Strategy for Survival

As much as I love finding cheap stocks, I devote a fair amount of attention to avoiding issues that can leave me with a permanent impairment of capital. Owning a stock that Wall Street is in love with can cause devastating losses when the relationship sours and institutions rush for the door.

Sometimes identifying these names can be very easy. Stocks with triple-digit earnings ratios such as Tesla (TSLA) and Netflix (NFLX) may be exciting to own in the short run, but in a down market they will lead the way lower and may not recover for years. Look at tech stocks in 1999 and big banks in 2007 and you get an idea of what a permanent impairment to capital looks like....554 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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