You have to buy damaged stocks, not damaged companies.Sometimes these buys are easy to discern. In 1998, when Cendant (CD) was defrauded by the management of CUC International through a series of bogus financials, the stock went from $36 to $12 in pretty much a straight line. Was that a one-day sale that should be bought? No, that was a damaged company. It took years for Cendant to work its way back into the hearts of investors. Some say it has never recovered.
Rule No. 4: Buy Damaged Stocks, Not Damaged Companies
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