In my last post I gave a momentum strategy for beaten-down shares.
I thought I’d take a look at HSV, which had a disasterous fall in June 2010, and a lesser one in October 2011.
If you had applied the principle of waiting until shares made a new year high, a buy would have been triggered on 13 Jan 2014 at 294p. It goes to show just how long the bad periods can be. If you would have held on for a year, you would have sold at 340p, for a 15% gain. During that period, the FTAS lost 2%.
Pretty good. Maybe not overwhelming, but OK.
On the other hand, if you kept holding the shares whilst the 52w high was still in uptrend, you would still be holding today, where the price is 609p.
Of course, you cannot base an investment decision on a sample size of 1. It does show how you don’t necessarily have to be in a rush to buy after the crash, or to sell after a run-up, to make money at recovery shares that have good momentum.