I have personally seen many good
investors use 52-weeks highs and lows to decide whether they should invest
their money in any stock. And many of them have found quite a good deal of
success in this.
However, I never really
understood this fully. Call me an old-school. But before investing in any
company, I do a thorough research on that company and its future growth plan—that
has nothing to do with 52-weeks approach.
Here’s a simple idea—a stock at
its 52-week low might not necessarily be cheap, it could go down further. Just
like that, a stock at its 52-weeks high might not necessarily be expensive—it
could go up even further. If you follow this theory, you might miss a lot of
A stock at low price might be
preparing to bottom out more in the coming weeks. A stock valued high might be
preparing to launch even higher. So instead of depending on this practice –
that isn’t entirely wrong, given the success rate – I would say you stick to
the fundamentals like management quality, growth prospects, business potential,
over entirely relying on the price.
So coming straight to your
question—NO, IT’S NOT A SMART APPROACH!!!