How to Win in a Volatile Stock Market: The Definitive Guide to Investment Bargain Hunting by Alexander Davidson

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Beat the professionals at 
their own game 
If you are investing, or are thinking of doing so, on the stock market, 
you will harbour the secret dream of making a killing. You may have 
already done well in bull markets, but the upward momentum never 
seems to last long enough. 
At worst, you can get caught high and dry as the market recedes, 
leaving you holding a portfolio of fast-fading stars. Up to this point, 
you may never have thought about any kind of value investing. 
The plan to reveal the Bargain Hunters’ Investment FlexiSystem, 
which has been used so profitably by some City professionals for their 
private investing, was conceived while I sat glued to the screens on the 
trading floor of one of Europe’s leading investment banks. The bears 
were out that day and the FTSE 100 index was slipping almost by the 
minute. The Asian economy was in bad shape and the Russian rouble 
had almost collapsed. The issue of whether to sell, to stay put, or to 
invest more was preying on the mind of any responsible investor. 
Most institutions had to keep trading on a short-term view. But for 
private investors who were lucky enough to be familiar with the 
Bargain Hunters’ Investment FlexiSystem, some real longer-term 
buying opportunities had opened up. 
Most private investors cower from buying shares when the stock 
market is depressed. This is exactly when you should be buying, as the 
Bargain Hunters’ Investment FlexiSystem makes clear. 
When the market is down, prices of individual stocks tend to fall 
substantially below the true value. This is because the market always 
overreacts to news, whether good or, as in this case, bad. Following a 
market correction, a 10-20 per cent fall in the share price is common- 

place. After a full market crash, stocks could be trading at as little as 
half their true value, or much less. 
Using the Bargain Hunters’ Investment FlexiSystem, you will be 
picking out the best value stocks (as well as other investments and 
assets) in the depressed market and you will invest in them while your 
fellow investors are sitting tight. The system is rooted in the tradition 
of value investing that started more than 50 years ago with Benjamin 
Graham, who has been described as the ‘father of investment 
analysis’. 
The system has not, in the view of many who quietly practise it, 
been bettered. But it is still not for everybody. There are as many ways 
to pick stocks as there are ways to skin a cat. Traders, for instance, 
prefer to exploit short-term stock movements (a skill covered in 
Chapter 13) although, for their private medium- to long-term 
investing, the Bargain Hunters’ Investment System is ideal. 
Others invest in growth stocks, sometimes at a price far in excess of 
the company’s net asset value. They hope to see the share price 
continue in its upward trend. If you join these speculators, make sure 
that you have a screen showing share price movements. You may only 
make profits if you can act quickly. 
Your advantage over institutional investors 
Many institutional investors take the plunge and move in and out of 
growth stocks rapidly, reacting to news flow. They tend all to select the 
same hot stock, giving a temporary boost to its price. Sometimes they 
get caught out. 
Truth to tell, many institutions cannot afford the time investment 
required to invest only in undervalued stocks as the Bargain Hunters’ 
Investment FlexiSystem dictates, which is a good reason for the diffi-

culties most have in beating the market average. They must meet 
short-term profit targets and so fast-rising shares prove irresistible, 
even if the underlying companies have long overreached their funda-

mental value. An exception is to be found in some insurance compa-

nies that can afford a more long-term approach to investment. 
In addition, some institutions are hampered by the need to hold a 
very broad range of companies in their portfolios, simply to achieve

an adequate spread of risk. As a private investor, you are answerable 
only to yourself, and so have more flexibility than the institutions.

How to Win in a Volatile Stock Market: The Definitive Guide to Investment Bargain Hunting by Alexander Davidson