Should you catch the fallen angels?

Buying 'fallen angels' – bonds and shares that have fallen on hard times – is one approach to investing. Matthew Partridge explains how it works.

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Better times may be just round the corner

Momentum investing buying 'hot' stocks or other assets that are shooting up in value is a popular investing strategy. This approach can lead to strong returns while the trend continues. However, it can also be very risky. Indeed, many momentum investors have found out the hard way that when sentiment turns they are then left with a portfolio of overvalued stocks that end up tumbling. As a result, some investors take the opposite approach. This involves buying 'fallen angels': bonds that have been downgraded to 'junk' by the rating agencies (see below), or shares that have experienced a large drop in value.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri