portfolio of such stocks is a triple or more. However, I wouldn’t rush out and buy them yet. Wait for a market rally and a re-test of the recent lows before buying in. I would expect that re-test to occur in the next few months.

1 comment:

Phil Ordway said...

Hi Mr Hui,

Very insightful brief post. Greatly appreciated. I have included it in my nightly value investment links at

Best regards
miguel barbosa