The problem with spotting great buying opportunities is that when you find them, they look scary. That’s what makes them buying opportunities. If they weren’t scary, more people would buy them and the price wouldn’t be so low.

It’s a corollary of why it’s so hard, almost impossible, to pick a bottom. Bottoms happen typically on very low volume because nobody wants to buy at the bottom. Mathematically, the amount of traders who pick exact bottoms is equal to the exact order book order volume on the exact lowest tick down in price, divided by the cumulative volume of very single other trade before and after that down tick. It means the percentage is vanishingly small.

But it’s actually even smaller than that. If we are talking about exact bottoms, it is very unlikely that anybody, not a single investor or trader or fund or institution, picks the exact bottom. Say a hedge fund places a large order just around what turns out to be the bottom of Paddy Power Betfair in this instance. The fund will probably establish its position over a number of weeks or even months consisting of many different orders around the bottom in the best case. The best chance to get the exact bottom can only be by retail traders, whose orders are small enough to be fulfilled at one single price point. If they are savvy enough to pick close to the bottom though, they probably scaled in on downticks rather than believe themselves prophetic enough to buy at the exact right time.

The best one can realistically do to find a bottom is buy good companies that are depreciating in value for no good fundamental reason. Paddy Power Betfair is one of the best examples of that right now. Here we have a company clearly going in the right direction, growing in the right areas and metrics, heavily affected right now by beta market conditions for reasons unrelated to its own financial health, and which has had a string of bad luck perceived as ominous for the company but which probably won’t affect much if anything fundamentally.