Most investors tend to believe that any correction in a stock is an opportunity to buy. That is like trying to catch the proverbial falling knife. Every correction in stock price does not make it attractive. More often than not, sharp corrections are a result of key technical and fundamental shortcomings. Jumping in and buying such stocks will be foolhardy. The key is to spot and avoid falling knives.

Having said that; one need to always shy away from falling stocks! For example, Tudor Jones bought heavily into stocks in October 1987 when the stock markets corrected by 22% in a single day. If you have the risk appetite and the capacity to hold then buying falling stocks can be quite profitable.