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 possible opportunities.
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!!!