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Strategies & Market Trends : Value Investing
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To: bruwin who wrote (22845)12/25/2005 4:53:24 PM
From: Marc Hyman  Read Replies (1) of 78749
 
The end result of this approach is that one ends up with only a handful of QUALITY stocks compared with the generally accepted practice of large portfolios chosen, primarily, to reduce risk.

Regardless of the 8 specific criteria you use you're still at risk for the non-financial things that can (and sometimes does) drive the price of a stock down. You might be able to figure out that a company might have exposure to lawsuits or patent issues, but how about a plane crash taking out the company top management, an earthquake that destroys company headquarters, a hurricane that destroys the infrastructure necessary to keep a factory running at peak efficiency.

These things don't happen often, but they can have a very large impact when they do happen. I don't want 30% or 50% of the value of my portfolio susceptible to that kind of risk.

// marc
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