After history’s 50 worst 10-year periods, 179 out of 187 subsequent returns have been positive… a 96% base rate!
Can we get better, more consistent results by looking at how stocks score on all the Financial Strength factors discussed in Chapter 14 rather than just looking at them individually?
Does the Percentage Change in Cash Flow Help? What About Looking at Standardized Unexpected Earnings? Is a Composited Form of Earnings Growth Superior to any Single Factor Measurement?
The data clearly supports that both positive and negative relative strength persists into the following six-month and one-year returns. But what about longer periods of time?
Utilities and consumer staples possess a business advantage that lowers volatility. And unless the government inexplicably deregulates utilities or one of the major brands were to self-destruct, these advantages seem permanent.
The exhibits ranking strategies by downside risk and maximum decline give us an idea of how bad things can get and show us which strategies should be avoided because the risk is just too high.
“As a rule, I always look for what others ignore.” — Marshall McLuhan