|Errr...don't try this at home!|
"...And put it in your pocket" - that's Perry Como's advice.
But when it's a falling knife, should you try to catch it? Well, I've been trying a bit knife juggling - what has this produced?
As most readers will be aware, a 'falling knife' is a share price in free fall, usually after some bad news. Knives are sharp and dangerous to try to catch. The problem with the financial variety is that you never know when they will stop falling, if ever. A falling knife may also lead to a dead cat bounce - presumably when an unsuspecting kitty was lying underneath. That's when you think all the bad news is over...but it isn't!
However, unless you are an out-and-out index tracker fan, investing in the stock market is all about calculated hunches...
My falling star/knife is Huntsworth (LSE:HNT) which I first bought a year ago (May 2012). The 'buy' was then based on:
- Nice yield and generally sound-ish financial numbers
- A new tie-up with one of China's largest PR firms, BlueFocus, which agreed to buy 19.8% of the group; the two companies planned to
pursue a common business strategy.
But the market reaction seemed a bit over the top to me, as the company fundamentals seem to be still in place and, let's face it, things happen at their own pace in China.
With the yield approaching 6% and a commitment to hold the dividend at the level of the previous year, this seems to be another opportunity to take advantage of one of Mr Market's well known mood swings.
Only time will tell whether Huntsworth is a falling star or a falling piece of cutlery.
[Purchase price £0.5953]
I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.
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