These are the factors to assess to remain calm despite market nerves.In times of uncertainty, the factors of “value” and “momentum” are not particularly useful in measuring a business’s safety. They are relevant but they are not about survival. A more important factor is “quality”.
While there may be a few names that surprise given their history, this measure looks at them today, with the ultimate litmus test being how well they can execute their plans.When markets run hot, there is a propensity for lazy companies to tap investors for much-needed cash. This has the effect of diluting existing shareholder wealth significantly.
If there is one shining light with broad market selloffs, it is that it offers a unique opportunity to jump from your previous underperformer into another stock you have always wanted to buy, but it had run too hard in the past. A good business whose price has fallen is an opportunity. A bad business whose price has fallen can be terminal.