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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Mr.Gogo who wrote (41082)	1/17/2011 9:58:24 AM
From: Jurgis Bekepuris	Respond to of 78464

We should be careful always. ;) (Slogan of Communist Party of Soviet Union, BTW :P ) I don't know if I've been burned by "too good" deals more often than "medium good" deals. Maybe I should make a list and see if I can learn something. I learned "OCF << earnings is a red flag" and "huge inventories and A/R is a red flag" from Chinese companies. I knew that dilution is bad and management overcompensation is bad before Chinese companies, so that's not new lessons. The big question is how absolute are those lessons. A lot of cheap small caps have at least some of these warts. This is especially true if you limit your stock universe by requiring good operational performance (high margins, ROE, sales growth, etc.) - why would a company with good operational performance sell for cheap otherwise? So should we discard all stocks that have these issues or just some? And where's the limit?