Booms and busts are finite by definition. To capture the recovery, a value investor needs to buy in the most hostile environment BEFORE the market accounts for the potential for recovery into the stock price. This effect almost always happens months before the actual recovery occurs as the "smart money" (institutions) knows the business cycle better than anyone. The edge that the retail investor has over the institutional one is that he can hold these positions for a prolonged period of time without answering to impatient clients and marketing divisions demanding short term results at the expense of long term gains.
Features of companies that will endure the economic storms and emerge stronger than before (the competition crushed) include those with an MARGIN OF SAFETY demonstrated by a stock price that is trading below a company's intrinsic value. Intrinsic value is unfortunately largely subjective regardless of the fancy mathematical modeling some analysts use to calculate the number. IMHO it's best to convince yourself of the strengths of the company as if you were thinking like a company owner-
You'd want a company with a:
- strong balance sheet
- strong cash flow
- manageable or no debt
- dividend that is sustainable, yet compensates for inflationary bite out of the ROI over time
- strong brand
- wide economic moat (i.e. no or weak competition and a high barrier to entry for other potential competitors)
- experienced effective management with a track record during prior market slow downs
- global footprint (arguable these days as the international markets seem to move in lockstep)
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