Leading indicators of an economic contraction, page-321

When, in fact, all it was meant to be is an example of one approach one might use in applying investment caution at the individual company level (where it is demonstrably possible to do so on a sustainable and repeatable basis), as opposed to trying to get the macro call right which, from my long-made observations, is not possible to do.

@madamswer
I understand completely the rational behind using this approach in applying investment caution to get an indication of current and future cashflow, (with some degree of predictability) one would expect from the investments regardless of macro events. If a business is sound and has a history of generating cash with a higher yield than risk free investments over a long period of time one doesn't need to worry too much about the macro events. We are sort of lucky to have an event like GFC in not too distant past as it gives us an opportunity to judge the business performance against the extreme eventuality. One thing I exercise during the evaluation process is how the business performed during the GFC, and all good businesses (NCK, REH, CSL, ARB to name a few) came out alright at the other side of the event.

There are two kind of investors, one type is who is trying to make money by buying a parcel from the market and selling the parcel to the market and the second one is who is trying to generate income from the business it self. the first type would worry about the macro events most, but if the investment is in the sound businesses with a long term horizon, everyone would be alright.

I think overall everyone would be better off if the markets were to open only twice a year for a period of month for buy/sell activities after the half yearly and annual results and rest of the time stay closed. In this hypothetical scenario, it will take out lots of worries regarding the macro events from the mind of investors and still they can make the informed decision twice a year and that's a plenty of opportunity.