When a company is out of favor with the market, its' stock price gets driven way down. It is still a good company and a great value at these very low prices. You can make BIG profits from this type of stock.
Let me give you an example- the banking industry has been beat up this past year and most stocks are at very low prices compared to two years ago. Look at Bank of America as one of these stocks, it has been as high as $ 45 and as low as $ 3. Do you think you could make money being buying the stock at a low and holding for a short time? If you bought in March of 2009 and sold in August of 2009, you would have to make $ 15 dollars a share! If you bought 400 shares at $ 3 and sold it for $ 18, you would have made $ 6,000 profit (on $ 1,200 investment) in only 5 months. Would you like to do that over and over? You can if you know how.
Look for industries that are getting all the bad press. Pick out 6-8 stocks in that field and follow their stocks. Watch as they fall in price and make new lows. Each stock will do this at different times, so you must know what each of them is selling for each week. You will get to know how they are performing in the market. When theses stocks turn around and go up 5-7% from the bottom, you buy and hold them for a few months and make HUGE gains on your investments!
Remember, all stocks go up and down. I suggest you only buy a stock when it is at a low and turning upward! This allows you to maximize your profits and lowers your risk. If you buy low and sell higher, you will become a truly great investor. You do need to be able to recognize a low and do your homework by watching the market to find the golden nuggets. You can do this type of profitable investing.
Key point: a stock is ONLY a vehicle to produce profits for you! If it produces profit, keep it. If it looses money, sell it fast. Do not let any emotion keep you in a bad trade. Take small losses quickly and get out. Let your profitable stocks run up as long as they make you money! When they turn downward- sell. Make a plan or use someone's plan to achieve your goals of making big money with stock investing.