Do Stock Sell-Offs Pay Off? These Experts Warn Not to ‘Bottom Feed’ on New Lows

Core Insights - The recent selloff in reputable software stocks may tempt investors to buy at perceived bargains, but experts advise caution against purchasing stocks at new lows [2][3] - Analysts suggest that pullbacks from new highs are generally better investment opportunities than drops to new lows, as momentum can be a risky factor [3][4] Group 1: Market Trends - Well-regarded software stocks like Adobe, Salesforce, Intuit, and Workday are currently trading near 52-week lows, prompting discussions about potential buying opportunities [2] - Broad market indexes are near record highs, which may encourage investors to hunt for bargains, but some discounts may be justified [3] Group 2: Expert Opinions - Wall Street experts warn against the strategy of "buying new lows," citing a history of investment mistakes associated with this approach [4] - A study from Erasmus University and Northern Trust indicates that stocks with positive price momentum tend to continue performing well, while those with weak momentum tend to decline [5] Group 3: Investment Strategy - Experts recommend waiting for price stability before considering investments in stocks that have recently hit new lows [5] - Deutsche Bank's macro strategist notes a pattern of sharp sell-offs followed by quick recoveries, suggesting that the situation may differ for stocks retreating from 52-week highs [5]