It is possible from personal experience, you won't capture everything but the odd are good that you avoid the majority of them.
I have filter and discipline in place that I can reasonably confident I can avoid most of these debacles, that is not to say I don't lose money on the stock market, I do lose money on some stocks either due to wrong timing or financial crisis and sometimes speculation but I know full well it is speculation and I confined it to speculation capital only.
I have strict rules not to invest in
Professional service business so SGH belongs to this group
Airlines
Mining stocks
Agriculture stocks
Heavy CapEx business and much more, I then end up with a very narrow list on the ASX, and there are some exception to that list, for example, I would pick BHP for mining and nothing else when the price is right
After that list, It will get filter further on the key performance like Return on equity/asset/capital, cash flow, debt level and wording of the report on certain keys number etc..
but crooks has a way to cheat on all sort of number too but it hard for them to cheat on everything because mamma always tell me if you tell the true you don't have to remember anything... when crooks lies and cheat they have to remember all the dots of where they cheated, no one can do it consistently and eventually something will mismatch when you know what to look for.
so the list could end up something like this
REH,GXL,CCL,CAB,CDA,CBA,FLT,WOW,WES,RFG,SDF,ITD,MYX,DMP,PGH,CCP,JIN,BRG,SIQ, etc....
then I just sit around most of the time and do nothing until the time is right and on the stock market.
plenty of 24 news cycles and crisis to always drive my shopping list to the price I want so I just be patient and do nothing most of the time.
Most of them I own and over a long period of time and over many cycles and some of them I pick when they are just a baby cap going to be billion dollar cap etc...
Each year my dividend pile getting bigger which then get recycle to the stock that fit the criteria big or small but I like SMIC stock ... I called them SMall but In Charge as in their balance sheet is pristine and much stronger than many fund managers so blue chip stock.
I get incredible growth out of these SMIC both in dividend and capital and let the compounding machine works.. when I feel SMIC has done its job and becomes the big boy and grow slow, I lighten the load, chuck in cash and repeat the cycle.
Obviously, there are great business that gets disrupted by technology like CAB and you lose some but overall with that system in place the money you make can cover many times over the money you lose so you always end up winning and rarely lose.
I also very quick to act as soon as I smell fishy or don't like something so
my loss usually is not that huge, the most were 35% of the capital of that stock.
When the fact change, I change my mind, what do you do sir?
this is very relevant to the stock market, I may like a business and put money to it but when the fact change I re-evaluate and change with it and get the hell out if need be.
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