Usually, by this time of a market correction, I am buying stocks which have had significant corrections. For the past month, I've been resisting my normal practice of buying beaten down stocks. The main reason is because I started using an approach which I call a long short portfolio, which requires the purchase of stocks of strong companies combined with shorting stocks of week companies. The portfolio doesn't allow for purchasing beaten down stocks.
However, I am making a list of stocks to consider when I do start buying beaten down stocks. So far my list include CLF, RGC, PBI, STX, and RRD. These stocks are paying dividends in the range of 4-11%, which by itself makes these stocks attractive in the current low interest rate environment. I still haven't purchased any of these stocks.
Should the market decline another 5-10%, I will start purchasing small positions in some beaten stocks since these types of stocks tend to do well in sharp upward market rallies.
Disclosure: At time of publication, I have no positions in CLF, RGC, PBI, STX and RRD.
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