Small Cap Pirate provides investors and speculators of all account sizes with strategies and techniques to get above average results without spending a huge amount of time and money on research.
Many speculators and investors and stockbrokers love to jump on a stock after it has suffered a large one-day crash of 20-30% and more. The drop in price is usually due to poor earnings or some kind of accounting fraud. To me this is like catching a falling knife and you are likely to lose money doing it. But there is a simple no-brainer way to speculate in stocks that have had a huge sell-off.
First, wait. Wait seven calendar days. That is it. If the company is strong enough to overcome the bad news the stock price will stabilize and start rising slowly after seven days. Then buy the shares as you would any other speculative venture. That is it. No need to do any research, fundamental or technical. No need to pay for advice or analysis.
Like any speculation there is no guarantee that the stock will go higher. In fact, it may drift a little lower after you buy but the chance of another big decline is slim. Check it out for yourself on a stock like GMCR or more recently VRX. Both suffered big one-day drops due to scandal. Both stabilized in price after one week and both have gone higher,
This strategy works really well on biotech stocks that fail Phase III testing. Most biotech breeze through Phase I and Phase II testing. Phase III testing is fraught with landmines that kill most Phase III results an stock prices plummet 30% and more in one day. But what does not kill you makes you stronger. If the biotech company can convince investors to try Phase III again the company usually gets good results. Good Phase III results are a giant financial windfall to a biotech company.