I would suggest that we steer away from financial institutions like banks and insurers. When money is the inventory things are a little more difficult for most folks to track. Units moved, units sold, services rendered are usually simpler models to understand. Jack, I agree. The classic "Peter Lynch" or classic "Warren Buffet" approach makes better sense: real products that people use in their ordinary lives. But there's also has to be an accounting gimmic. The classic one is how the value of the company's real estate is reported at book, not present market value, though Wall Street is beginning to catch on to that one, too. Possibly, rail companies and paper/pulp comanies would own enough real assets to provide margin of safety to creditors in Chapter 11. The "top-down" prediction has to be that the economy is facing a recession. Therefore, the position will have to be able to be ridden out, which means the company has to have the wherewithal to survive the downturn. (If we could find one that will prosper from the downturn, so much the better.) But I'd be happy with survival, which means it's too early to be buying, but not too early to be positioning to be buying when the bottom does come, which means understand the industry, and the companies within the industry, and then waiting patiently, which means avoiding retailers with leases, companies with huge pension obligations, etc. The chosen company has to be able to survive financial distress or maybe be a takeover target to its stronger peers.Charlie
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