Every Investor's MOST Important Job! How to Manage Risk
Every Investor's MOST Important Job! How to Manage Risk
If banks lend money to every borrower, they would eventually go bankrupt. This is because only some borrowers will pay back the money they borrow. So, banks prioritize risk management and select ONLY the borrowers that show the highest probability of paying back their debt.
Your job as a stock investor is to think like a bank.
Here is what to do:
Ensure the company's revenue has been growing year over year
Ensure the company's net income has been increasing year over year
Ensure the company has a winning internal culture (look up employee reviews)
Ensure the company can compete for the next 10 to 20 years (read analysts' reviews)
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