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NEW YORK ( TheStreet) -- Bag-holder, bottom-feeder and catcher of falling knives have all been used to describe buyers of stocks that have fallen out of favor with the market. There is another term that is used, although rarely at the purchase time: value investor.
This is what you call someone who buys stocks that are beaten down but then rise.
The difference between the bag-holders and the value investors is akin to the difference between gamblers and speculators.
The speculator understands the potential risks and rewards while carefully determining the correct course of action. The gambler is too busy to be bothered with "all that stuff that doesn't matter." Fortunately, the market offers many opportunities to evaluate any given stock's value to you.
On Aug. 15, I wrote
7 Oversold Stocks Ready to Bounce, 2 to Avoid
In that article, I picked seven stocks I liked and two that I didn't. I will use the closing price on Aug. 15 as the starting price, and the closing price on Monday as reference points. All returns are rounded down. Let's see how they performed:
Electronic Arts(EA) + 7.2%
Take Two Interactive Software(TTWO) + 12.3%
Thompson Creek Metals(TC) + 43%
Halcon Resources(HK) - 0.5%
Devry(DV) + 7.3%
Bill Barrett(BBG) + 5.1%
Deckers Outdoor(DECK) - 0.2%
The two I didn't think should be bought were:
Facebook(FB) - 10.6
Polycom(PLCM) + 11.4%
I didn't get all the picks right (as I did in a previous article), but if we view DECK as breaking even, then I am five for six in my suggested buys.
With the biggest winner up more than 40% and the biggest loser down half a percent, I consider it a good day's work.
A gain was lost in Polycom, although I am not trying to predict the future, I am trying to predict the odds. After adding Facebook into the Polycom mix, it's a breakeven anyway.
Included below is what I am reviewing now.
SID data by
YCharts Companhia Siderurgica Nacional(SID - Get Report)Background: Companhia is a large, integrated steelmaker in Latin America. It operates its own mines, steel mill, railroads, ports and service and distribution centers. The company was founded in 1941 and is headquartered in Sao Paulo, Brazil.