Technical Terms of the day : Bottom Fishing

DEFINITION of 'Bottom Fishing'

Investing in stocks that are cheap because of a problem with the company or the economy. A bottom-fishing investor speculates that the stock's depressed price is temporary, will recover and make for a profitable investment. Bottom fishing is a risky strategy because the company's stock price is depressed for a reason and may not bounce back.

BREAKING DOWN 'Bottom Fishing'

Here are some examples of bottom fishing: 

• Investing in the stock of an aluminum company when aluminum prices are depressed.
• Buying the stock of a container shipping company during an economic depression.
• Investing in a print media company when the Internet is putting such companies out of business.
• Buying shares of a bank during a financial crisis. 

In each of these cases, it is unclear when or if the stock's price will recover. 

Courtesy: investopedia.com