I just saw someone asking about disposal stocks, and this is indeed a common trap that many investors tend to fall into.

Have you ever encountered this situation? A certain stock's price surges over 100% in a short period, which looks very attractive, but when you actually try to place an order, you find that the transaction speed is painfully slow, and margin trading and short selling are not allowed. At this point, it's almost certain that the stock has been designated as a disposal stock.

In simple terms, a disposal stock is a regulatory measure by the Taiwan Stock Exchange against stocks with abnormal trading activity. When a stock experiences excessive price fluctuations in a short period, high turnover rates, or abnormal trading volume, the exchange will first flag it as a watchlist stock to alert investors. If the situation doesn't improve, it will be upgraded to a disposal stock. Once on the disposal list, trading becomes restricted.

In the first disposal phase, the stock can only be matched every 5 minutes. If a single order exceeds 10 lots or accumulates over 30 lots, a circle deposit transaction (equivalent to full payment) is required. If the stock continues to be too volatile and triggers the conditions again within 30 days, it will enter the second disposal phase, where matching occurs every 20 minutes, and all trades require circle deposit regardless of the amount. These restrictions significantly reduce liquidity, and trading volume often drops sharply.

So, do disposal stocks go up? Honestly, it depends on the case. For example, WeiFeng Electronics was designated as a disposal stock in 2021, but its popularity didn't diminish—in fact, it increased, and it even entered the second disposal phase, during which the stock price rose by 24%. However, Yang Ming was also designated around the same time due to excessive gains, but shortly after, it was reclassified as a disposal stock again due to a large decline, and its stock performance remained sluggish afterward.

There's a saying in the market called "The bigger the closure, the bigger the tail," meaning some stocks that are designated as disposal stocks were hot stocks with big gains initially. After entering the disposal phase, their chips stabilize, liquidity drops, and once the restrictions are lifted, they may surge again. But this is a double-edged sword—if short-selling forces come into play, investors might not be able to sell at all.

Regarding whether disposal stocks will rise, I believe it's not just about whether a stock is designated as a disposal stock; the company's fundamentals matter more. Disposal status is just a temporary abnormal trading condition and doesn't reflect the company's quality. If thorough research indicates that the company still has investment value, then the disposal period can actually be an opportunity because the main capital flows are relatively clean, making it easier to observe institutional movements.

Investment value judgment can be based on fundamental analysis and chip analysis. Fundamental analysis looks at core business, product competitiveness, revenue growth rate, gross profit margin, etc. Chip analysis involves observing capital flow trends, such as the buying and selling behavior of major players. Before buying, confirm whether the stock price is in a sideways consolidation, avoid situations of sharp decline, and also assess whether the current valuation is reasonable.

As for long-term holding, disposal stocks generally carry higher risks than normal stocks, as abnormal trading might indicate underlying issues. If a company's fundamentals are stable but your risk tolerance is low, it might not be suitable. However, for long-term investors, trading restrictions don't matter much—they can even help see the company's financial reports more clearly. In conclusion, whether disposal stocks will rise ultimately depends on the company's fundamentals.